India insurers look to hike health premiums as pollution stings

Go Digit General Insurance

21/02/2025 08:17

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      Insurers want 10%-15% hike in health insurance premiums
    

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      Air pollution-related claims ballooned in New Delhi in
2024
    

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      Unprecedented plan needs insurance regulator's blessing
    

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      If approved, model could be replicated in other polluted
cities 
    

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      Insurers collected $12.4 billion in health premiums in
2023/24
    

  
    By Ashwin Manikandan
       NEW DELHI, Feb 21 (Reuters) - Indian insurers are
considering making New Delhi residents pay 10% to 15% more for
new health policies after an extraordinary spike in claims
related to air pollution in 2024 in India's capital, according
to nine executives aware of the matter. 
    The plan, now in discussion amongst insurers and which would
need approval from the insurance regulator, follows
record-breaking air pollution in New Delhi last year. If
approved, it would be the first time air pollution was used as a
direct factor in figuring health insurance premiums in India,
and could be used to justify price hikes in other cities as
well. 
    Toxic air led to more Delhi residents seeking treatment for
asthma, chronic obstructive pulmonary disease (COPD) and
cardiovascular conditions in 2024, higher than in any prior
year, five of the executives said. 
    All the executives spoke on condition of anonymity as they
are not authorized to speak with media. 
    "We have to start thinking about pollution as a separate
factor in the pricing in the sense that can we then start
executing a particular charge for the areas which are impacted
by it," said Amitabh Jain, the operating chief of Star Health
 STAU.NS , India's No.1 standalone health insurer. 
    In 2024, the number of patients with respiratory ailments
who needed to be hospitalized rose to 17%-18% in the second half
of the year versus 5%-6% in the first half, Jain said. 
    Also, respiratory claims rose 8.3% from fiscal year 2023 to
fiscal year 2025 in the state of Delhi, which recorded the
highest rise in healthcare costs in India during that period,
according to a joint report from Boston Consulting Group and
Indian healthcare administrator Medi Assist. 
    Star Health and ICICI Lombard  ICIL.NS  said pollution could
soon become a direct factor in determining health insurance
premiums if poor air quality persists. Bajaj Allianz General
Insurance said the industry could also add new clauses
specifically addressing pollution-related health concerns. 
    The Insurance Regulatory and Development Authority of India
(IRDAI) and prominent Indian insurers including Aditya Birla
Health Insurance, Tata AIG, New India Assurance  THEE.NS  and Go
Digit  GODG.NS  did not respond to requests seeking comment. 
    For 2023/24, Indian insurers collected $12.4 billion in
health insurance premiums, an increase of about 20% over the
previous year, according to the latest IRDAI annual report. 
        
    NOT JUST DELHI
    New Delhi chokes on smog every winter due to a blend of
vehicle emissions, construction dust and smoke from illegal farm
fires. In November, Delhi overtook Pakistan's Lahore as the
world's most polluted city in Swiss group IQAir's live rankings,
with Mumbai and Kolkata also making it to the list of top 10
cities with the most toxic air. 
    On November 18, India's pollution control authority said the
national capital territory's 24-hour air quality index (AQI)
score touched a season-high of 491 on a scale of 500. Anything
over 400 is "severe", affecting healthy people as well as
"seriously impacting" those with existing health issues. 
    In India, insurers can vary health insurance premiums by
city based on factors ranging from hospitalization costs to
demographics. 
    Getting the regulatory nod to include air pollution as a
factor would depend on insurers submitting proof to back the
assertion that toxic air is leading to an increase in claims. 
    "The frequency and severity of hospitalization purely due to
the toxicity in the air needs to be isolated," PwC India
Financial Services Advisory Leader Joydeep Roy said. 
    "That involves commissioning longer-term studies." 
    It is not known how long it would take to conduct such
studies or to get the needed approvals from IRDAI.  
    Senior citizens, children, outdoor professionals and those
with preexisting respiratory conditions would likely pay the
highest premiums. The plan, if approved, would likely make
health insurance unaffordable for many who need it most. 
    New Delhi's per capita income was $5,331 in 2024 according
to the Delhi Statistical Handbook, and under current guidelines
health insurance with a coverage limit of $10,000 for a family
in the city would cost between $100 to $400 per year. 
    "In India, owning health insurance cover is a luxury," said
Delhi resident and COPD patient Aniket Tiwari, 28, who decided
against getting coverage in 2024 because it was too pricey. 

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States with highest increase in healthcare costs    https://reut.rs/3QqRSIx
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 (Reporting by Ashwin Manikandan; Editing by Dhanya Skariachan
and Tom Hogue)
 ((Ashwin.Manikandan@thomsonreuters.com;))