Air Pollution's Hidden Cost: Health Claims Skyrocket, Indian Insurers Rethink Strategies!

Insurance

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Updated on 13 Nov 2025, 12:16 pm

Air pollution across major Indian cities is directly contributing to a noticeable rise in hospitalisation claims related to respiratory and cardiac conditions. Health insurance policies in India typically cover these illnesses, with insurers processing claims for conditions such as asthma, COPD, bronchitis, and pneumonia, provided medical diagnosis and policy terms are met. Narendra Bharindwal from the Insurance Brokers Association of India (IBAI) confirmed that air pollution is not an exclusion under IRDAI guidelines.

Insurers and hospitals are observing a clear seasonal pattern, with claims for respiratory ailments peaking during high-pollution months. Prudent Insurance Brokers reported a rise in respiratory claims from 5.7% in FY23 to 6.5% in FY25. While these cases are classified as general respiratory ailments, insurers are increasingly factoring environmental pollution into their risk modelling and premium pricing. Yogesh Agarwal of Onsurity and Arun Ramamurthy of Staywell.Health corroborate this, noting increases in conditions like asthma and COPD flare-ups, especially in northern India during winter.

In response, insurers are exploring product innovation, including specialised riders and add-ons for climate- and pollution-linked health risks. Some companies have introduced add-ons for diagnostic check-ups related to pollution-triggered illnesses. Insurers are also evaluating geographical price differentials and short-term top-ups for chronic diseases, pending regulatory approval. Preventive health and wellness programmes are gaining prominence, with many plans offering annual check-ups and redeemable wellness points. Future offerings might include AQI-linked incentives or purifier subsidies, aligning with IRDAI's wellness guidelines.

Impact: This news significantly impacts the Indian insurance sector by highlighting a critical risk factor that necessitates adjustments in risk assessment, pricing strategies, and product development. It underscores the growing importance of climate and environmental factors in health insurance, potentially leading to more specialised and geographically tailored products. Insurers may see increased claim payouts in affected regions, driving a need for more robust actuarial models and preventive health initiatives. This trend could also spur innovation in wellness programs and potentially influence the broader healthcare ecosystem. Rating: 7/10.

Difficult Terms: COPD (Chronic Obstructive Pulmonary Disease): A group of lung diseases that block airflow and make it difficult to breathe. IRDAI (Insurance Regulatory and Development Authority of India): The statutory body that regulates the insurance sector in India. AQI (Air Quality Index): An index for reporting daily air quality. TPAs (Third-Party Administrators): Companies that provide administrative services to health insurance companies, such as claims processing. Parametric covers: Insurance policies that pay out a predetermined amount based on the occurrence of a specific event (like a certain AQI level) rather than actual loss. Underwriting: The process of evaluating the risks of insuring someone or something and deciding whether to provide coverage and at what price. Actuarial models: Statistical methods used by insurance companies to calculate risks and set premiums.