What Led To A Sharp Rise In Health Insurance Premiums?

Bhabtosh Mishra, Director Underwriting, Products and Claims at Max Bupa Health Insurance, gives an insight into premium costs trends of the recent past, in an interview with Nirmala Konjengbam. Edited excerpts. 

Most of the health insurance providers hiked the renewal premium this year. What was the reason behind this? 

There has been an increase in the premium of health insurance products owing to the implementation of standardisation guidelines issued by IRDAI. These guidelines standardize all the exclusions with an intent to make the policies easy to comprehend for the customers. However, as of September 30, out of the total 388 products, premiums of only 55 products have been increased by both general and health players, up to 5 per cent. The other factor contributing to the spike in premium is medical inflation which has gone up by 29 per cent owing to the current pandemic. In such a scenario, insurers will automatically be forced to increase premiums to sustain in the market.

How has the pandemic impacted medical inflation?

The hike in the premium of health insurance products can be attributed to multiple reasons such as the inclusion of standardisation guidelines, and medical inflation. Although a combination of all these factors has resulted in the premium hike, the biggest contributor to the increased premium is the COVID-19. There is no standard cost for COVID-19 treatment. In some cases, patients have received bills upwards of Rs 20 lakh. Additionally, during the lockdown period, people postponed their planned treatments to remain safe which also put a financial burden on the hospitals. This year we also registered a 29 per cent increase in medical inflation, which among the highest we have seen across many years.

Will there be another price hike in near future?

The revision in the premium amount of health insurance products is dependent on various factors and it is difficult to predict such futuristic changes. The medical inflation has been highest in the year 2020 as compared to any previous years. This harmed the claim ratios of products. If the inflation continues in the same manner, insurers may look to revise their premium. Besides, many claims have been deferred due to the COVID-19 pandemic. Certain claims might come up which will further impact the portfolio of insurance companies. In such a situation, insurers may have to revise the premium of their products.

Did Max Bupa hike the renewal premium?

At Max Bupa, we have taken a conscious decision to not increase premiums this year, especially in the times of pandemic, where health insurance has become an absolute necessity. We want more people to buy a health cover to secure themselves against unforeseen medical emergencies. We do not want to burden them with a premium hike, since a lot of them are already undergoing financial strain.

Even during the implementation of standardisation guidelines, we have not readjusted the premiums. We have further provisioned for coverage of non-payables like PPE kits under all our indemnity plans to support customers and minimize their out-of-pocket expenses. We have also reduced the waiting period for COVID-19 specific claims to 15 days across all our plans.