Your Renewal Shock Was Visible a Year Ago
When your premium jumps at renewal, it rarely comes from nowhere. The warning was sitting in the insurer's public accounts a year earlier. Here are the three numbers that predict it.
When your premium jumps at renewal, it rarely comes out of nowhere. The warning was sitting in the insurer's public accounts a year earlier, if anyone had thought to look.
The renewal email arrives and the number is twenty per cent higher than last year. Nothing about your health has changed. You did not even claim. It feels arbitrary, maybe a little unfair, and there is not much you can do about it in the moment except pay or scramble to switch.
It was not arbitrary. An insurer's own financial filings tell you, roughly a year in advance, whether a premium hike or a quiet tightening of claims is on the way. Premium is not just the price of your personal risk. It is driven by the health of the company's business, and that health is public.
You do not need an accounting degree. You need three numbers and the sense to read them together.
The number that says the core business is losing money
Start with the combined ratio. It adds two things: the share of premium an insurer pays out as claims, and the share it spends running itself. Above 100 means the basic insurance business is losing money before any investment returns.
One large health insurer recently ran a combined ratio of about 102.7 per cent, up from roughly 101.8 per cent the year before. Put plainly, for every ₹100 it collected in premium, about ₹70 went to claims and about ₹33 to running the business, salaries, agent commissions, advertising, technology, offices. That is ₹103 going out for every ₹100 coming in. The core operation loses about three rupees on every hundred, and the gap is widening, not closing.
A combined ratio that stays above 100 for several quarters and keeps drifting up is one of the clearest early warnings there is. The company will eventually have to fix it, and there are only three ways to do that.
Where your hundred rupees actually goes
That same split is worth sitting with as a buyer, not just as an analyst.
Out of every ₹100 you pay, only around ₹70 comes back to policyholders as claims. The other ₹30 or so is the cost of the machine that sells and administers the policy. Two insurers charging the same premium can return very different amounts to customers, depending on how lean they are. An insurer that spends less on overheads and pays more in claims is, in the most concrete sense, giving you more for your money. When you compare plans, this is a fairer question than the premium alone: of what I pay, how much actually comes back to people like me?
Of every ₹100 in premium, about ₹70 goes to claims, ₹16 to commissions and ₹17 to overheads, which is ₹103 spent for every ₹100 collected, a ₹3 underwriting loss. The combined ratio rose from 101.8 to 102.7 per cent over the year, which is the wrong direction.
So how are they still profitable?
If the insurance business loses money, how does the company post a profit? Investment income.
Insurers sit on very large investment portfolios, built up from years of premiums, and the interest and dividends on that pile more than cover the small underwriting loss. So the company is in no danger. You do not need to worry about it going under. The one we have been describing has a solvency ratio comfortably above the regulator's minimum, plenty of capital to pay claims.
But notice what that means for you. A business that loses money on insurance itself and stays profitable on its investments has exactly three levers to repair the core operation. It can raise premiums. It can cut costs, which is slow and hard. Or it can tighten claims, paying out less by scrutinising and rejecting more. Two of those three land directly on you, and they tend to arrive together.
The claims ratio trap
Here is where most people's instinct is exactly wrong.
The incurred claims ratio is the share of premium an insurer pays back as claims. People assume a low number is good, the sign of a well-run, disciplined company. From your seat as the person who might one day file a claim, a low number can be the opposite of good.
Too high, well above 100, and the insurer is bleeding, which means hikes are coming. Too low, and it can mean the company simply is not paying, that it is denying aggressively and keeping more of the premium. Neither extreme is reassuring. What you want is a healthy middle, and more than that, you want to read the trend alongside the company's behaviour.
The combination to watch for is a claims ratio drifting down while denials and complaints drift up. That is not efficiency. That is tightening. The insurer we have followed through these pieces saw its health claims ratio slip from about 71 per cent to about 69.8 per cent over a year, and in the same window its claim rejections and its regulatory troubles were moving the other way. A falling payout ratio next to rising complaints is a story, and it is not a happy one for policyholders.
Penalties are a siren, not a footnote
One more number, buried in the profit and loss statement: the penalties an insurer pays to the regulator.
For the company in our example, penalties jumped from roughly ₹0.07 crore one year to about ₹3.39 crore the next. That is close to forty-eight times higher. A leap like that almost never happens quietly. It usually means the regulator has taken issue with how the company is operating, and in health insurance, that often traces back to claims practices. When penalties spike, treat it as a flashing light, not a line item.
What to actually do
You cannot stop a premium hike. You can stop being ambushed by one.
Once a year, before you renew, pull the insurer's latest disclosure and check two things. First, the combined ratio. Is it above 100, and is it rising? Second, the claims ratio trend next to the complaints and denial trend. Is the company paying out a smaller share while rejecting and annoying more people? If both signals point the wrong way, a higher premium or a harder time at the claims desk is the likely next chapter. At least then you can plan for it, set aside the extra, or start looking at porting to another insurer well before your renewal date instead of in a panic the week it lands.
The accounts that predict your next renewal are filed every quarter and posted on the insurer's website. They are written to be skipped. Read them once a year and the renewal email stops being a shock.
Next, and last in this series: everything we have covered, pulled into one method, so you can take two plans that look identical and tell which one is actually right for you.
Educational, not advice. The figures here are drawn from one real insurer's most recent quarterly public disclosures (around Q3 FY2025-26), shown anonymized: the combined, claims and expense ratios from its analytical-ratios and revenue and profit-and-loss filings (NL-20, NL-1, NL-2), and the penalties from its profit-and-loss account, cross-checked against the IRDAI Annual Report. Filings refresh every quarter, so check the latest figures for the specific insurer you are considering.
Frequently asked
- What is the combined ratio in health insurance, and why should I care?
- The combined ratio adds the share of premium an insurer pays out as claims to the share it spends running itself. Above 100% means the core insurance business is losing money before investment returns. A combined ratio above 100% and rising for several quarters is one of the clearest early warnings of a premium hike or tighter claims.
- Does a low claims ratio mean a health insurer is good?
- Not necessarily. A low incurred claims ratio can mean the insurer is paying out less by denying more, not that it is well run. The pattern to watch is a claims ratio drifting down while complaints and denials drift up, which is tightening, not efficiency.
- Why did my health insurance premium increase so much at renewal?
- Premiums track the insurer's economics, not just your personal risk. A combined ratio above 100% and rising shows up in public filings about a year before it reaches you as a higher premium or stricter claims handling.
- Where does my health insurance premium actually go?
- Roughly ₹70 of every ₹100 comes back to policyholders as claims; the remaining ₹30 or so covers commissions and overheads like salaries, advertising, technology and offices. A leaner insurer that pays more in claims is giving you more for your money.
- How can I tell if a health insurer's premium is about to rise?
- Once a year before you renew, check the insurer's public filings. A combined ratio above 100% and rising, together with a claims ratio falling while complaints and denials rise, points to a coming hike or tighter claims, so you can plan or port in time.