Beyond the cap: Can we truly fix senior citizen health insurance?

While the move promises stability, it also raises a crucial question: Will insurers find new ways to offset costs, tightening underwriting and claim scrutiny? 

There are some areas where additional refinements could enhance consumer protection and clarity.

Shielding seniors

The 10% cap offers much-needed relief by preventing the sudden, steep premium hikes that have long troubled senior citizens. These increases often stemmed from age-related adjustments, price revisions, or both. 

While the cap ensures more predictable costs, concerns linger that insurers might treat it as a benchmark, opting for annual price revisions instead. 

A balanced approach, driven by ongoing dialogue between the regulator and insurers, is crucial to maintain affordability without compromising the sustainability of health insurance offerings.

Policy safety net

The provision that prevents insurers from withdrawing products without seeking Irdai’s approval is a thoughtful safeguard.

It signals the regulator’s commitment to protecting consumer interests and preventing abrupt changes that could disadvantage senior citizens. This guideline should ideally be coupled with a uniform approval process that promotes prudent decision making. 

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

A more transparent process, perhaps including a publicly accessible summary of pricing decisions and their justifications, could help build confidence among policyholders.

Capping costs

While the 10% cap offers much-needed relief, it raises concerns about insurers tightening underwriting standards, potentially limiting access for new senior citizens. 

Claims processes, too, might become more stringent as insurers navigate cost controls within the new framework. However, these adjustments need not be seen as setbacks. 

Instead, they present an opportunity for collaborative solutions, where regulators and insurers can develop self-regulatory guidelines that balance cost management without compromising the quality of service seniors rely on.

Empathetic communication

Cold transactional communication has been a major reason that rubs salt to the premium hike wound. Most insurers simply sneak in a renewal notice with a big premium hike, and thus end up creating shock and significant emotional distress for policyholders. 

Also read: Why GST Council cannot ignore the health insurance row

Clear and proactive communication explaining the reasons behind the price increase, giving options to reduce the hikes, can ease the friction of unexpected hike causes.

Standardising hospital charges

While state-level healthcare pricing regulation remains a persistent demand, its on-ground execution appears far from imminent.

The more feasible alternative is for the industry to collectively negotiate “bulk” rates with hospitals, standardising pricing and ensuring fair billing practices. 

The General Insurance Council’s “Cashless Everywhere” initiative is a promising step in this direction, but its success hinges on strong, unified support from all stakeholders.

Wellness-driven insurance

A sustainable solution to high premium hikes lies in a broader approach beyond merely managing premiums and claims. Integrating personalised wellness management and preventive care into health insurance products can play a significant role in reducing hospitalisation claims.

By empowering primary care, insurers can guide customers toward the most appropriate and cost-effective treatments, proactively reducing overall healthcare expenses and ensuring more affordable premiums. The future lies in insurers evolving from mere risk financiers to proactive risk managers, promoting wellness and prevention alongside coverage.

Responsive customer support

There is an urgent need to strengthen the grievance redressal mechanism, ensuring customers have clear, accessible channels to raise and escalate complaints. 

Also read: ‘Insurance ombudsman doesn’t allow third party help: A dilemma for policyholders

Currently, many are left with no choice but to turn to social media or contact the CEO directly, while others simply abandon their efforts. Enhancing this process would not only empower customers but also improve the industry’s reputation, making premium hikes easier to accept. 

A more responsive customer experience can create tangible value, ultimately softening the impact of price increases.

Winning the young

In 2023-24, according to Irdai reports, India purchased 2.31 crore personal health insurance policies covering 5.6 crore lives—a modest 5% increase from the previous year.

Such sluggish growth in a market like India serves as a wake-up call for the industry. Health insurance can only thrive long-term if the healthy subsidise the sick. 

Without actively attracting younger policyholders, insurers risk an ageing portfolio, leading to disproportionate claims, straining profitability, and ultimately driving regular premium hikes.

Mahavir Chopra, founder, Beshak.org, an insurance advisory platform