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COVID-19 impact: Expect 15% hike in health insurance premium by next quarter

COVID-19 impact: Expect 15% hike in health insurance premium by next quarter

While insurance companies have not hiked the premiums on health plans as yet, there are high chances that it may happen soon. Industry players see a hike in 10-15 per cent range in health insurance premiums by next quarter.

COVID-19 is also one of the reasons for the expected premium hike COVID-19 is also one of the reasons for the expected premium hike

The daily surge in COVID-19 cases continues in the country, with India crossing the 2-lakh mark on Thursday. Hospitalisation due to coronavirus, and hence health insurance claims, are also on the rise. While insurance companies have not hiked the premiums on health plans as yet, there are high chances that it may happen soon. Industry players see a hike in 10-15 per cent range in health insurance premiums by next quarter.  

As per PolicyX.com's Health Insurance Price Index, launched recently, no hike was witnessed in health insurance premiums during the first quarter of calendar year 2021.

"The index value remains constant at Rs 24,026 in Q1 2021. The average price for a Rs 5 lakh sum assured and a Rs 10 lakh sum assured is Rs 20,781 and Rs 27,271, respectively. Prices shown here are average of all the age groups - 26 years, 36 years, 46 years and 56 years, and all coverage types -- 1 adult, 2 adults, 2 adults + 1 child, and 2 adults + 2 children," says Naval Goel, CEO and founder of PolicyX.com.

Premium hike on the cards

Indraneel Chatterjee, co-founder of RenewBuy, believes many insurance companies are likely to increase their health insurance premiums by up to 10 per cent in the beginning of FY21-22. "This is because some health insurance companies had not revised their insurance premium for past few years and are doing so now and a few others have revised their premium after addition of few dynamic features like worldwide coverage, restoration of premium for same illness etc. Many diseases like mental disorders, genetic diseases, neuro-related disorders, psychiatric disorders are also now included in the health insurance policy."

COVID-19 is also one of the reasons for the expected premium hike. The health insurance companies have reportedly received claims worth Rs 14,000 crore, out of which they have settled only Rs 9,000 crore. "The constant spread of Covid is one of the reasons behind the increase in the health insurance premium as the pandemic has laid an enormous burden on the insurance companies. Despite no change in quarter 1, 2021, there are some imputations for an increase in the premiums of health insurance. The increase may range between 10-15 per cent. However, the percentage can be confirmed only after insurance companies announce it," says Goel.

Speaking to Business Today, Anand Roy, MD, Star Health Insurance says the company is evaluating the situation and will take steps as required. "We are unable to confirm anything now," says Roy.

Talking about the logic behind premium hike, Roy explains that health insurance premiums are only revised to keep them sustainable and account for medical inflation.  

"The same is done after taking requisite approval from the regulator IRDAI. The last product to undergo premium revision was our Star Medi classic Insurance Policy (Individual) which was relaunched on November 1, 2019. The policy premium was revised by nearly 20 per cent. Prior to this, the premium for this product was revised in 2014."

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