ICICI Lombard: Premium Hikes Not Applicable Upon Policy Renewal if Insurer is Found Sick

Health insurance policies often include a material change clause, which requires policyholders to report major health changes after buying a policy. This clause has caused confusion, with many worrying that developing a new illness could lead to higher premiums at renewal.

However, ICICI Lombard has clarified that fresh underwriting or health-based loading will not apply when renewing a policy, even if the policyholder develops a health condition during the coverage period.

What This Means for ICICI Lombard Policyholders

Policyholders can now be assured that as long as they continue renewing their policy on time, their insurer cannot increase premiums or restrict coverage based on new health conditions. Simply put, your policy renewal remains safe regardless of any illness diagnosed after the policy start date.

Understanding the Material Clause

The material clause was originally designed to ensure policyholders report significant health changes. Insurers could then adjust the policy terms at renewal, which might include revising coverage or premium loading.

However, regulatory guidelines from the Insurance Regulatory and Development Authority of India (Irdai) prevent insurers from using this clause to selectively raise premiums or deny renewal for individuals who fall sick.

Regulatory Protections

• Any premium change must be approved by the IRDAI Product Management Committee and applied uniformly across all policyholders of a product.
• Insurers cannot charge higher premiums based on health conditions or recent claims.
• Fresh underwriting is allowed only when the sum insured is increased, not for routine renewals.

Purpose of the Material Clause

The clause is intended to reward good health behavior, not penalize policyholders. Insurers can provide benefits such as wellness discounts or removal of loadings for healthy customers. If a policyholder develops a new condition, the clause allows fair adjustments to policy terms without increasing premiums.

Read more: NPCI Launches AI-Powered “UPI Help” to Assist Users with Digital Payments.

Conclusion

The clarification from ICICI Lombard reassures policyholders that premium hikes will not apply at renewal due to new illnesses. The material clause exists to maintain transparency and fairness, not to penalize those who face health challenges. With Irdai’s oversight, policy renewals remain safe, predictable, and non-discriminatory.

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