
In a major step to protect senior citizens from rising healthcare costs, the Insurance Regulatory and Development Authority of India (IRDAI) has imposed a limit on the annual premium increases for health insurance policies. The new directive, issued on January 30, 2025, restricts insurers from raising premiums for senior citizens by more than 10 percent each year.
According to the IRDAI, insurance companies must consult with the authority before proposing any premium increase greater than 10 percent or before withdrawing individual health insurance plans for senior citizens. This move comes as a response to concerns about the financial strain on seniors, a group often living on fixed incomes, who are most affected by steep hikes in health insurance premiums.
“Senior citizens are among the most vulnerable groups, and a sudden rise in premiums can leave them without coverage,” the IRDAI noted in its press release. The new rule aims to ensure transparency in premium adjustments and prevent unexpected changes that might disrupt coverage for seniors.
The regulator also emphasized that premiums are primarily determined by factors such as the anticipated claims outgo and other expenses, including the costs associated with acquiring and managing insurance policies. The claim outgo is heavily influenced by hospital charges for various treatments and surgeries.
Additionally, the IRDAI has instructed insurance companies to implement joint empanelment of hospitals and negotiate package rates similar to those in the Pradhan Mantri Jan Arogya Yojana (PMJAY). Currently, hospital charges can vary significantly across different health insurance products, leading to higher claims and, in turn, higher premiums. By standardizing hospitalization costs, insurers will be able to manage claims more effectively and keep premiums under control.
In further efforts to improve senior citizens’ experience, the IRDAI has mandated that insurers establish a dedicated channel for handling health insurance claims and grievances from senior citizens. This information must be easily accessible on the insurer’s website.
Earlier, in April 2024, the IRDAI removed the age limit of 65 years for individuals seeking health insurance policies and reduced the waiting period for pre-existing conditions from four to three years. These regulations, which came into effect on April 1, 2024, have already been a significant step toward improving accessibility to health insurance for all age groups.
Hanut Mehta, CEO and Co-Founder of Bimapay Finsure, a division of Hindon Mercantile, praised the IRDAI’s latest directive. He highlighted that capping premium increases at 10 percent annually will help provide pricing predictability, reducing the financial burden on senior citizens. This regulation is expected to foster customer loyalty and reduce policy lapses, contributing to a more stable and reliable insurance system.
Mehta also noted that the establishment of a dedicated grievance redressal mechanism will improve service quality and increase customer satisfaction. Furthermore, the move to standardize hospital empanelment and negotiate package rates will help reduce inconsistencies in hospitalization costs, benefiting both insurers and policyholders.
By encouraging insurers to adopt a model similar to PMJAY, the IRDAI aims to make healthcare services more affordable and accessible, while promoting better financial management for insurers. This collaboration between insurers and healthcare providers is expected to enhance the overall efficiency and fairness of health insurance services.