HomePersonal Finance NewsInsurance premiums likely to rise in 2023 — Here's how much and why

Insurance premiums likely to rise in 2023 — Here's how much and why

Read this to understand how much will premiums increase and what are the possible reasons for the same

By Anshul  December 28, 2022, 5:28:39 PM IST (Published)

Insurance premiums are likely to increase in 2023, owing to the rising interest rates and a weakening economic scenario globally, Indraneel Chatterjee, Co-Founder at RenewBuy, told CNBC-TV18.com. However, it will be a slow one and premiums might increase only by up to 5 percent in the life and non-life categories, he said.

“The revisions will be predominantly be linked with medical inflation (in health insurance category) and overall economic condition of the country,” Chatterjee said.

According to a recent report by Indian financial services company Motilal Oswal Financial Services Limited, medical inflation in India has continued to rise. The report noted that room rents have increased 3-4 percent over the past one year.

The health insurance market, meanwhile, has expanded significantly since 2020, which presents an opportunity for the insurance industry. During the peak COVID-19 period (2021-22), premiums for health insurance in India had already increased by 25 percent compared to the pre-pandemic level.

Given the effects the insurance industry has already experienced in terms of claims, including home quarantine, Komal Chhabra, AVP - Customer Success at Pazcare, also said that premiums will rise.

“PSUs have taken a step back to reconsider their strategy for the fourth wave of COVID-19, but we should also be aware that India as a nation has a very high vaccination rate (90 percent of the Indian population is completely vaccinated), and we all wait to see what January 2023 brings with it,” Chhabra told CNBC-TV18.com.

Currently, the entire insurance industry is concerned about the increasing COVID-19 cases in China and there are apprehensions over the possibility of a spill-over effect in India.

Thus, in the health insurance category, it is significant that consumers do not think about insurance premiums at this point but keep themselves and their families protected with adequate health insurance coverage (just in case, the COVID wave hits India again), Chatterjee said.

As per Insurance Regulatory and Development Authority in India's (IRDAI's) mandate, existing health insurance policies include coverage for COVID related hospitalisation. Apart from this, there are several customised health insurance policies for COVID-19 too available in the market which can be considered.

Chatterjee believes that nominal premium hike would not impact a consumer, as much as it would impact if the consumer stays unprotected without necessary insurance coverage.

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