Health cover premiums shoot up as Covid-19 pandemic threat looms

Premium costs jump 10-15%, driven by large number of claim payouts during pandemic as well as factors such as rising healthcare costs

As the Covid-19 pandemic threatens to rear its head again, health insurance costs are shooting up, with an increase of 10-15 per cent in premiums on several new policies as well as existing ones that come up for renewal.

Many non-life insurers have already raised premiums on their health offers. This is driven by the large number of health claims paid out in the two years of the pandemic as well as related factors such as an increase in healthcare costs when the virus raged and the regulator’s soft signal to insurers not to raise premiums during grim times. Several products had reached an age where they needed a price revision.

As of FY22, insurers paid cumulative Covid-related health claims of about Rs 25,000 crore, says data from the General Insurance Council, more than three times the Rs 7,900 crore as of FY21. The so-called second wave ravaged parts of the country in the summer of 2021. Insurers raise prices when the loss ratios of their health products breach their thresholds. The claims due to the pandemic pushed up loss ratios for many.

Care Health Insurance has raised premiums on some of its products by 10 per cent and Manipal Cigna by 10-15 per cent. HDFC Ergo, too, has increased premiums while Niva Bupa has obtained the regulator’s nod for an increase, though both insist the pandemic is not primary the reason behind the increases. Star Health Insurance, the largest in the business and one that did not respond to an email from Business Standard, is believed to have raised premiums by 15 per cent on some of its products.

Insurers can raise premiums on their health offers every three years but with the consent of the regulator. Most insurers opted not to do so during the past two years despite rising medical costs. Hospitals do not have a regulator to contend with while increasing prices, and many of them did so during the pandemic, contributing to a surge in claims for insurance companies, until the Insurance Regulatory Development Authority stepped in to set a benchmark for insurance claims.

Bhabatosh Mishra, director, underwriting, products and claims, Niva Bupa Health Insurance, said many insurers had revised premiums. “We are looking at revising the premium of only one product and that we will do sometime in Q2 of this year.” The claim ratio for the product had risen in the last three years, but Covid had nothing to do with the price revision, he added.

“We have recently made adjustments under our product ManipalCigna ProHealth Insurance and this has been approved by the regulator,” said Ashish Yadav, Head of Products, ManipalCigna Health Insurance. A Care Health Insurance spokesperson said the company had raised the premium on one product by as much as 10.75 per cent because of medical inflation.

An HDFC Ergo spokesperson confirmed the increase and said rate increases were done for individual health products in the routine course periodically to cover the general rise in the cost of medical treatment. Each health insurance product has its own cycle of rate increase, typically every three to four years.

“Covid has resulted in major losses for insurers. Health insurance companies are now reviewing hospitalisation claims and discussing raising premium rates,” said Indraneel Chatterjee, co-founder, RenewBuy, an online insurance distribution platform.