Health Insurance Premiums Spike, Policyholders Struggle
MUMBAI: A significant rise in health insurance premiums is forcing many policyholders to reconsider their coverage options. In the current financial year, one in ten policyholders has missed renewal deadlines, with approximately 10% experiencing premium increases of 30% or more. Insurers attribute these hikes to a deteriorating claims ratio, which reflects the growing costs associated with medical treatments.
Understanding the Premium Surge
The surge in health insurance premiums is not uniform; it often occurs in sudden jumps rather than gradual increases. Insurers typically revise their rates every three years to keep pace with medical inflation, which currently stands at around 14%. Additionally, premiums tend to rise with the policyholder’s age, leading to sharper increases in later years due to higher claims from older demographics.
Over the past decade, the compound annual growth rate (CAGR) for premiums has varied significantly. For 52% of policyholders, premiums have increased between 5-10%, meaning a premium of Rs 100 has escalated to between Rs 162 and Rs 259 over ten years. Meanwhile, 38% of policyholders have faced a CAGR of 10-15%, resulting in premiums rising to between Rs 259 and Rs 404. A smaller segment, about 3%, has seen even steeper increases, with a CAGR of 15-30%.
Policyholder Responses to Rising Costs
In light of these rising costs, many policyholders are exploring strategies to manage their expenses. Amit Chhabra, Chief Business Officer of General Insurance at Policybazaar, notes that while some individuals face significant price hikes, the overall renewal rate has improved. Approximately 90% of policyholders are renewing their plans, which is a 10% increase from the previous year.
To cope with the increased premiums, many consumers are opting for lower-tier plans or introducing deductibles to their policies. These adjustments can help mitigate the financial impact of rising costs. Chhabra emphasizes that customers have options to adapt their coverage to better suit their budgets, allowing them to maintain some level of protection without absorbing the full brunt of premium increases.
Market Trends and Future Outlook
A recent study by Policybazaar sheds light on the evolving landscape of India’s health insurance market. It highlights the dual challenges of rising premiums and increasing medical inflation, while also showcasing how consumers are adapting to these changes. The study indicates that while some policyholders are facing sharp increases, the majority are finding ways to navigate the financial landscape through new plan structures and cost-saving measures.
As the health insurance sector continues to evolve, the interplay between medical inflation, technological advancements, and expanded coverage options will shape the future of health insurance in India. Insurers are likely to continue adjusting their strategies to meet the demands of a changing market, while consumers will need to remain vigilant in managing their health care costs.
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