Insurers mull premium hike as claims mount due to rising air pollution

Health insurers are weighing 10-15% premium hikes and city-based pricing as pollution-linked claims rise sharply across metros, driven by increasing health complications and higher medical costs

Health insurers are considering a premium hike as claims linked to rising air pollution across the country have increased significantly. The cost of treating pollution-related illnesses has also risen, adding further pressure on the insurers. Consequently, the firms are evaluating location and season-based risk differentials and corresponding premium adjustments.

 

According to Policybazaar data, the pollution-linked claims increased 14 per cent in 2025. The financial toll of pollution-related illnesses is also steadily increasing. From financial year 2022-23 (FY23) to FY24, treatment cost for respiratory illnesses rose 11 per cent and cardiac complications grew 6 per cent reflecting longer hospital stays and more intensive interventions, such as oxygen therapy and nebulisation.

 

Varsha Gujarathi, chief customer officer, Universal Sompo General Insurance said: “The average claim size of such claims has been between ₹60,000 - 80,000 depending on the geography, hospital used, and condition of the patient, with costs going upwards of ₹200,000 in severely compromised cases requiring ICU admissions.”

 

The pollution-linked illnesses now account for over 8 per cent of total claims, surging sharply during post-Diwali weeks. In September alone, 9 per cent of all hospitalisation claims were linked to air pollution-related ailments, including respiratory infections and cardiac complications to skin and eye allergies, data showed.

 

According to insurers, air pollution has driven the increase in respiratory and indirectly related cardiovascular claims, mainly in highly polluted metropolitan areas. Insurers and third-party administrators report higher claim frequency and faster growth in respiratory claim costs compared to other categories. It has led to upward pressure on claim volumes, average claim size, and medical inflation experienced by health insurers.

 

Children – mostly those less than 14 years of age -- and senior citizens above 60 years are more susceptible to pollution related complications. People with pre-existing respiratory or cardiac conditions are also affected by poor air quality.

 

“As per our claims experience, we have seen an increase in claim incidence in the last financial year (FY25) with respect to respiratory disease, with a significant increase in north India primarily due to air pollution. With regard to age wise scenario we have experienced more claim incidents in the less than14 year age group and also in the over 60 age group who are most vulnerable to change in air quality,” said Parthanil Ghosh, executive director, HDFC ERGO.

 

“The average claim size for pollution-related ailments stands at ₹55,263, compared to ₹61,319 for non-pollution cases, but with a higher overall frequency. Average hospitalisation cost per day is ₹19,076, indicating shorter but repeated episodes of care,” Policybazaar said.

 

According to Policybazaar data, Delhi continues to record the highest share of pollution-linked claims, followed by Bengaluru and Hyderabad now reporting higher pollution-claim ratios, underscoring how deteriorating air quality is becoming a national concern. Pune and Mumbai are also reflecting these trends along with several other Tier 2 cities in the country, data shows.

 

Amid the significant risk factor in certain geographies, certain insurers are considering zone or city based pricing.

 

“The Insurers are now factoring in air pollution as a significant risk factor in certain geographies and considering this trend long term in nature. Premium increases of 10-15 per cent are being explored in zone / city based pricing by certain insurers, a trend that is likely to be adopted by the industry. In the winter months trends are likely to be adverse with highest frequency of claims being anticipated in next 2- 3 months for the said ailments,” Gujarathi said.

 

Voicing a similar opinion, Ghosh said, the industry is responding on multiple fronts including - Pricing & underwriting where insurers Insurers are evaluating location- and season-based risk differentials; Introduction of or emphasis on telemedicine, OPD/diagnostic add-ons, chronic care programmes, and preventive services (vaccination drives, screening). The Insurers are also working with wellness partners on early-intervention programmes to avoid hospitalisations and consumer education, air-quality alerts, employer health programmes, and partnerships for indoor air quality and remote care are increasing.

 

 

Ghosh said the industry is acting on multiple fronts, including:

 

• Pricing and underwriting based on location and season-specific risk;
• Introducing or strengthening telemedicine, OPD/diagnostic add-ons, chronic-care programmes and preventive services;
• Working with wellness partners on early-intervention initiatives to avoid hospitalisation;
• Enhancing consumer education, issuing air-quality alerts, and expanding employer health-care programmes;
• Partnering on indoor air quality solutions and remote-care services.