increase in renewal premium
In the name of standardization, policy premium will be hiked for renewal? Have experienced unwarranted hikes everytime there are IRDA changes.
In our view, the standardization is genuinely good for the customer in the long run. Insurers will have to factor the increased scope of coverage - extending cover for Mental Illnesses, Internal Congenital disease, providing cover for modern treatments like Oral Chemo, Stem cell therapy will have a direct impact on the financials of the insurance plan and the insurance company. This will hence result in hike in premiums for sure to keep the insurance plan and insurer viable.
Yes, premium hikes look unwarranted for sure. We have all personally experienced how premiums can just shockingly zoom in a certain year. Here's the story from the insurer's point of view - just to help you get a better understanding of the problem. Anything that has a new impact on their financials will result in unavoidable increase in premiums (IRDAI allows it)
- Health Insurance is not a fixed benefit product. The costs of healthcare keep rising, resulting in direct in average claim amount, which results in impact on the insurers books. Health Insurance premiums need to be regularly corrected to factor the impact of inflation. If you compare the cost of a surgery a few years ago and today you will know what we are talking about.
- Health Insurance plans were also required (by IRDAI) to cover COVID19 treatment which was not clearly a part of the coverage of health insurance policies. This has also impacted the financials of insurers.
- Apart from the above, you would be already aware that premiums also rise based on your age. The insurer has a premium grid, where premiums rise when you move from one age slab to another. The hikes at higher age slabs are steeper. For instance the hike from 18-30 slab to 31-35 slab may 10%, but the hike from 55-60 slab and 61 to 65 slab may be very steep - even 50% in our experience.
Lastly, every premium hike an insurer is required to send you three months prior notice informing you about the hike, so that you have a choice of porting from the product to another alternative that is available. Of course, we agree it may not practical to be able to keep jumping insurers every time there is a hike. Just thought will let you know about this option.
Hope this helps.
You can look at the health insurance premium chart of the insurance company to understand how premiums rise with age. Unfortunately, the revision of this grid, based on the claims experience of the insurance company cannot be predicted.