Health cover pricing under review amid rising claims – Times of India

MUMBAI: Non-life insurance is divided over a proposal by some players to introduce what they describe as ‘cohort-based pricing‘ to increase premium for policies where there are consistently high claims.
The insurance industry is in a quandary over health insurance pricing as many companies see claims in excess of premium. At the same time, many customers are dropping out due to unaffordable premiums.
The proposal was largely supported by standalone health insurance companies during a recent industry meeting with the regulator. According to insurers, there are some policies where they are constantly paying out claims for over a decade. At the same time, there are also those who have been paying for decades without a claim but are seeing their premium rise manifold due to overall revisions coupled with higher rates for seniors.
“While there might be logic in this proposal from an actuarial point of view – insurance is for unexpected risks – and this goes against the principle of distribution of risks in insurance,” said an official with a public sector general insurance company.
The strongest objection is because the proposal would make insurance costlier for those who need it most. “The proposal disproportionately affects those with chronic health conditions by imposing punitive premium loadings at renewal. This practice not only exacerbates healthcare inequalities but also overlooks the continuous care needs of these individuals, potentially compromising their access to necessary treatments,” said a digit insurance spokesperson.
Industry data shows that the while health insurance has been growing at 35%, a large part of this growth comes from the increase in premiums. This is due to higher rates coupled with policyholders buying more insurance due to an increase in hospitalisation costs.
Insurers say there has been a surge in healthcare costs after the pandemic because of additional diagnostics. One suggestion for making health insurance more affordable is to reduce the GST on health insurance premium.

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