The Insurance Regulatory and Development Authority of India (IRDAI) has directed insurance companies to initiate a host of measures to standardise health insurance premium rates, which the government feels can be done by following the Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme model.

In a circular issued on January 30, the insurance sector regulator said that as part of the ongoing monitoring of insurance products offered in the Indian insurance market, it has been observed that there has been a steep increase in premium rates under some of the health insurance products offered to senior citizens.

No PMJAY like standardisation in case of health insurance products available, says IRDAI

“Unlike in case of Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme, where the hospitalisation expenses are negotiated centrally for package rates and are thus standardised across various hospitals, there is no such standardisation in case of health insurance products. This is leading to higher hospitalisation costs resulting in higher claims outgo under health insurance products offered by insurers,” the circular said.

Hanut Mehta- CEO and Co-Founder of Bimapay Finsure, said, that IRDAI encouraging insurers to adopt standardized hospital empanelment and negotiate package rates is an important aspect. “By following a model similar to the PMJAY, the industry can mitigate inconsistencies in hospitalisation costs, leading to better financial management for insurers and making healthcare services more affordable and accessible to policyholders. Additionally, this strategy fosters closer collaboration between insurers and healthcare providers to ensure fair and efficient service delivery.”

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Mehta noted that the IRDAI directive also emphasizes the need for insurers to actively promote the initiatives being implemented for senior citizens, adding that transparent communication regarding policy benefits and changes will empower customers with the knowledge needed to make well-informed decisions, ultimately strengthening consumer confidence in the health insurance sector.

IRDAI suggests insurers have a separate channel to address grievances

The regulator, for the benefit of senior citizens, has directed all insurers to establish a separate channel to address their health insurance-related claims and grievances. “The details of such a channel are required to be published on the respective insurer’s website.”

The requirement for insurers to establish a dedicated grievance redressal mechanism for senior citizens will significantly improve service quality and customer satisfaction, Mehta said. Companies that streamline support systems and enhance responsiveness are likely to gain stronger consumer trust and reinforce their market reputation, he added.

On the increase in health insurance policy premium rates for seniors, IRDAI rued that, as part of the ongoing monitoring of insurance products offered in the Indian insurance market, it is observed that there has been a steep increase in premium rates under some of the health insurance products.

The premium rate, it said, is primarily based on the estimated claims outgo and the expenses including acquisition costs incurred by the insurance company for acquiring and servicing the insurance policies. “The claims outgo is largely dependent on the amounts charged by the hospitals for various treatments and surgeries.”

Senior citizens most vulnerable age group with limited income sources, says IRDAI

IRDAI sees senior citizens as the most vulnerable age group having limited sources of income. It further said that this group is impacted the most when there is a steep increase in health insurance premium. “This matter has been engaging the attention of IRDAI and is a regulatory concern. Therefore, under the provisions of the Section 14 of the Insurance Regulatory and Development Authority Act, 1999 read with Section 34 of the Insurance Act, 1934…”

The IRDAI has directed all general and health insurers, offering indemnity based individual health insurance products to senior citizens, to not revise the premium for senior citizens by more than 10% per annum.

“By capping premium increases at a maximum of 10% per year, the regulation introduces pricing predictability, ensuring that senior citizens are not burdened by steep cost escalations, Mehta noted. “This measure will help insurers retain their customers and prevent policy lapses driven by unaffordable premiums, thereby fostering a more reliable insurance ecosystem.”

In the following cases, IRDAI said that insurers shall undertake prior consultation with the regulator:

a. If the increase proposed in the premium for senior citizens is more than 10% per annum.

b. In case of withdrawal of individual health insurance products offered to senior citizens.

It also said that the insurers shall give wide publicity of the various measures (including the above) taken for the benefit of senior citizens while offering health insurance products.

“The insurer shall take necessary steps for common empanelment of hospitals and negotiate package rates on the lines of PMJAY scheme,” it said.