Irdai caps annual premium hike for senior citizens at 10% annually—what it means for policyholders | Mint

The Insurance Regulatory and Development Authority of India (Irdai) has capped insurers’ annual premium hikes at 10% for senior citizens. Any increase beyond this limit will now require prior approval from the regulator. While this step enhances transparency and predictability for policyholders, industry experts caution that it could lead to stricter policy issuance, tougher claim settlements, and a potential shift of costs to younger policyholders.

“The insurers shall not revise the premium for senior citizens by more than 10% per annum,” Irdai stated in a circular issued on Thursday. It also specified two key scenarios requiring prior consultation: if an insurer intends to hike premiums beyond the 10% cap or withdraw an individual health insurance product for senior citizens.

Read this | Why senior citizens require deductibles in health plans

The decision comes in response to concerns over insurers imposing excessive premium hikes on senior citizens—sometimes doubling their existing premiums—making it increasingly difficult for them to afford continued coverage.

Industry leaders welcomed the move, emphasizing its consumer-friendly approach. 

“Our focus has always been on delivering value-driven insurance solutions, and hence, we fully support these reforms and remain committed to protecting our customers with transparent and sustainable products,” said Aashish Sethi, Head – Health SBU and Travel, Bajaj Allianz General Insurance.

Mahavir Chopra, founder of Beshak.org, also acknowledged the positive intent of the Irdai directive, saying the move will porvide clarity to senior citizens clarity on how much their premiums may increase, which is a welcome step. 

Read this | Mistakes people make when porting a health insurance policy

“Not sure, however, if the announcement has come with or without out industry consultation. We have seen in the past that quick decisions by the regulator have led to insurers finding a work-around to solve their own share of problems. We need to see how insurers react to the circular,” said Chopra.

Potential challenges for policyholders

Despite the relief the new cap provides, experts warn of unintended consequences. Chopra outlined three key risks that policyholders may face:

Annual 10% hikes becoming the norm – Insurers may automatically raise premiums by 10% every year, even when lower increases might be justified.

Stricter underwriting for senior citizens – Insurance providers could become more selective in issuing policies, making it harder for seniors to get coverage.

Tougher claim settlements – Higher claim rejection rates or stringent scrutiny could emerge as insurers try to mitigate potential losses.

Narendra Kumar Bharindwal, director and vice president at the Insurance Brokers Association of India (IBAI), further warned that the new regulation could make it difficult for senior citizens to switch insurers. 

New insurers may be reluctant to onboard high-risk profiles, or they may impose hefty premiums on those porting their policies, he explained. 

Read this | Health insurance with no premium hikes: Should you buy such plans?

He also noted that younger policyholders might indirectly bear the financial burden. “If insurers make losses in 60+ profiles, they might pass on the premium hike to the younger population to make up for it.”

Push for standardized healthcare costs

Beyond premium regulation, the Irdai circular also addresses rising hospitalization costs. It directs private insurers to take steps toward a common empanelment of hospitals and negotiate package rates akin to the Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme.

The regulator highlighted the disparity between public and private insurance models, stating: “Unlike PMJAY, for package rates and are thus standardised across various hospitals, there is no such standardisation in case of health insurance products. This is leading to higher hospitalization costs resulting in higher claims outgo under health insurance products offered by insurers.”

However, experts have mixed views on the feasibility of this approach. Bharindwal pointed out that while government schemes like PMJAY and CGHS (Central Government Health Scheme) operate with standardized rates, private insurers cater to diverse customer preferences and offer varying features. 

“A hospital may subsidise rates for general ward patients, but not for those who opt for suite or private room. The government will always have better negotiating power on rates which hospitals accept, but it does not happen with insurers,” he said.

Sethi, however, believes that moving toward standardized pricing will bring much-needed stability. Encouraging insurers and hospitals to collaborate on standardizing packages and pricing will enhance transparency, cost efficiency, and fairness, he said.

Also read | Govt’s free health insurance scheme welcomes senior citizens. But can they rely on it?

While Irdai’s move marks a step toward greater predictability in premium pricing and cost efficiency in healthcare, its success will depend on how insurers implement these regulations. Policyholders, especially senior citizens, will need to stay vigilant about how insurers adjust their policies, claim approvals, and pricing strategies in response to these changes.