Insurance Premiums to be set based on health factors, companies preparing for change
New Delhi (The Uttam Hindu): Insurance companies are planning to raise health insurance premiums in certain areas due to various factors affecting people's health, even though the premiums themselves remain the same for now. These changes will need approval from the Insurance Regulatory and Development Authority of India (IRDAI). Shortly, people in places like Delhi may face health insurance premium hikes of up to 15%.
One major reason for the increase is the rising number of claims due to health problems caused by air pollution. For the first time, diseases linked to pollution may be factored into how health insurance premiums are calculated in India. In 2024, many people in Delhi were hospitalized for respiratory issues like asthma and chronic obstructive pulmonary disease (COPD), which were made worse by the toxic air. This led insurance companies to pay out more in claims.
Amitabh Jain, operations head at Star Health, explained that air pollution will now be considered separately when setting insurance prices, and additional charges might be added for areas heavily affected by pollution.
In 2023-24, insurance companies earned Rs 1.06 lakh crore in health insurance premiums, a 20% increase from the previous year. However, claims for respiratory diseases in Delhi have risen by 8.3%, which has contributed to higher healthcare costs.
If poor air quality continues, companies like Star Health and ICICI Lombard say that pollution could soon directly affect how health insurance premiums are calculated. Bajaj Allianz General Insurance is also considering adding a new insurance policy section for health issues caused by pollution.
Certain groups like children, senior citizens, outdoor workers, and people with pre-existing respiratory problems are expected to face the highest premium increases. If this plan is approved, these groups might find the premiums too high and choose not to buy insurance.
Delhi's air quality continues to worsen each year, especially in winter, due to vehicle emissions, construction dust, and farm fires. In November 2024, Delhi became the world's most polluted city, with air quality levels reaching hazardous levels (AQI of 491). Mumbai and Kolkata also ranked among the top 10 cities with the worst air.
