Health Insurance Premiums May Rise 10-15% Due to Pollution

Insurers Propose Premium Hike Amid Rising Health Risks

Indian insurance companies are considering a 10-15% increase in health insurance premiums, citing the severe impact of air pollution on public health. The proposal, currently under discussion, requires approval from the Insurance Regulatory and Development Authority of India (IRDAI).

Air Pollution: A New Factor in Insurance Pricing?

For the first time, air pollution may be considered a direct factor in determining health insurance premiums. The move follows record-breaking pollution levels in New Delhi in 2024, which led to a surge in hospitalizations due to respiratory and cardiovascular diseases.

• Asthma and COPD cases increased significantly last year.

• Hospitalization rates rose from 5-6% in early 2024 to 17-18% in the latter half.

• Insurance claims for respiratory illnesses grew by 8.3%, as per a joint study by Boston Consulting Group and Medi Assist.

Industry Leaders Weigh In

• Amitabh Jain, COO of Star Health, emphasized that insurers must begin factoring pollution into their pricing models.

• Bajaj Allianz General Insurance suggested adding specific clauses related to pollution-related ailments.

• ICICI Lombard warned that continued poor air quality could solidify pollution as a long-term pricing factor.

Regulatory Challenges and Approval Process

To implement these changes, insurers must submit extensive data proving the link between air pollution and rising claims. PwC India Financial Services Advisory Leader, Joydeep Roy, stated that isolating pollution-specific hospitalization data requires long-term studies, making regulatory approval a complex process.

Impact on Policyholders

If approved, this policy change could mean higher premiums for high-risk groups, including:

• Senior citizens

• Children

• Outdoor workers

• Individuals with pre-existing respiratory conditions

With insurance costs already rising, the added burden of pollution-based pricing could make health coverage unaffordable for vulnerable populations.

Conclusion

As India grapples with increasing pollution levels, the healthcare sector faces mounting challenges. While the proposed insurance premium hike aims to account for rising medical costs, it also raises concerns about accessibility and affordability. The decision now rests with IRDAI, which will determine whether pollution should officially become a factor in health insurance pricing.