Govt, Regulator Weigh Curbs As Health Insurance Premiums Climb

The government is reportedly in talks with Insurance Regulatory and Development Authority (IRDAI) as well as several hospital groups to explore ways of containing the unprecedented increase in health insurance premiums, which in turn, has inflated medical costs, reports The Economic Times.

Amid higher premiums, uneven claims settlements, the government and the regulator are mulling a series of interventions, including a potential cap on premiums, limits on agent commissions and tighter disclosure requirements.

The report suggests some of the government's suggestions have already been sent to the IRDAI.

In order to digitise and streamline the claims process, the government is pushing for greater coordination through the National Health Claims Exchange.

The government is also watching closely to ensure insurers pass on the benefits of recent reductions in goods and services tax on individual health insurance premiums.

“Some of these suggestions have been shared with IRDAI, and the regulator will take a final call,” a government official said, as cited by the report.

It must be noted that the GST Council in September cut taxes on several goods and services, taking the rate on individual health premiums to zero.

IRDAI has time and time again flagged gaps in the health insurance ecosystem, particularly instances of payouts falling short of expectations.

IRDAI chief Ajay Seth recently stated that the agency is monitoring claim settlements closely. Officials may also review commission structures and see whether or not it falls under insurers’ management expenses and could be tightened further.

Agent commissions currently account for as much as 35% of gross written premiums at stand-alone health insurers. New health policies typically offer commissions of up to 20% and renewals of about 10%.

The discussions come as insurers grapple with fast-rising medical inflation, inconsistent billing practices and greater use of high-cost treatments, particularly when a health insurance is being applied.