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Insurers' 'Material Change' Clause Raises Concerns Over Claim Rejections and Premium Hikes
17 Nov
Summary
- Insurers now require annual health/lifestyle updates from policyholders
- Experts say IRDA rules prohibit claim-based loading and fresh underwriting
- Nondisclosure alone cannot justify claim rejection, unless proven fraud
As of November 2025, health insurance renewals in India have become more complex, with many insurers now including a "material change" clause. This clause requires policyholders to report any major changes in their health or lifestyle at the time of renewal.
According to industry experts, the purpose of this clause is to help insurers keep policies fairly priced for all customers, as new health risks can impact the overall pricing pool. However, this has left many policyholders concerned about potential misuse, such as insurers using the disclosures to increase premiums, add exclusions, or reject claims.
Experts have clarified that under IRDA regulations, insurers are not allowed to change premiums or alter coverage at renewal, unless those changes are applied uniformly across all customers. Additionally, fresh underwriting is only permitted if the policyholder seeks to increase their sum insured. Importantly, experts state that non-disclosure alone cannot justify claim rejection, unless there is proven fraud or deliberate misrepresentation.
While the "material change" clause still exists in many policies, insurers may be hesitant to invoke it due to the negative attention it has received. Policyholders are advised to be transparent about any changes, as minor updates rarely impact premiums, and non-disclosure can cause more trouble than disclosure.
