Renewal Surprises: Why Does Your Health Insurance Premium Increase?

For maintaining financial stability and receiving quality healthcare, health insurance plays a vital role. However, many individuals are often taken aback by the sudden increase in their health insurance premiums during the annual renewal process.

With the rising healthcare costs, inflation and economic factors contribute to premium increases, changes in policy coverage, age, health status, claims history, market conditions, and regulatory changes also play significant roles.

Kotak General Insurance aims to highlight the reasons behind these renewal surprises and help you better understand why your health insurance premium may increase.

➥ Rising Healthcare Costs

One of the major factors contributing to increased health insurance premiums is the continuously rising cost of healthcare. Medical advancements, new treatments, and the increasing demand for healthcare services all contribute to escalating expenses. Premiums must be adjusted to account for these rising costs and ensure they have adequate funds to cover their policyholder’s medical expenses.

➥ Inflation and Economic Factors

Inflation affects various sectors of the economy and health insurance is no exception. As the general cost of living increases, so does the cost of healthcare services, medications, and medical technologies.

➥ Changes in Policy Coverage

Health insurance policies undergo periodic modifications to comply with evolving regulations and cater to the changing needs of policyholders. These changes can include expanded coverage for specific medical conditions, the inclusion of new treatments or medications, or adjustments to policy limits and deductibles. It can lead to an increase in premium rates to account for the enhanced coverage provided when your health insurance plan undergoes such modifications.

➥ Age and Health Status

Age and health status play an important role in determining health insurance premiums. They generally require more healthcare services and are more prone to developing chronic conditions as individuals grow older.

The age and health status of policyholders are considered while calculating premiums, as older individuals and those with pre-existing conditions tend to have higher medical expenses. Therefore, it is common to observe an increase in premiums as policyholders age or experience changes in their health status.

➥ Claims History and Utilisation

Insurance premiums are also influenced by the claims history and utilisation of policyholders. If you or your dependents have made frequent claims or utilised healthcare services extensively in the previous policy year, it can result in higher premiums during renewal. Rates are adjusted based on the risk associated with each policyholder and their likelihood of incurring future medical expenses.

➥ Market Conditions and Competition

The health insurance market is subject to various market forces and competitive dynamics. The market conditions must be assessed, including the cost of providing coverage and the rates offered.

➥ Regulatory Changes

Health insurance is heavily regulated and changes in regulations can impact premium rates. New regulations may require insurers to provide additional coverage or implement certain consumer protections. Compliance with these regulations often necessitates adjustments in premium rates to cover the costs associated with the new requirements.


Understanding the factors behind the increase in health insurance premiums during the renewal process can help policyholders make the right decisions about their coverage.  You can better navigate through the renewal process, explore alternative coverage options, and ensure that you have appropriate health insurance coverage that meets your needs and budget by staying informed and regularly reviewing your policy.

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