Insurance Companies Delay IRDAI’s 10% Cap on Senior Citizens’ Health Plans

Despite a regulatory move aimed at protecting elderly policyholders, insurance companies have delayed the implementation of the Insurance Regulatory and Development Authority of India’s (IRDAI) directive to cap premium increases for health insurance for senior citizens at 10 percent. This delay has created uncertainty for older individuals and families who depend on health insurance for parents, especially in the face of rising medical inflation and coverage restrictions.

Regulatory intent versus industry response

In January 2025, IRDAI issued a circular directing all health insurance companies to restrict annual premium revisions for senior citizens to a maximum of 10 percent. The regulatory move was a response to growing concerns about affordability for older citizens who often face annual increases of 30 to 100 percent, rendering their policies financially unsustainable.

However, more than a month after the announcement, the implementation of the order remains inconsistent. Some insurance providers have yet to incorporate the cap into their renewal pricing, citing confusion about the wording of the directive. Specifically, insurers are uncertain whether the cap applies to annual revisions or broader periodic revisions across the lifespan of the policy.

Why the delay matters

Health insurance becomes significantly more crucial in old age due to increased medical needs and chronic health conditions. But premium hikes—particularly in individual and family floater policies that cover older parents—can discourage continued coverage, leaving vulnerable citizens without financial protection.

The delay in implementing the premium cap has had several implications:

• Policy renewals at higher-than-expected costs: Senior citizens renewing their plans after the IRDAI directive have still been charged premiums far exceeding the 10 percent limit, due to ambiguity around the applicability of the rule.
• Disrupted financial planning for families: Those purchasing health insurance for parents are now uncertain about budgeting for future premiums, particularly for long-term care and hospitalisation expenses.
• Loss of trust in regulatory enforcement: The reluctance of insurers to promptly apply the cap could undermine public confidence in both the insurance system and its regulatory safeguards.

Key concerns from insurance providers

Insurance companies argue that the IRDAI circular lacks clarity in two major areas:

1. Nature of premium caps: Insurers are unclear whether the 10 percent limit applies strictly to annual renewals or to any upward price revision made at predefined age slabs or milestones (e.g., every five years).
2. Product categories and exceptions: It is uncertain whether the cap is applicable only to individual retail policies for senior citizens or also includes group health plans and family floaters where parents above 60 are included.

Additionally, some insurers are seeking further regulatory guidance on how to balance actuarial pricing needs with capped premium increases. They argue that imposing a flat limit may affect risk pooling and solvency margins in the long term, especially in the absence of government-backed subsidies or risk-sharing mechanisms.

What IRDAI’s circular said

The January circular explicitly stated that senior citizens—defined as individuals aged 60 and above—are the most affected demographic by steep health insurance premium increases. It instructed all insurers to ensure that annual revisions in premium do not exceed 10 percent for this age group, thereby offering some degree of financial predictability for older customers.

The regulator also warned against insurers withdrawing older, affordable products and replacing them with newer, more expensive plans without approval. The intent was to ensure continuity of coverage and avoid forced migration to costlier alternatives.

How consumers are impacted

The delay in enforcement is most deeply felt by:

• Retired individuals who depend solely on pension incomes or fixed deposits and face difficulty absorbing sudden cost jumps.
• Adult children purchasing health insurance for parents, especially those managing multi-generational households with significant financial obligations.
• Policyholders with chronic conditions, who often cannot shift to new policies due to exclusion clauses or extended waiting periods for pre-existing diseases.

Many senior citizens and their families report receiving renewal notices with premium increases well beyond 10 percent, despite the IRDAI order. Some were informed that the cap would only apply from the next cycle or for specific policies, creating confusion and frustration.

Industry voices and potential next steps

Insurance brokers and consumer advocacy groups have urged IRDAI to release a clarification or frequently asked questions (FAQ) document to eliminate any scope for interpretation. A clear communication outlining the scope, timing, and enforcement mechanism would help ensure compliance and protect policyholders.

Consumer protection forums have also called on the regulator to monitor implementation actively, rather than relying solely on self-regulation by insurance firms. They suggest that IRDAI could impose penalties for non-compliance or require insurers to issue refunds for overcharged premiums in violation of the cap.

What policyholders can do in the meantime

Until the directive is uniformly enforced, policyholders—especially those managing health insurance for senior citizens—are advised to:

• Check renewal terms carefully and compare the current premium increase against last year’s policy.
• Contact the insurer’s grievance redressal officer in case the increase exceeds 10 percent without justification.
• Escalate unresolved issues to IRDAI’s Bima Bharosa platform or file a complaint with the Insurance Ombudsman.
• Explore policy portability to another insurer that is offering similar coverage under more favourable terms, although senior citizens may face underwriting scrutiny in the process.

Conclusion

The delay by insurance companies in implementing IRDAI’s 10 percent cap on senior citizen health insurance premiums reflects the broader challenge of balancing regulatory intent with market realities. While the directive aims to improve affordability and fairness, its true impact hinges on swift and uniform enforcement. As families continue to prioritise health insurance for parents, a stable and transparent pricing structure remains critical to ensuring that India’s ageing population can access the care they need without financial hardship.