Delhi-NCR has been battling acute air pollution with the Air Quality Index (AQI) readings between “severe" and “hazardous" levels for most of the past two weeks. While the condition is acute in Delhi-NCR, some other metros are also witnessing increased levels of air pollution. The depleting air quality is a health hazard, especially those with respiratory ailments. In some cases, it even leads to hospitalization. But can increasing air pollution, which in turn increases the chances of falling ill, impact health insurance premiums?

What happens now

“A few insurers already have slightly higher premium rates in Delhi-NCR and most parts of north India because the loss ratio in this region is higher compared to the rest of the country," said Amit Chabbra, head, health insurance,, an online insurance marketplace. This is because the lifestyle in north India, in terms of fitness and eating habits, calls for more claims, he said. Another reason for higher premiums is that medical facilities are more expensive in Delhi-NCR compared to other metros.

“Pollution has been around for long but this is a spike that prevails for a month or so and should pass soon. I don’t think it’ll have a bearing on premiums anytime soon," said Gurdeep Singh Batra, head, retail underwriting, Bajaj Allianz General Insurance Co. Ltd.

Revising health insurance premiums is a complex process as it requires regulatory approvals. It takes about six to nine months from the time an insurance company files for a change in premiums to actually reflect on the price chart.

Insurers told Mint that insurers, typically, have different premiums for different zones, primarily based on the cost of hospitalization which is relatively higher in metros compared to tier II and tier III cities. Zones are divided based on city type or north, south, east and west. So if you’re a 40-year-old living in Delhi (which falls under tier I), your premium would be about 12,540 for a 10 lakh cover, but if you were living in Dehradun (tier II), your premium would be about 10,450 for the same cover. “As the underwriting becomes more sophisticated and insurers are able to see a higher claim incidence in Delhi-NCR compared to other places, they may consider increasing premiums in this region," said Abhishek Bondia, principal officer and managing director,, an insurance broking firm.

Bondia said insurers haven’t started having serious discussions on the issue of air pollution yet, primarily because the data needs to be put together first. “Of course, there’s been a rise in hospitalization but the impact on claims has not been much," he said.

Considering the overall pie of claims, for asthmatic patients or people with respiratory disorders, the chances of surgery (which is expensive) are low compared to someone with cancer, heart problems, and so on. “If acute pollution creates long-term health hazard and it shows up in five to seven years, then insurers may consider it," added Bondia.

Specific Products

If pollution in Delhi-NCR does not come under control, insurers may introduce specific policies. Batra said insurers could come up with bite-sized policies like the ones that are available for vector-borne diseases like malaria and chikungunya, which are usually seasonal. These policies, typically, come at a lower premium.

While there isn’t much clarity on what these sachet policies would cover, insurers said they may primarily target individuals with existing respiratory disorders who are prone to hospitalization when pollution levels skyrocket.

It seems insurers aren’t seeing pollution as a cause for a spike in claims as yet and may not hike premiums immediately. However, if pollution keeps getting worse, it could have a bearing on premiums.

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