Insurers Charging Higher Renewal Premium from Senior Citizens Face IRDA Music

By Debjoy Sengupta, Economic Times

February 7, 2008

India

Insurance Regulatory and Development Authority’s (IRDA) recent circular that said renewal premiums payable by senior citizens in 2008 cannot be hiked beyond 75% of the premiums paid in 2006 had come as a breather for elderly. Despite this, senior citizens are being asked to cough up tariffs that were increased by 100-200% in 2007, a month after the date of implementation of this circular.

IRDA has decided to pull up errant insurers either on the basis of inspections or on the basis of specific complaints made by insured. Nevertheless, officials from the four public sector insurers at branch levels or for that matter in regional offices are unaware of any such circular and are continuing to charge the existing hiked tariffs. As a result, senior citizens are being asked to pay increased premiums for their existing policy.

In fact, ET has received a few letters from senior citizens who were asked to dole out hefty premiums by insurers like Oriental Insurance, National Insurance while for others, policy renewal was flatly denied.

Officials from New India Assurance, the largest public sector insurer in Kolkata, said: “We have not received any circular or directive from our head office. In the absence of any such intimation, we are charging the existing tariffs. The tariffs were revised last year and we are charging as per the schedule.” Those from Kolkata-based National Insurance said they were ignorant about any such developments or circular. “We are charging as per the latest revised chart,” they added. According to the revised charges, premiums have been raised by sizeable amounts for senior citizens.

Officials at regional offices of United India Insurance, as well as Oriental Insurance, said they are yet to receive such a circular from their respective headquarters and have been charging as per this existing premium schedule.

IRDA chairman CS Rao said that a circular to this effect has been sent to every insurer and they should have implemented it from January 2008. “We have asked insurers to charge at most 75% more on the premiums they paid in 2006 for senior citizens. Not on the hefty premiums they already paid in 2007,” IRDA chairman Rao told ET.

Citing an example, he said: “If someone paid Rs 10,000 to renew his premium in 2006, he will pay at most Rs 17,500 in 2008. Premiums for the year 2008 will not be based on premiums already paid in 2007.” Since IRDA’s notification came towards the fag end of 2007, when almost all policies were renewed and seniors were forced to cough up those extra 100-200%, the regulator has decided to base the 75% cap on previous year’s premiums.

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