Pricing key challenge for health insurance of older citizens: Experts

Most companies had an internal policy which did not allow them to sell health insurance products to persons of more than 65 years

The insurance regulator’s move to prod insurance companies to sell health products to all age groups, including those above 65, is aimed at increasing penetration though there would be challenges on pricing due to higher risk perception, experts said.

While there was no regulatory cap on age for health insurance policies, most companies had an internal policy which did not allow them to sell health insurance products to persons over 65.

“The key point of contention is affordability of insurance at a senior age. The price of the product is always higher because the risk and vulnerability is higher. So, that has been a touch point always for that age group. Simultaneously, there is an issue on the amount of insurance cover. Also, there is the issue of the existing set of ailments,” said an insurance industry official.

Last week, the Insurance Regulatory and Development Authority of India (Irdai) said that insurance companies must ensure that they offer health insurance products to all age groups, effective from April 1, 2024.

This move from the insurance regulator is expected to boost sale of policies to these customers and increase insurance penetration.

“The new order by Irdai is an instrumental move for the insurers as it will increase the eligible base of customers who can purchase health insurance due to inclusion in this cohort,” said Rupinderjit Singh, vice-president, retail health, ACKO General Insurance.

“Some of the insurers earlier were keeping a higher age limit for customers to buy health insurance. This move will bring more competition and transparency in the above 65 years category. Companies can now build new products or enhance existing ones by keeping in mind the comprehensive coverage to the entire family, including parents, instead of the current approach of restrictive offering for senior citizens,” said Singh.

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The recent Irdai notification also barred insurance companies from refusing policies to individuals with severe medical conditions like cancer, heart or renal failure, and AIDS.

Irdai also reduced the waiting period for coverage of pre-existing conditions from 48 months to 36 months. After this period, all pre-existing conditions must be covered, regardless of the initial disclosure.

However, the waiting period norm of pre-existing diseases will not be applicable for overseas travel policies. Travel policies can only be offered by general and health insurers, it said.

According to industry officials, some key challenges for the companies will be accurate pricing of premiums for the senior citizens due to limited past experience. It will also be difficult to ensure adequate coverage to these policy holders. The companies are also likely to face administrative hurdles in updating medical underwriting processes.

Irdai has also directed health insurance providers to introduce tailored policies for specific demographics, such as senior citizens, and establish dedicated channels for handling their claims and grievances.

“A key element of this entire change is also to achieve Irdai's grand vision of insurance for all by 2047. It is at the core of every initiative which Irdai has launched over the last two years, especially the set of regulatory reforms,” said Krishnan Gopalakrishnan, head - compliance, Bajaj Allianz General Insurance

The proposed regulation seeks to handle the complaints and claims of senior citizens via a specialised channel. This is to ensure a more tailored and responsive approach to their requirements, the notification added.

Challenges for insurance firms

> Accurate pricing of premiums for senior citizens due to limited past experience 

> Ensuring adequate coverage to these policy holders 

> Administrative hurdles in updating medical underwriting processes

> Pricing of the products gets higher due to high risk and vulnerability, say industry experts