 "Life insurance industry, insurers, health insurance, insurance sector")
Illustration: Ajay Mohanty
Rising insurance premiums have become a pressing issue for consumers. HDFC Life, ICICI Prudential, Bajaj Allianz and Max Life Insurance have hiked their term insurance premiums by 4 per cent to 7 per cent in past months. As consumers grapple with these rising costs, understanding the underlying reasons and exploring strategies to mitigate the impact is crucial.
Why do insurers increase premium
Claims experience of insurers is the usually biggest factor behind premium hikes. “Based on it, they have to keep revising the premiums periodically. They may revise the premiums themselves. Alternatively, their reinsurers may have increased the reinsurance premiums, after which insurers pass on the increase to customers,” Mahavir Chopra, founder, Beshak.org, told ‘Business standard’.
“Life Insurance companies are actively working to address the rising cost of life insurance. One key strategy is aligning with the Insurance Regulatory and Development Authority of India (IRDAI)’s push for affordable insurance,” said Nitin Mehta, chief distribution officer & head marketing at Bharti AXA Life Insurance, referring to the industry regulator.
“Furthermore, insurers are exploring ways to make life insurance more cost-effective through technological advancements. By automating underwriting processes and utilising data analytics, companies can improve efficiency and potentially offer lower premiums.GST rationalisation is another factor that can make life insurance more affordable,” said Mehta.
How can consumers tackle rising premiums?
Compare premium: One of the most effective ways to combat rising premiums is to compare quotes from different insurance providers.
Take advantage of discounts: Many insurers offer discounts such as bundling multiple policies, maintaining a claims-free record, or completing safety courses. Consumers should inquire about available discounts that could help lower their premiums.
Utilise top-up plans: Top-up health insurance plans offer additional coverage at a lower cost compared to standard policies.
Review and adjust coverage: Regularly assess your insurance needs. By understanding your financial goals and risk tolerance, individuals can tailor their insurance policies to meet their specific requirements without overspending.
Pay premiums in advance: Some insurers allow policyholders to pay premiums for multiple years upfront, which can lead to discounts.
First Published: Aug 30 2024 | 12:52 PM IST
