Insurance Firms Hold Back Implementing IRDAI's 10% Cap On Senior Citizens Health Insurance

After over a month since the Insurance Regulatory and Development Authority of India issued a notification capping revision of premium rates for senior citizens at 10%, insurance companies are yet to implement it.

Post the notification, insurance companies have gone back to the IRDAI regarding clarifications, Narendra Kumar Bharindwal, vice president at Insurance Brokers Association of India, said.

Insurance companies are unsure of whether the notification caps the hikes on an annual or periodic basis, for instance. Companies also have brackets for senior citizens. "So, assuming 61-65 is one age bracket, is a hike permitted only when the age bracket changes?" Bharindwal asked.

Rajesh Kakkar, business head and principal officer at Zuari Insurance Brokers Ltd. said that there will be actuarial and operational complexities involved in achieving a balance between consumer affordability and insurer viability as well. Insurers need to redefine their pricing parameters, while controlling regulatory push and one that involves industry coordination.

The IRDAI's had published a notification in February, directing insurers to not revise premium rates for senior citizens by more than 10% per annum. The notification made note of the steep increase in premium rates under some of the health insurance products offered to citizens aged 60 years and above.

Senior citizens constitute a vulnerable age group having limited sources of income and are most impacted in case of a steep increase in health insurance premiums, the regulator had stated. Insurers will have to consult the regulatory body if the premium is to be increased by more than 10%, it further directed.

Health insurance company Niva Bupa said that while IRDAI's decision to cap health insurance premiums is a commendable move towards protecting senior citizens from sudden financial burdens, it's essential to be aware of potential challenges.

Insurers might become more selective in issuing policies to seniors, especially those with pre-existing conditions, enforcing stricter underwriting, it said.

There's also a possibility that insurers could adjust policy terms, such as introducing sub-limits on treatments or capping room rent, to manage costs. The move could also impact younger policyholders if insurers consider adjusting premiums to balance the financial implications.