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New Delhi, August 23, 2025 – Health insurance customers in India may soon get relief from steep and arbitrary premium hikes. The Insurance Regulatory and Development Authority of India (IRDAI) is working on a proposal to introduce a cap on annual increases in health insurance premiums, both at the product and portfolio level.

Currently, many insurers attract customers by offering relatively low premiums in the initial years, only to raise them sharply later. This practice has made several health policies unaffordable for policyholders within just a few years, leaving them with very limited alternatives.

Growing Burden of Rising Premiums

The issue of rising premiums gained momentum after the COVID-19 pandemic, when insurers significantly increased the cost of health insurance plans. Customers complained about the lack of regulation, leading to calls for stricter monitoring and structured guidelines.

Industry data suggests that health insurance is becoming a dominant segment in India’s insurance sector. In the financial year 2024–25, health insurance is estimated to account for nearly 40% of the total premium collection in the general insurance industry.

Senior Citizens Already Have Some Protection

Earlier this year, IRDAI introduced a 10% annual cap on premium hikes for senior citizens. The move was aimed at shielding older policyholders from sudden and unaffordable increases in premiums. However, experts warn that insurance companies may compensate for this cap by disproportionately raising premiums for customers below 60 years of age.

For example, while the regulator’s move was welcomed by senior citizens, younger policyholders could still face significant hikes unless broader guidelines are introduced.

Heavy Dependence on Health Insurance Revenue

The dominance of health insurance in insurers’ revenue streams highlights the importance of regulating premiums. ICICI Lombard derives nearly 30% of its total premium collection from health insurance products, while for New India Insurance, the share stands at about 50%. Go Digit also earns around 14% of its premiums from health policies.

This growing dependence suggests that companies may be tempted to increase prices aggressively, which makes a regulatory cap even more critical.

Consultation Paper Expected Soon

According to sources, IRDAI is likely to release a consultation paper soon to seek feedback on limiting annual premium increases. Experts believe such rules are essential for ensuring transparency and fairness in pricing, while also boosting long-term confidence in health insurance.

Without effective regulation, sharp premium hikes discourage individuals from continuing their health policies, undermining the overall purpose of health insurance. Many families end up discontinuing coverage due to affordability issues, leaving them financially vulnerable during medical emergencies.

Why Policyholders Need This Reform

Health insurance has become one of the fastest-growing segments in the Indian insurance market. However, the lack of clear pricing rules has caused widespread dissatisfaction. By introducing annual caps on premium hikes, IRDAI aims to:

• Prevent arbitrary increases by insurers

• Ensure greater affordability and stability for policyholders

• Encourage long-term retention of health insurance plans

• Strengthen trust in the insurance industry

The Road Ahead

If implemented, this reform could significantly reshape the health insurance market in India. For policyholders, it will bring much-needed relief and predictability, while for insurers, it will require balancing profitability with fair pricing practices.

Experts say that while regulating premiums is crucial, IRDAI must also ensure that insurers remain financially stable to handle rising healthcare costs. A balanced approach could make health insurance more accessible without compromising the sustainability of the sector.

As the regulator prepares to release its consultation paper, millions of policyholders are hopeful that stricter rules will soon make health insurance both affordable and reliable.