The clarification comes within the wake of a number of queries from insurers in search of steerage on the applicability of the brand new rule, which goals to guard policyholders aged 60 and above from steep premium jumps.
Nevertheless, present merchandise, these filed earlier than the deadline, are usually not coated beneath the cap and might nonetheless witness renewal premium will increase of greater than 10% and might go as much as even 60%, relying on claims expertise. Medical insurance merchandise are usually repriced each two–three years, whereas older merchandise are phased out over 5–six years attributable to hostile choice, the place more healthy clients exit and people with excessive claims stay.
“Current product portfolios can nonetheless present larger year-on-year premium jumps of greater than 10% if it isn’t arising for repricing,” stated an insurance coverage firm government, who didn’t want to be recognized.
Although the IRDAI didn’t situation a proper notification clarifying the interpretation, insurers perceive, based mostly on verbal steerage, that the ten% cap kicks in solely when a product is repriced. As an illustration, if a coverage was final repriced in January 2025, the subsequent revision would fall beneath the cap solely throughout its subsequent cycle in 2028.
The business is awaiting a written clarification, particularly on whether or not the cap applies to long-term merchandise or renewals that don’t contain repricing. The regulator’s January 30 round refers particularly to product “revisions”, leaving room for ambiguity.The round was issued in response to growing complaints from senior residents, a few of whom noticed their medical health insurance premiums double inside a yr. The IRDAI stated the restrictions have been introduced to handle the monetary vulnerability of this age group, who usually have restricted revenue sources and are disproportionately affected by steep well being premium hikes.Along with the premium hike cap, the IRDAI has directed insurers to standardise pricing agreements with hospitals and prohibited beauty repackaging of previous merchandise merely to justify worth will increase. The regulator additionally launched a rule requiring prior regulatory approval for product discontinuation, additional defending policyholders, significantly senior residents, from dropping entry to long-term covers.
“Insurers are in search of formal clarification, as the present interpretation relies on verbal communication and regulatory language that refers to ‘revision’,” stated one other government.