The higher hospitalization and treatment costs in the metros will now be reflected in the premiums paid towards health insurance. For health insurance policy holders in cities such as Delhi and Mumbai, the consumers will have to pay more when compared to consumers in tier II and III cities, as per the zone-wise premium method adopted by General and Standalone health insurers.
Apart from the higher costs, the insurance firms are also citing loss ratio, as claims from such regions are always higher than the rest of the country. Private Health insurer Star Health and Allied Insurance has a zone wise premium for its family health Optima product. Premiums are higher in zones where the loss ratio is higher.
Similarly, Future Generali's Health Suraksha has basic, silver, gold and platinum plans. Zones are differentiated depending on the cost of treatment. This helps in charging premiums correctly as per risk and eliminates the high-cost areas.
However, experts debate that it would be difficult for policyholders, especially individuals, to make out the difference in premium as the insurers are experts in masking premium rates in such a way that the end user is not aware about it.
The age group of the insured, demographics, previous ailments and the likely number of claims the region would have in a given year are the factors that govern the premium rates. The differential premium policy is more evident in group policies as insurers resort to higher premium loadings for regions like Mumbai. Certain pockets within the country like Mumbai attract larger claims mainly on account of higher medical costs.