In a national survey conducted by LocalCircles, around 11% of the respondents said their health insurance premiums rose by 10% to 25% between August 2021 and August 2022. Many other policyholders across the country are also witnessing a sudden rise in the cost of their health insurance coverage. If you’ve noticed this phenomenon too, you may be wondering why the health insurance premiums in India are seeing an upward trajectory.
There are many reasons behind this noticeable phenomenon. Let’s take a closer look at what’s driving the rise in the cost of health insurance in India.
4 Possible Reasons Behind Rising Health Insurance Premiums in India
A closer look at the insurance industry in the country reveals many possible driving factors causing an increase in the cost of health coverage. Here are some of the top reasons driving this trend.
COVID-19 resulted in several hospitalizations. The second wave was particularly intense in India, and many people had to be admitted to medical facilities for extensive care and treatment. This also put tremendous pressure on the health insurance sector. Around 27 lakh people raised health insurance claims, amounting to 24,000 crores.
This kind of undue pressure has forced the health insurance sector to revisit the premiums charged on insurance covers. By increasing the cost of coverage, health insurance providers can remain operational in the face of rising claims.
2. Rising Claims Due to Fear
The onset of the pandemic and the many waves of the outbreak have resulted in a general atmosphere of fear and panic, particularly among the vulnerable sections of the population, like older people and people with pre-existing conditions. Many people chose to be admitted into medical facilities at the slightest sign of an illness as a precautionary measure.
These increased hospitalizations meant that more people chose to cash in on the health insurance coverage they had. For health insurance providers, this translated to a rise in the number of claims, thus leading to the need to boost the cost of medical coverage accordingly.
3. General Medical Inflation
Official data from the Ministry of Statistics and Programme Implementation reveals that the cost of medical treatment in India rose over 7% in April 2022. Medical inflation such as this implies that the cost of healthcare and medical intervention has significantly increased in the past year.
As a result, when policyholders raise claims on their health insurance covers, insurance providers will have to bear the effect of medical inflation. Rising health insurance premiums help compensate for this added financial burden on health insurance providers.
4. An Aging Population
Improving the country’s healthcare quality has led to an increasing average lifespan. This, in turn, means that more people live to see ripe old age. And as the population of India ages, there is likely to be more demand for health insurance coverage.
It is also highly plausible that more claims could be raised on existing policies because with age come many ailments. Increasing the premiums on health insurance policies is essential to compensate for this risk.
How to Keep the Cost of Health Insurance Affordable?
If you are worried about rising health insurance premiums, here are some things you can do to keep the costs affordable.
- Purchase health insurance online.
- Compare health insurance plans before you make a purchase
- Opt for a higher voluntary deductible
- Buy health insurance when you are younger
- Choose a plan that offers extensive and long-term coverage
- Enhance coverage with top-up plans when required
- Opt only for the coverage that you require
- Be mindful of the add-ons that you purchase
- Choose a family floater plan instead of individual plans for each family member.
Now that you know what is driving the rising prices in the health insurance sector, you can be better prepared to manage the costs. The tips outlined above should also clarify how you can keep the health insurance premiums within an affordable range. That said, rising health insurance costs should not be a reason to skip obtaining coverage, because health coverage could save you a significant amount of money in the long run.