What happens on frequent admission to hospitals in older age?

Hello Kautilya,

Here are your answers:

Does the insurance company start to find loopholes in the policy claim documentation? So that somehow legally they can prevent disbursal of the claim amount. Can they decline cashless admission even at their network hospitals?

You mean once an insurer finds out that a person will require multiple hospitalizations, due to degrading health - the insurance company will start finding loopholes to prevent payment of the claim. No, this won't happen - as far as I know, and the experience I have had, they do not follow cases on a customer-to-customer level to pass claims. Claims are passed based on systems, processes, and protocols and do not get prejudiced by the type of health condition of a customer. Even if they want to - there are many grievance redressal forums like Ombudsman, IRDAI etc. where cases can be escalated.

Many policies now offer restoration benefits as a part of the policy. Can they decline/add complexities in such cases?

Insurers will only accept or reject cases based on the policy document - which includes the wordings, and the proposal form. There is no additional complexity they can add. If you have been transparent in your declarations in the proposal form and you have understood the terms and conditions of the restore benefit well, you won't face any hassles - whatsoever.

Can they disallow the renewal of a policy?

Are there any regulations/protections for policyholders being provided by IRDAI for such cases?

Can insurance companies move them to some risky class of individuals? And increase the premium amount at the time of renewal?

Health Insurance policies are renewable for a lifetime. Renewals cannot be declined based on claims made in the past. Insurers cannot charge additional premium loading based on claims too. This is as per IRDAI Health Insurance Regulations 2016.

From the insurance provider's perspective - How do they manage this risk associated with their business model?

Like you have imagined, managing health insurance in India is super complex, especially after IRDAI made it mandatory for insurers to provide health covers to people for a lifetime. Apart from detecting frauds, Insurers need to constantly ensure that they are adding younger, healthy customers to the pool, to keep it healthy and viable.

Insurers who aren't able to keep their product profitable, ones who are finding it difficult to add enough healthy customers - will keep applying for revision of premiums, especially for senior citizens. (It's a vicious cycle when you start increasing premiums - because people who aren't making claims will drop-off, making the situation even worse.) We did see some dramatic premium hikes in the last 6 months in health insurance. We wrote about it here. Deconstructing the increase in Health Insurance Premiums in 2020 (beshak.org)

In the long run, unless there are healthcare billing regulations, more awareness, and perks with the younger population to buy health insurance - health insurance premiums will always remain under pressure and become unaffordable - that's the reason we wrote about having a healthcare fund in the forum: Discussion: Saving for your own healthcare Vs Health insurance? | Beshak Forum

Hope this helps,

Regards,

Mahavir