The Insurance Regulatory and Development Authority of India (IRDAI) is weighing a proposal to cap annual health insurance premium hikes at both the product and portfolio levels. A formal consultation paper is expected shortly, inviting feedback from insurers, policyholders, and industry experts.
The move comes amid growing concerns about the affordability of health insurance and the need to balance sustainability for insurers with protection for consumers.
Why IRDAI Is Considering a Cap
Health insurance pricing in India has been under scrutiny due to:
- Steep premium hikes after initially low-priced policies, leaving policyholders with limited choices.
- Affordability concerns, particularly for non-senior citizens who face premium increases without regulatory caps.
- Rising medical inflation, which pushes insurers to pass on higher costs to consumers.
In FY25, health insurance is projected to account for 40% of total general insurance premiums, making it a critical driver of the sector. The pandemic-driven surge in healthcare costs has further intensified calls for stronger regulatory oversight.
Existing 10% Cap for Senior Citizens
Earlier in 2025, IRDAI introduced a 10% cap on annual premium hikes for senior citizens, aimed at easing the financial strain on older policyholders who had faced steep increases.
While the move was widely welcomed, industry experts have raised concerns that younger policyholders may end up cross-subsidising senior citizens, facing higher premiums in other segments.
Additionally, insurers have been urged to improve operational efficiency and reduce costs, rather than relying solely on premium hikes to offset rising claims.
Health Insurance Market Snapshot
The contribution of health insurance to insurers’ total premium income varies significantly across companies:
- ICICI Lombard: ~30% of total premiums from health insurance
- New India Assurance: ~50% of total premiums from health insurance
- Go Digit General Insurance: ~14% of total premiums from health insurance
Despite these differences, one trend is clear — health insurance is becoming central to insurers’ business models, heightening the importance of pricing regulation.
Next Steps: Consultation Paper on Premium Hike Caps
IRDAI is preparing to release a consultation paper outlining its proposed framework for capping premium hikes. This paper will:
- Benchmark caps to medical inflation at the portfolio level
- Seek feedback from insurers, policyholders, and healthcare experts
- Balance affordability with industry sustainability
Given the complexity and far-reaching impact of the proposal, the consultation phase will play a crucial role in shaping the future pricing structure of health insurance in India.
Key Takeaways
- IRDAI may cap annual health insurance premium hikes at both product and portfolio levels.
- A 10% cap is already in place for senior citizens since early 2025.
- Health insurance contributes 40% of general insurance premiums, underscoring its importance.
- A consultation paper will soon be released to gather stakeholder feedback.
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