Health insurance premiums in India to rise due to climate change-induced diseases

Health insurance premiums in India are expected to rise as intense heat, incessant rains and dirty air trigger a range of illnesses, industry executives said.

According to a UN report released in July, heatwaves this year have killed more than 100 people and left more than 40,000 in India. A Lancet study released the same month says polluted air kills about 33,000 Indians every year. The US-based Health Effects Institute estimates that 464 children under five die in the country every day due to air pollution. Meanwhile, torrential rains and waterlogging are leading to a rise in waterborne and vector-borne diseases. Kerala, where the monsoon hits the continent first, has recorded about 4,306 confirmed and 12,958 probable cases of hepatitis A this year, compared with 231 and 894 in 2022.

Higher claims

“This year, the number of claims is higher,” said Hiten Kothari, chief underwriting officer and chief actuary, HDFC Ergo General Insurance. “Currently, in our data, we see that respiratory, bone, gastric and abdominal diseases account for 10-15% of the number of claims we see. If there is a 25% increase in the number of such claims, insurance companies will have no option but to increase prices or premiums automatically. For example, if there is a 10% increase in claims, the premium will increase by 10%,” said Kothari.

While respiratory diseases are covered by health policies, depending on the insurance provider and plan, diseases such as malaria and dengue may also be added to the list.

“Heat waves can increase not only deaths but also diarrheal diseases, food-borne infections and diabetes, and lead to a rise in blood pressure and worsen mental health status. If mortality increases, health premiums will certainly go up because premiums depend on the risk of dying or falling ill,” said Dr Dileep Mavalankar, distinguished professor of public health at the Indian Institute of Public Health, Gandhinagar. He said that increased heat will be more lethal for newborns, pregnant women and elderly citizens.

Rising premiums

Medical inflation and losses at insurers have already pushed up health premiums by nearly 50% over the past six years, industry executives said. Medical inflation that soared to about 32% during the Covid pandemic has come down to 14% but remains high. Higher costs of operations, nursing, use of cutting-edge technology and high room rents are putting pressure on insurance companies, which is passed on to customers in the form of higher premiums, health insurers said. Customers are also looking for policies that offer broader coverage.

Queries sent to the Union Health Ministry’s Secretary and Spokesperson and the Chairman of the Insurance Regulatory and Development Authority of India remained unanswered at the time of going to press.

“Insurance is all about big numbers, and we can see these big numbers only when we have enough data,” said Bhaskar Nerurkar, head of the health management team at Bajaj Allianz General Insurance. “Hence, the current surge in health insurance premiums is not due to the re-emergence of rare diseases. During the pandemic, medical inflation increased by almost 32% and post-pandemic, it did not come down significantly,” said Nerurkar.

Health insurance premiums are calculated taking into account demographics, coverage scope and medical cost inflation, in addition to the health status, lifestyle and personal habits of each individual. Data analysis is performed to arrive at the risk profile of the individuals.

Nerurkar said that while earlier patients would leave hospitals within a day or two in case of minor infections, the time has now come down to three to four days. “Perhaps immunity has waned, but it is too early to say. We are seeing a slight change in attributes like length of stay.”

Unstable weather affects immunity and makes more people sick, insurance executives said, adding that when the weather is warmer or wetter than usual, infections increase. Although weather-related health risks are not yet very high, it could be a concern when another epidemic emerges or when it becomes a trend, they said.

Insurance claim

People are buying more insurance as they realise the rising costs of treatment, said Sandeep Dadia, managing director and head of India at Lockton, a global health insurance broker.

“Currently, given this situation, claims and amounts have increased and are likely to continue to increase to offset the substantial rise in inflation in the healthcare sector and ultimately, premiums will increase substantially. Generally, people should budget for an increase of between 5 to 10 per cent every year. After three years, this increase can be 20 to 25 per cent,” Dadia said.

The increase in premiums is due to the rise in diseases, Dadia said, adding that companies review these rates every year. “So, if I make a huge loss this year, I either stop insuring or start increasing premiums. In health insurance, don’t expect premiums to ever come down in the kind of system we have in India,” Dadia warned.

This year, India suffered a scorching summer, with temperatures near 50 degrees Celsius (122 degrees Fahrenheit) in major cities in the north of the country, until the monsoon arrived on May 30. After a slow start, the country was hit by torrential rains this year, triggering landslides and waterlogging in metropolises and spreading water- and mosquito-borne diseases such as dengue and malaria.

Burden of infectious diseases

“Infectious diseases have increased and I think this may be linked to climate change, because during this season, dengue and other infections are on the rise. We are also seeing a slight upward trend in cardiovascular diseases. We are also seeing claims for hospitalisations due to malaria and gastric problems caused by water and food,” said Bajaj Allianz’s Nerurkar.

“Given the rise in cardiovascular, infectious and waterborne diseases, among others, there could be higher long-term treatment costs, including medications, surgeries and ongoing care, which could increase the frequency of claims. The cumulative effect of these costs could push up premiums as insurers adjust to cover higher future liabilities. Therefore, insurers may need to factor these factors into their premiums to account for the increased risk of these outbreaks,” Nerurkar added.

Several infections have tripled this year, said Dr Vikas Maurya, director and head of the department of respiratory medicine and an interventional pulmonologist at Fortis Hospital in Delhi’s Shalimar Bagh.

“In the last two to three weeks, cases of respiratory diseases have almost tripled, along with respiratory infections, viruses and pneumonia. Similarly, gastrointestinal diseases, abdominal infections or typhoid fever have tripled. We usually notice such diseases in September, but this year they are occurring in August, perhaps due to continuous heavy rainfall in the city,” said Dr Maurya.

According to him, these cases are likely to increase if weather conditions remain extreme. “In the future, a longer or harsher summer will likely cause fewer respiratory infections, but more abdominal and gastric infections, more heat strokes and heat-related illnesses. If there is a harsher rainy season, respiratory and abdominal cases are expected to increase,” Maurya added.