10% premium cap for seniors only on new or repriced plans, others may see steep increases
Mumbai, Apr 17, 2025
Synopsis
IRDAI has clarified that the 10% cap on health insurance premium hikes for senior citizens applies only to new or repriced products filed after January 31. Existing policies can still face increases exceeding 10%, potentially up to 60%, based on claims experience. Insurers await written clarification, especially regarding long-term products and renewals without repricing.
The Insurance Regulatory and Development Authority of India (IRDAI) has informally clarified that the 10% annual cap on premium hikes for health insurance policies covering senior citizens will apply only to new or repriced products filed on or after January 31 this year, according to people familiar with the matter.
The clarification comes in the wake of multiple queries from insurers seeking guidance on the applicability of the new rule, which aims to protect policyholders aged 60 and above from steep premium jumps.
However, existing products, those filed before the deadline, are not covered under the cap and can still witness renewal premium increases of more than 10% and can go up to even 60%, depending on claims experience. Health insurance products are generally repriced every two–three years, while older products are phased out over five–six years due to adverse selection, where healthier customers exit and those with high claims remain.
“Existing product portfolios can still show higher year-on-year premium jumps of more than 10% if it is not coming up for repricing,” said an insurance company executive, who did not wish to be identified.
Though the IRDAI did not issue a formal notification clarifying the interpretation, insurers understand, based on verbal guidance, that the 10% cap kicks in only when a product is repriced. For instance, if a policy was last repriced in January 2025, the next revision would fall under the cap only during its next cycle in 2028.
The industry is awaiting a written clarification, especially on whether the cap applies to long-term products or renewals that do not involve repricing. The regulator’s January 30 circular refers specifically to product “revisions”, leaving room for ambiguity.
The circular was issued in response to increasing complaints from senior citizens, some of whom saw their health insurance premiums double within a year. The IRDAI said the restrictions were brought to address the financial vulnerability of this age group, who often have limited income sources and are disproportionately affected by steep health premium hikes.
In addition to the premium hike cap, the IRDAI has directed insurers to standardise pricing agreements with hospitals and prohibited cosmetic repackaging of old products merely to justify price increases. The regulator also introduced a rule requiring prior regulatory approval for product discontinuation, further protecting policyholders, particularly senior citizens, from losing access to long-term covers.
“Insurers are seeking formal clarification, as the current interpretation is based on verbal communication and regulatory language that refers to ‘revision’,” said another executive.
[The Economic Times]
