Delhiites At Risk Of Paying Higher Health Insurance Premiums Due To Rising Air Pollution

Indian insurers are considering levying a 10% to 15% increase on new health insurance policies for residents of New Delhi, following a sharp rise in claims linked to air pollution in 2024, according to nine executives familiar with the discussions.

The proposal, currently under discussion among insurers, would require approval from the insurance regulator, reported Reuters.

Photo Credit: PTI

If implemented, it would mark the first time air pollution has been directly factored into health insurance pricing in India, potentially setting a precedent for premium hikes in other cities as well.

The surge in pollution levels in New Delhi last year resulted in a significant increase in residents seeking treatment for asthma, chronic obstructive pulmonary disease (COPD), and cardiovascular conditions, with figures surpassing those of previous years, five of the executives revealed.

"We have to start considering pollution as a distinct factor in pricing, in the sense that we can then begin applying a specific charge for areas affected by it," stated Amitabh Jain, Chief Operating Officer of Star Health, India's leading standalone health insurer.

In 2024, the proportion of patients requiring hospitalisation for respiratory conditions rose to 17%-18% in the latter half of the year, compared to 5%-6% in the first half, Jain noted.

Furthermore, respiratory-related claims in Delhi increased by 8.3% between the 2023 and 2025 fiscal years.

The state also recorded the highest rise in healthcare costs across India during this period, according to a joint report from Boston Consulting Group and Indian healthcare administrator Medi Assist.

Star Health and ICICI Lombard suggested that pollution could soon be a direct determinant of health insurance premiums if poor air quality persists. Bajaj Allianz General Insurance indicated that the industry might also introduce new clauses specifically addressing pollution-related health concerns.

The Insurance Regulatory and Development Authority of India (IRDAI), along with major insurers such as Aditya Birla Health Insurance, Tata AIG, New India Assurance, and Go Digit, did not respond to requests for comment.

For the 2023/24 financial year, Indian insurers collected $12.4 billion in health insurance premiums, reflecting an approximately 20% increase from the previous year, according to IRDAI's latest annual report.

### Beyond Delhi

New Delhi experiences severe smog each winter due to a combination of vehicle emissions, construction dust, and illegal crop burning.

In November, the city overtook Lahore, Pakistan, as the world's most polluted city in Swiss firm IQAir's live rankings, with Mumbai and Kolkata also featuring in the top 10 most polluted cities.

On 18 November, India's pollution control authority reported that Delhi's 24-hour Air Quality Index (AQI) reached a season-high of 491 out of 500. Any reading above 400 is classified as "severe," posing health risks even to healthy individuals and significantly impacting those with existing conditions.

In India, insurers can adjust health insurance premiums by city based on factors such as hospitalisation costs and demographics.

Gaining regulatory approval to include air pollution as a pricing factor would require insurers to provide concrete evidence proving that toxic air has led to an increase in claims.

"The frequency and severity of hospitalisations purely due to air toxicity need to be isolated," explained Joydeep Roy, Financial Services Advisory Leader at PwC India.

"That requires commissioning long-term studies."

It remains unclear how long such studies would take or when regulatory approval from IRDAI might be granted.

Senior citizens, children, outdoor professionals, and individuals with preexisting respiratory conditions are likely to bear the highest premium costs.

If the proposal is approved, health insurance could become unaffordable for many of those who need it most.

New Delhi's per capita income stood at $5,331 in 2024, according to the Delhi Statistical Handbook. Under current regulations, health insurance coverage of $10,000 for a family in the city costs between $100 and $400 per year.

"In India, having health insurance is a luxury," remarked Aniket Tiwari, a 28-year-old Delhi resident and COPD patient, who opted against purchasing coverage in 2024 due to its high cost.