Health Insurance Renewal: Why Are Consumers Reluctant to Renew Policies? Insights from the Sector

The health insurance sector is facing significant challenges, with recent reports indicating that a large number of consumers are not renewing their health insurance policies. This trend has led to a notable decline in premium collections for insurance companies.

According to a report, the premium collection of health insurance companies has fallen by 10 percent in the current financial year. This implies that 1 out of 10 customers has not renewed their insurance. A survey conducted by Policybazaar supports these findings, highlighting a decrease in premium collections alongside a substantial increase in the cost of premiums.

*Why Are Customers Not Renewing?*

Policybazaar’s report points to a 30 percent increase in the cost of health insurance as a primary reason for the decline in renewals. Typically, insurance companies adjust their premiums every three years based on treatment costs and the age of the consumer. However, the recent spike in costs has deterred more than 10 percent of customers from renewing their policies.

*Premium Increases Over the Last Decade*

Over the past decade, health insurance premiums have increased by 5 to 10 percent annually for 52 percent of policyholders. Consequently, a health premium of Rs 100 has risen to between Rs 162 and Rs 259 over ten years. For 38 percent of consumers, premiums have increased by 10 to 15 percent annually, raising Rs 100 to between Rs 259 and Rs 404 in a decade. Additionally, 3 percent of policyholders have seen annual increases of 15 to 30 percent.

*Premium Increases vs. Medical Costs*

Amit Chhabra, Chief Business Officer of the General Insurance Department at Policybazaar, stated that the medical sector’s inflation rate is 14 percent during this period, while the increase in health insurance premiums has been lower. He noted that 90 percent of policy renewals have seen only a 10 percent premium increase compared to last year.

*Other Factors Contributing to Declining Renewals*

Market experts suggest that the decrease in health insurance renewals is not solely due to rising premiums. Reports indicate that health insurance companies have rejected about 50 percent of health insurance claims over the last three years. This has led to growing skepticism among customers about the reliability of health insurance. Many consumers question the value of expensive policies if claims are frequently denied.

As the health insurance sector navigates these challenges, it is crucial for companies to address customer concerns and rebuild trust to ensure sustained growth and renewal rates.