The Insurance Regulatory and Development Authority of India (IRDAI) is planning to put a cap on annual increases in health insurance premiums.
This cap would apply both to individual products and across insurers’ overall portfolios. The goal is to keep insurance affordable for policyholders while ensuring insurers remain financially stable.
Portfolio-level caps will likely be linked to medical inflation, so pricing stays in line with real healthcare cost trends.
Why This Move Is Important
Right now, many insurance plans start with low premiums but become much more expensive over time, especially hurting middle-class customers.
Younger policyholders have been hit hardest, since insurers are already restricted from raising premiums for senior citizens by more than 10% in a year.
With health insurance making up nearly 40% of all general insurance premiums in FY25, this area is too important to go without tighter regulation.
Senior Citizens Already Have Some Protection
Earlier this year, IRDAI limited annual premium increases for senior citizens to 10%. This provided relief to older customers who were facing high yearly hikes.
However, insurers often shifted those costs to younger customers, leading to demands for more balanced regulation to ensure fairness for all age groups.
Impact on the Insurance Industry
Health insurance is a major source of income for insurers, though the level of dependence varies:
ICICI Lombard: about 30% of its premiums come from health insurance.
New India Assurance: depends on health insurance for nearly 50% of its premiums.
Go Digit: has lower exposure, around 14%.
Because of this heavy reliance, any regulation limiting premium hikes will have a big effect. Insurers may need to reduce costs or improve efficiency instead of increasing premiums sharply.
What’s Coming Next?
IRDAI is expected to release a consultation paper soon. This will include detailed rules and invite feedback from insurers, policyholders, and industry experts.
The goal is to create fair, lasting regulations that support both consumers and the insurance industry.
In Summary
The proposed cap on health insurance premium hikes could be a major change for India’s insurance market.
By tying price increases to medical inflation and spreading them across portfolios, IRDAI hopes to make insurance more affordable and stable for millions of Indians.
