In a significant relief for senior citizens, the Insurance Regulatory and Development Authority of India (IRDAI) has imposed a limit on annual health insurance premiums. The regulator has stated that insurance companies cannot increase premiums for senior citizens by more than 10 percent.
The regulator, in a press note issued on January 30, 2025, said that the insurance companies should consult with it before:
1. If the increase proposed is more than 10% per annum.
2. In case of withdrawal of individual health insurance products offered to senior citizens.
“…the most vulnerable age group is senior citizens with limited sources of income, and this group is impacted the most when there is a steep increase in health insurance premiums. This matter has been engaging the attention of Irdai and is a regulatory concern,” IRDAI said.
This ensures transparency and prevents abrupt changes that could leave seniors without necessary coverage, it added said.
It added that the premium rate is primarily based on the estimated claims outgo and the expenses including acquisition costs incurred by the insurance company for acquiring and servicing the insurance policies. The claim outgo is largely dependent on the amounts charged by the hospitals for various treatments/surgeries.
Moreover, Irdai has instructed insurance firms to facilitate the joint empanelment of hospitals and establish negotiated package rates similar to those of the Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme.
“Unlike the Pradhan Mantri Jan Arogya Yojana scheme where the hospitalisation expenses are negotiated centrally for package rates and are thus standardised across hospitals. There is no such thing in case of health insurance products. This is leading to higher hospitalisation costs resulting in higher claims outgo under health insurance products offered by insurers,” IRDAI noted.
IRDAI said the regulatory framework mandates that all insurers create a dedicated channel to handle health insurance claims and grievances for senior citizens. This information must be readily available on the insurer’s website for easy access.
“For the benefit of senior citizens, the regulatory framework requires all insurers to establish a separate channel to address their health insurance-related claims and grievances. Such information should be published on the website of the insurer,” IRDAI said.
In April 2024, the IRDAI eliminated the age limit of 65 years for individuals looking to purchase health insurance policies. They directed insurance companies to provide health insurance options to individuals of all age groups. Furthermore, the waiting period for pre-existing conditions was decreased from four to three years. These regulations have been in effect since April 1, 2024.
“IRDAI’s latest directive on revising premium rates for senior citizens marks a crucial step towards enhancing affordability and accessibility in the health insurance landscape. This initiative is set to bring stability, transparency, and trust while simultaneously promoting sustainable practices within the insurance sector. By capping premium increases at a maximum of 10% per year, the regulation introduces pricing predictability, ensuring that senior citizens are not burdened by steep cost escalations. This measure will help insurers retain their customers and prevent policy lapses driven by unaffordable premiums, thereby fostering a more reliable insurance ecosystem,” said Hanut Mehta- CEO and Co-Founder of Bimapay Finsure, a division of Hindon Mercantile.
He added: “The requirement for insurers to establish a dedicated grievance redressal mechanism for senior citizens will significantly improve service quality and customer satisfaction. Companies that streamline support systems and enhance responsiveness are likely to gain stronger consumer trust and reinforce their market reputation. Another transformative aspect of the circular is its encouragement for insurers to adopt standardized hospital empanelment and negotiate package rates.”
“By following a model similar to the Pradhan Mantri Jan Arogya Yojana (PMJAY), the industry can mitigate inconsistencies in hospitalization costs, leading to better financial management for insurers and making healthcare services more affordable and accessible to policyholders. Additionally, this strategy fosters closer collaboration between insurers and healthcare providers to ensure fair and efficient service delivery,” he explained.