Insurance regulator IRDAI has issued a directive to limit the increase in health insurance premiums of senior citizens to 10%, but despite more than a month has passed since the issuance of the directive, insurance companies have not yet implemented it.

Narendra Kumar Bharindawal, Vice President of the Insurance Brokers Association of India, said that after the notification was issued, insurance companies are seeking further clarification from IRDAI on this.

...and how much more clarity is awaited!

According to the companies, they are not yet clear whether this 10% limit will be applicable on an annual basis or for some other period. Apart from this, insurance companies divide senior citizens into different age groups. For example, if there is also an age group of 61-65 years, will the rates increase only when the customer reaches the next age group?

Rajesh Kakkar, Business Head and Principal Officer, Zuari Insurance Brokers Limited, said that there are many calculation and operational challenges in implementing this rule. Companies will have to redefine their premium determination parameters so that they can strike a balance between the paying capacity of consumers and their financial stability.

Insurance companies in a dilemma

Health insurance company Niva Bupa said that this move of IRDAI is commendable for protecting the elderly from financial crisis, but it can also create some new challenges. Insurance companies may be more cautious in giving policies to senior citizens, especially for those who are already suffering from any such insured. Companies can tighten the underwriting rules.

In addition, insurance companies can change policy conditions to control costs, such as applying sub-limits on treatment or capping room rent. This can also affect young policyholders, as companies can also change their premium rates to create financial balance.

IRDAI had given instructions in February

Insurance regulator IRDAI, in a notification issued in February, had instructed insurance companies not to increase the health insurance premium of people aged 60 years and above by more than 10% annually. This decision was taken because premium rates for this age group were increasing heavily in many health insurance plans.

The regulator had said that senior citizens are a sensitive class, whose means of income are limited and they are most affected when health insurance becomes expensive. If a company has to increase by more than 10%, then it will have to first get permission from IRDAI.

This rule of IRDAI is to provide relief to senior citizens, but it is not so easy for insurance companies to implement it. Companies are considering measures to balance the effects of this decision.

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