We often hear from people that their health insurance premiums have gone up even though they haven’t made a single claim. The key thing to understand is this: Health insurance doesn’t work like motor insurance. Your premium doesn’t rise because you have not used the policy. Premiums rise for very different reasons, and they affect entire groups of policyholders, not individuals.

So today, let’s understand what really goes on behind the scenes.

Health insurance was never a fixed-price product. Many assume that once they buy a policy, the price should remain stable forever. But that has never been true. Insurers can revise premiums if a plan becomes financially unsustainable. Previously, they needed regulatory approval. Under the new framework, insurers can make internal revisions as long as they document the changes and publicise them. This means premium changes will continue to happen.

The reasons for premiums increase;

1. Adverse selection: Insurance only works when there’s a blend of young, low-claim customers and older, higher-claim customers. If an insurer isn’t attracting enough healthier individuals, while existing customers continue to claim more, the cost of claims rises faster than the premiums collected. Eventually, the insurer will have no choice but to adjust premiums for everyone in the pool.
2. Marketing pitch: Many insurers are using a high-risk customer acquisition strategy to attract new buyers:
2.1 Launch a new plan with very low premiums. New customers rush in. After a few renewal cycles, gradually raise prices for existing customers.
2.2 Introduce a brand-new plan with lower premiums again—but only for new customers. Older customers can’t shift to the new plan.
3. Hospitalisation is becoming more expensive: With increasing private investment in healthcare and no standardised pricing for hospital treatments, the cost of medical services has been increasing steadily. Hospital rooms, surgeries, specialist consultations, diagnostics, consumables—everything costs more today. When the cost of treatment rises, the cost of claims rises, and premiums follow. This is one of the biggest drivers of premium hikes today.
4. Enhanced features add to costs: Insurers keep improving their plans to stay competitive—sometimes due to regulations, other times due to customer expectations. Upgrades such as the removal of room rent limits, shorter waiting periods, OPD coverage, or wellness benefits make policies more valuable but also more expensive to sustain. Premiums eventually adjust to reflect these enhancements

How You Can Protect Yourself:

1. Be cautious with very cheap plans: If a premium seems too cheap, it could simply be an introductory price meant to attract customers correct prices later.
2. Check the Insurer’s Claims History: Check the company’s Incurred Claim Ratio (ICR) over several years. This is available on the IRDA website. Insurers with unstable or consistently high ICRs are more likely to revise premiums sharply.
3. Keep the option to port open: If you face repeated hikes, consider porting your policy to another insurer while preserving your waiting period benefits. Start the process 40–45 days before renewal.
4. Use a Super Top-Up to Reduce Costs: If your base plan becomes too costly over time, a super top-up policy can give you high coverage at a much lower cost.

  Source: Beshak Insurance.