From HDFC to Star Health: Health insurers hike premiums to combat inflation

HDFC Ergo is increasing premiums, Star Health will increase premiums by 10-15% for 30% of its policies, Niva Bupa and New India will also increase rates.

After HDFC Ergo General Insurance increased premiums for its flagship health insurance products Optima Secure and Optima Restore from August and Star Health and Allied Insurance announced that it plans to increase premiums by 10-15% for 30% of its products, Niva Bupa is increasing the premium for Health Companion, one of its oldest products. Incidentally, New India Assurance, the country’s largest general insurer, has increased the premium for some of its products by 10%, which would be effective from November this year.

Reasons behind the increase in premiums

Health insurers and industry observers said premiums are increasing due to rising medical inflation and reduction of waiting period for pre-existing diseases from the earlier stipulation of four years to three years from April this year. The insurance regulator has also reduced the moratorium period From eight to five years from April. This means that policyholders who have paid premiums continuously for five years will be entitled to have the insurer pay all claims up to the limits prescribed in the policy.

“Just like general inflation, medical inflation is a reality. The cost of treatment has been increasing, in fact faster than general inflation. We have reviewed the premium for the Health Companion programme and have taken steps to ensure that these reviews remain as low as possible and remain affordable, while outpacing inflation.” Niva Bupa he said in a communication to his policyholders.

Star Health and Allied Insurance Managing Director and CEO Anand Roy said the company was planning a price hike in about 30% of its product portfolio during the company’s Q1 2024-25 earnings conference call.

“We are planning to increase the price by 30% or more from our current portfolio and the average price increase we are looking at is between 10% and 15%. So roughly anywhere around 4% in the overall portfolio,” said Aditya Biyani, head of strategy and investor relations. Health of the stars During the earnings call.

During the Covid pandemic, claims increased and the health insurance The sector suffered losses that led to a sharp increase in premiums across the industry. Although health insurers are profitable now, medical costs remain high. This has resulted in health insurers increasing premiums on several popular policies for the second year in a row.

“But yes, there is a concern in this regard. And therefore, the broader issue of pricing of products has to be addressed effectively, and that is what we are doing with the kind of plans that we have for some of the products,” Biyani said when asked about the high level of hospital charges that has continued even after COVID.

“But there are certain conditions that can have a long-term impact on prices. For example, reduction of the moratorium period, reduction of pre-existing disease periods, etc. Therefore, we will accept price increases if necessary. We are looking at the impact of these changes on the larger products,” said Roy of Star.

In total, 52% of health insurance policyholders said their premium had increased by more than 25% in the past 12 months, according to a survey conducted by LocalCircles, a survey firm on governance, public interest and consumer issues, in May this year. In fact, 21% of health insurance policyholders said their premium had increased by more than 25% in the past 12 months, according to a survey conducted by LocalCircles, a survey firm on governance, public interest and consumer issues, in May this year. health insurance policy Homeowners reported a premium increase of 50% or more in the 12 months through May, while 31% reported a 10%-25% increase.

Regulatory measures and future prospects

The Insurance Regulatory Development Authority of India (IRDAI) has implemented several measures to make health insurance much more accessible to consumers. These include shorter waiting periods and cancellation fees for policies and promoting the introduction of products for all types of treatment, including outpatient treatment.

Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.