Government Considers Measures To Manage Rising Health Insurance Premiums

Health insurance premiums have been rising steadily, creating pressure for policyholders, insurers, and hospitals alike. 

In response, the government has begun consultations with the insurance regulator and industry stakeholders to explore possible measures aimed at improving transparency, easing costs, and ensuring that claims are processed more efficiently, as per the Economic Times report.

Government Discussions Underway

Government officials have initiated talks with the Insurance Regulatory and Development Authority of India (IRDAI), insurers, and hospital groups to understand the reasons behind rising premiums.

The discussions centre around controlling escalating medical costs, addressing uneven claim settlements, and assessing whether policyholders are benefiting from recent tax reductions.

Possible Policy Interventions

Among the measures being examined are caps on insurance premiums, potential limits on agent commissions, and stricter requirements for disclosures by insurers and healthcare providers.

These suggestions have been forwarded to IRDAI for evaluation, with the final decisions expected to be made by the regulator.

Focus on Claim Settlement Practices

IRDAI has expressed concerns about discrepancies between expected and actual claim payouts. Recent comments by the regulator indicate an increased focus on monitoring settlement amounts, particularly where payouts appear lower than anticipated.

The regulator has already taken steps to limit annual premium increases for senior citizens in response to sharp hikes reported in some policies.

Commission Structures Under Review

Agent commissions, part of insurers’ management expenses, are also likely to come under scrutiny. Stand-alone health insurance companies currently operate with an upper limit of 35% of gross written premiums allotted to management expenses.

Commissions for new health policies typically reach up to 20% of the premium, with renewals offering around 10%. IRDAI may explore tightening these allowances.

Industry Pressures and Disagreements

Insurers highlight rising medical inflation, varied billing practices, and the increased use of advanced medical technologies as reasons for higher premiums. Hospital groups, however, argue that their operating margins remain limited compared with insurer profitability.

The finance ministry has recently urged both sides to collaborate on improving cost transparency and strengthening the claims ecosystem.

Read More: Government Unveils ₹210 Crore Research Initiative for Critical Minerals.

Conclusion

The government’s ongoing engagement with regulators, insurers, and hospital networks reflects a broader effort to stabilise health insurance pricing and streamline claims. While potential interventions are still under review, the aim is to create a more balanced and transparent framework that benefits all stakeholders without disrupting the functioning of the sector.

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