Health insurance costs surge; one in 10 policyholders skip renewal

Health insurance premiums have soared, causing some policyholders to reduce coverage or cancel their policies entirely. One in ten policyholders skipped renewals this financial year, ToI reported. Around 10% of policyholders experienced premium increases of 30% or more, with only half of those affected paying the full increased amount.

Insurers attribute the rising premiums to a worsening claims ratio – the percentage of claims compared to total premiums collected. Health insurance premiums don't increase steadily. Instead, they jump periodically, typically every three years, to reflect rising medical treatment costs (medical inflation). Premiums also increase with age, rising more sharply in later years due to higher claims in older age groups.

Data from the last decade shows that over half (52%) of policyholders saw premiums grow at a rate of 5-10% annually. This means a Rs 100 premium a decade ago would now be between Rs 162 and Rs 259. Another 38% experienced annual premium increases of 10-15%, resulting in a Rs 100 premium rising to between Rs 259 and Rs 404. A smaller percentage (3%) saw premiums increase by 15-30% annually.

«The percentage of people who saw a very large price increase is very small. You have to look at what is happening in the context of medical inflation, which is close to 14%, while the average increase in premiums is much lower,” said Amit Chhabra, chief business officer general insurance at Policybazaar. Chhabra added that the 90% renewal rate is a 10% improvement over last year and