Premiums of Health Insurance Have Almost Doubled This Year, But COVID Alone is Not the Cause

If your health insurance renewal is due, then be ready to shed out some extra amount from your pocket this time. With many other factors that play a vital role in this jump of health insurance premium, COVID – 19 pandemic is one of them. As per insurance industry experts, the premiums of health insurance plans have jumped up by 10% to 15% for the people of middle-age, on an average.

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    However, the premiums of health insurance plans have seen a steep increase for senior citizens. The health insurance premiums have increased by up to 100% in some insurance providers for people of higher age. For people over the age of 55 – 66 years, the premium amount is doubled. For example, if the health insurance for two people in the year 2019 – 2020 was Rs. 28,000, then it is between Rs. 55,000 to Rs. 60,000 this year.

    Another health insurance industry expert has said that the premiums on an average have risen by 25% to 35% this year as against the increase of approximately less than 10% last year. However, for people of older age, the average increase in premium rate has become 50% to 75%. There are many reasons for this rise and COVID is one of them. Let us see these causes in detail:

    • The Impact of COVID: The first factor behind this rise in premium is COVID – 19. This is because none of the health insurance providers had included the cost of treatment of COVID – 19. Before the pandemic, the frequency of health insurance claims was around 8% to 9%, but it has become 15% to 18% which is almost double. The size of the claim for COVID is around Rs. 1.6 lakhs to Rs. 2 lakhs and the insurance providers are needed to make a large pay-out. As per some media reports, recent data shows that the insurance providers have received a claim for COVID – 19 approximately around Rs. 8,000 Cr and they have settled claims worth Rs. 3,500 Cr. In this way, an increase in premium remains the only way for the insurance providers. However, as per an industry expert, the premiums have no doubt gone up, but we cannot say that COVID – 19 is the only cause behind it.
    • Inflation in Medical Industry, Partially Because of COVID: According to some reports, the inflation in the medical insurance industry is more than 30%. It is because of COVID that non-COVID hospitals are also increasing their cost as there is a sudden rise in expenses. Now the healthcare staff that was working in two shifts has to work in three shifts, the cost of sanitization, gloves, masks, etc. has as well increased. In addition to this, the average size of the claim has also doubled. The reason is the patients with a critical illness are most of the time taken to the hospital because of the paranoia of COVID. Patients having mild to moderate symptoms are avoiding their hospital visits. Mostly, the patients with a serious illness go to the hospitals and they end up going to the large institutions, which increases the chances of heavier claims. People do not trust government hospitals especially when they consider hygiene. Therefore, they prefer private hospitals more. Lack of rules and regulations related to billing in the hospital is making the situation worse as the hospitals are charging relatively higher amounts for the cases of COVID – 19. In addition to this, there were lesser claims related to elective surgeries at the time of the initial months of COVID – 19. However, these have also started cropping up. All such factors are causing inflation in healthcare and consequently, the premiums are increasing.
    • The Issues with Price and IRDAI Factor: The Insurance Regulatory and Development Authority and expansion in coverage are some other factors behind the rise in price. In 2019 September, the IRDAI has introduced the standardization of the exclusions under insurance cover. According to this, insurance providers are not eligible to exclude some specific diseases. IRDAI has as well made it mandatory for companies to provide coverage for some of the modern methods of treatment. IRDAI has also increased the coverage in health insurance plans and it has seen a sudden increase in premiums of health insurance policies by approximately 5% as per an industry expert. So, COVID does not play a major role in increased premium rates of health insurance plans. Moreover, the extent of the premium increase as well depends on the coverage, age, and sum insured of the policy seeker. Another problem that the experts have shown is pricing according to age slab. Since the premium of a health insurance plan does not change every year as the policyholder gets old. Instead, it changes every five years. The premiums of some health insurance plans have changed from 10% to 15%, wherein the hike in price was pending from two to five years. For some consumers, the slab of age has shifted from an age slab which has increased the premium by 10% to 15%.

    The Final Words!

    Even though COVID – 19 is one of the reasons for the price hike in health insurance premiums but it is not the only reason. There are some other factors as well that affect the premium. Since health insurance is the need of an hour so we all must purchase it and get our families and ourselves covered in one.

    Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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