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IRDAI might cap health-insurance premium hikes: How it affects you?
22 Aug 2025

The Insurance Regulatory and Development Authority of India (IRDAI) is mulling a plan to cap health insurance premium hikes at both product and portfolio levels.

The proposal aims to strike a balance between the sustainability of the health insurance sector and affordability for policyholders.

The cap would be benchmarked against medical inflation, according to reports.

Steep rise in health insurance premiums
Pricing issues

The IRDAI's move comes amid concerns over the steep rise in health insurance premiums.

Many policies start with low premiums but see huge hikes later, leaving consumers with fewer affordable options.

Senior citizens have been particularly affected by premium hikes, but insurers are now restricted from raising rates for them by more than 10% in a year.

Health insurance's growing share in general insurance
Market impact

In FY25, health insurance is expected to account for a whopping 40% of the total premiums in the general insurance sector. The rising cost of healthcare, especially after the pandemic, has further fueled calls for regulatory intervention in pricing policies.

Concerns over potential impact on younger policyholders
Financial implications

While the cap on premium hikes was welcomed by senior citizens, there are fears that younger policyholders could end up paying more in other segments.

Insurers have also been criticized for not doing enough to cut costs in ways that could lower the need for higher premiums.

Without operational efficiency, rising claim costs and healthcare delivery eventually affect consumers.

Insurers' varying levels of dependence on health insurance
Revenue streams

As of FY25, different insurers show varying levels of dependence on health insurance as a revenue stream.

ICICI Lombard gets almost 30% of its total premiums from health insurance products, while the New India Assurance relies heavily on it, with around 50% of its total premiums coming from this sector.

Go Digit General Insurance has a smaller exposure with roughly 14% of its total premium base.

Consultation paper to outline proposed guidelines
Consultation process

The IRDAI is likely to issue a consultation paper soon, outlining its proposed guidelines on capping the health insurance premium hikes. The consultation will seek feedback from industry stakeholders like insurers, policyholders, and health experts.