{"id":1092,"date":"2017-04-14T04:59:59","date_gmt":"2017-04-14T04:59:59","guid":{"rendered":"https:\/\/pamstaging.securenow.in\/insuropedia\/?p=1092"},"modified":"2026-03-20T02:55:22","modified_gmt":"2026-03-20T02:55:22","slug":"which-factors-affect-premium-of-group-health-policy","status":"publish","type":"post","link":"https:\/\/securenow.in\/insuropedia\/which-factors-affect-premium-of-group-health-policy\/","title":{"rendered":"Factors influencing the premium of a group health policy"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><p>Group health insurance refers to medical insurance coverage for a group. Such a group mediclaim policy can be availed by employer-employees, banks and their customers, and clubs and their members.<\/p>\n<h2 data-path-to-node=\"5\">Key Takeaways<\/h2>\n<ul data-path-to-node=\"6\">\n<li>\n<p data-path-to-node=\"6,0,0\"><b data-path-to-node=\"6,0,0\" data-index-in-node=\"0\">Economy of Scale:<\/b> Large FMCG firms with thousands of employees can negotiate much lower premiums compared to small startups, even if the coverage limits are identical.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,1,0\"><b data-path-to-node=\"6,1,0\" data-index-in-node=\"0\">Risk-Based Occupations:<\/b> Insurers use a &#8220;weighted average&#8221; for premiums. A company with more field engineers or drivers will pay more than a firm with primarily clerical or management staff due to the varying levels of occupational hazard.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,2,0\"><b data-path-to-node=\"6,2,0\" data-index-in-node=\"0\">The 100% Claim Threshold:<\/b> If the total value of claims made by a company exceeds the total premium paid (a ratio over 100%), the insurer will almost certainly increase the renewal premium to recover costs.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,3,0\"><b data-path-to-node=\"6,3,0\" data-index-in-node=\"0\">The &#8220;Corporate Buffer&#8221; Utility:<\/b> Adding a corporate buffer (a common pool of funds for high-cost surgeries) increases the premium significantly but protects individual employees who exhaust their specific sum insured.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,4,0\"><b data-path-to-node=\"6,4,0\" data-index-in-node=\"0\">Age Advantage:<\/b> Startups often benefit from a &#8220;young&#8221; demographic. Even if their group size is small, having a low average age can help offset some of the costs that larger, older organizations face.<\/p>\n<\/li>\n<\/ul>\n<h2><strong>Which factors affect the premium of Group Health Insurance and how?<\/strong><\/h2>\n<ol>\n<li>A group\u2019s size, average age, and occupation are important determiners of the premium of a group medical insurance plan. Thus, the larger a group, the lower its premium for a group mediclaim policy. Similarly, if the average age of the group is low, premiums will be low.<\/li>\n<li>\u00a0Field, factory, airline staff, healthcare workers and offshore workers are considered high risk and will have to pay higher premiums. On the other hand, clerical staff are at lower risk and policies for them will have lower premiums.<\/li>\n<li>Another significant factor is the claim history of the employer or group administrator. What this means is that higher past claim ratios will lead to higher premiums. Claims ratios of over 100% will definitely result in premium increases.<\/li>\n<li>Additionally, the features and riders that a group opt for also determine premiums. Thus, the more add-ons a group selects, the higher the premiums it will have to pay for group medical insurance.<\/li>\n<li>Choosing a co-pay option will reduce premiums on group health insurance.<\/li>\n<\/ol>\n<p>See: <a href=\"https:\/\/securenow.in\/insuropedia\/benefits-of-group-health-insurance-for-indian-sme\/\"><strong>What benefits are available under employee group health insurance?<\/strong><\/a><\/p>\n<h3><strong>Case study: Premiums of Group Mediclaim depending on Size and the average age of the group<\/strong><\/h3>\n<p>College friends Kirti Bisht and Vivek Madhukar joined different firms. While Kirti joined a large FMCG firm with almost 12,000 employees pan-India, Vivek joined a start-up.<\/p>\n<p>Vivek\u2019s company employs only 12 people, and it is mulling a group health policy for its employees and their dependents. Vivek remembers that Kirti and her employer contributed equally (Rs. 2,650) to a group health plan that gives Kirti a health cover of Rs. 500,000. Accordingly, he expects to pay a similar amount as the premium and opts for Rs. 500,000 covers. However, his premium is Rs. 3,580.<\/p>\n<p>The insurer\u2019s explanation: The firm has very few employees and even the addition of family members of employees takes the number only to 20, the minimum covered under the policy. In fact, the premium would be higher still if the firm tried to match the features and riders that Kirti\u2019s employer offered.<\/p>\n<p>The good news for Vivek though is that the average age of the employees in his company is only 29 compared to the average age of 37 in Kirti\u2019s company. This, combined with a cleaner claim history for Vivek\u2019s company, might lower premiums in the future.<\/p>\n<p>See: <a href=\"https:\/\/securenow.in\/insuropedia\/key-differences-between-group-health-insurance-and-individual-health-insurance-that-you-need-to-know\/\"><strong>What are additional benefits available under Group Health Insurance?<\/strong><\/a><\/p>\n<h3>Summary Table: Factors Influencing Group Premiums<\/h3>\n<table data-path-to-node=\"3\">\n<thead>\n<tr>\n<td><strong>Factor<\/strong><\/td>\n<td><strong>Impact on Premium<\/strong><\/td>\n<td><strong>Core Reason<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span data-path-to-node=\"3,1,0,0\"><b data-path-to-node=\"3,1,0,0\" data-index-in-node=\"0\">Group Size<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,1,1,0\">Large groups often get lower per-life rates.<\/span><\/td>\n<td><span data-path-to-node=\"3,1,2,0\">Risk is spread across a broader pool of insured individuals.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,2,0,0\"><b data-path-to-node=\"3,2,0,0\" data-index-in-node=\"0\">Average Age<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,2,1,0\">Lower average age results in lower premiums.<\/span><\/td>\n<td><span data-path-to-node=\"3,2,2,0\">Younger populations generally have fewer chronic health risks.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,3,0,0\"><b data-path-to-node=\"3,3,0,0\" data-index-in-node=\"0\">Occupation<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,3,1,0\">Higher for factory\/field\/offshore workers.<\/span><\/td>\n<td><span data-path-to-node=\"3,3,2,0\">Increased exposure to physical hazards or high-stress environments.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,4,0,0\"><b data-path-to-node=\"3,4,0,0\" data-index-in-node=\"0\">Claim History<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,4,1,0\">Ratios over 100% trigger premium hikes.<\/span><\/td>\n<td><span data-path-to-node=\"3,4,2,0\">High past payouts signal high future risk to the insurer.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,5,0,0\"><b data-path-to-node=\"3,5,0,0\" data-index-in-node=\"0\">Add-ons\/Buffer<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,5,1,0\">Increases the total premium.<\/span><\/td>\n<td><span data-path-to-node=\"3,5,2,0\">Additional riders (like a corporate buffer) add to the insurer&#8217;s liability.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,6,0,0\"><b data-path-to-node=\"3,6,0,0\" data-index-in-node=\"0\">Co-payment<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,6,1,0\">Reduces the premium.<\/span><\/td>\n<td><span data-path-to-node=\"3,6,2,0\">Shared costs discourage minor or unnecessary claims.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3><strong>Case study: Premium of Group Health Insurance depending on the type of occupation and add-ons <\/strong><\/h3>\n<p>Giriraj Sundaram is the general manager, of Human Resources, at Vatsam Precision Equipment (VPE) Pvt. Ltd. He has to motivate employees through various benefit schemes. For instance, one scheme the management has approved is corporate health insurance. Accordingly, Giriraj is now considering the premium payable under the policy and examines the following information:<\/p>\n<table>\n<tbody>\n<tr>\n<td width=\"356\">Total number of employees at VPE<\/td>\n<td width=\"109\">120<\/td>\n<\/tr>\n<tr>\n<td width=\"356\">Clerical and sales staff<\/td>\n<td width=\"109\">30<\/td>\n<\/tr>\n<tr>\n<td width=\"356\">Engineering staff<\/td>\n<td width=\"109\">65<\/td>\n<\/tr>\n<tr>\n<td width=\"356\">Quality management and machine upkeep staff<\/td>\n<td width=\"109\">10<\/td>\n<\/tr>\n<tr>\n<td width=\"356\">Management staff<\/td>\n<td width=\"109\">5<\/td>\n<\/tr>\n<tr>\n<td width=\"356\">Permanent drivers and peons<\/td>\n<td width=\"109\">10<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The insurer quotes a premium based on a weighted average of occupational risks. Thus, it assigns the highest per-life rates to the drivers and the lowest to the clerical staff. These rates are then weighted to get an overall rate for the company.<\/p>\n<p>The firm\u2019s initial premium is Rs. 3 lakh. VPE also added a corporate buffer of Rs 1 lakh. If an employee incurs medical expenses of more than their sum assured, the excess costs can be paid from this buffer. The buffer added an additional cost of Rs 70,000 taking the total premium to Rs 3.7 lakh.<\/p>\n<p>To learn in detail about all factors and determiners of the premium of a Group Health Insurance, be sure to visit SecureNow where you could compare insurance quotes online before making any selection of group insurance or individual insurance policy.<\/p>\n<h3 data-path-to-node=\"8\">Frequently Asked Questions (FAQs)<\/h3>\n<h4 data-path-to-node=\"9\"><b data-path-to-node=\"9\" data-index-in-node=\"0\">1. Why is the premium for my 12-person startup higher than my friend&#8217;s 10,000-person company?<\/b><\/h4>\n<p data-path-to-node=\"9\"><strong>A)<\/strong> Insurers offer &#8220;bulk discounts&#8221; to large organizations because the risk is spread across thousands of people. In a small group, even one major surgery can wipe out the entire premium collected by the insurer, making the per-person cost higher to account for that risk.<\/p>\n<h4 data-path-to-node=\"10\"><b data-path-to-node=\"10\" data-index-in-node=\"0\">2. How does a &#8220;Corporate Buffer&#8221; work in practice?<\/b><\/h4>\n<p data-path-to-node=\"10\"><strong>A)<\/strong> If an employee has a sum insured of \u20b93 lakhs but their heart surgery costs \u20b94 lakhs, the remaining \u20b91 lakh can be pulled from the &#8220;Corporate Buffer&#8221; (if the company has opted for it). This rider adds to your premium but provides an extra safety net for critical cases.<\/p>\n<h4 data-path-to-node=\"11\"><b data-path-to-node=\"11\" data-index-in-node=\"0\">3. Will my premium decrease if my employees work from home instead of a factory?<\/b><\/h4>\n<p data-path-to-node=\"11\"><strong>A)<\/strong> Yes. Occupational risk is a major pricing factor. Employees in clerical or desk-based roles are considered &#8220;low risk,&#8221; while those working with heavy machinery, in offshore units, or in healthcare are &#8220;high risk.&#8221; Shifting the risk profile of the group can lead to lower quotes.<\/p>\n<h4 data-path-to-node=\"12\"><b data-path-to-node=\"12\" data-index-in-node=\"0\">4. What happens if our &#8220;Claim Ratio&#8221; exceeds 100%?<\/b><\/h4>\n<p data-path-to-node=\"12\"><strong>A)<\/strong> This means the insurance company paid out more in claims than they received from you in premiums. At the time of renewal, the insurer will likely increase your premium\u2014often by a significant percentage\u2014to rebalance the risk.<\/p>\n<h4 data-path-to-node=\"13\"><b data-path-to-node=\"13\" data-index-in-node=\"0\">5. Can we use a Co-pay to lower our company\u2019s insurance bill?<\/b><\/h4>\n<p data-path-to-node=\"13\"><strong>A)<\/strong> Absolutely. By introducing a co-payment clause (where the employee pays, for example, 10% or 20% of every bill), the insurer&#8217;s liability reduces. This is one of the most effective ways for an employer to lower the total premium cost.<\/p>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Why is the premium for my 12-person startup higher than my friend's 10,000-person company?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Insurers offer \\\"bulk discounts\\\" to large organizations because the risk is spread across thousands of people. In a small group, even one major surgery can wipe out the entire premium collected by the insurer, making the per-person cost higher to account for that risk.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"How does a \\\"Corporate Buffer\\\" work in practice?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"If an employee has a sum insured of \u20b93 lakhs but their heart surgery costs \u20b94 lakhs, the remaining \u20b91 lakh can be pulled from the \\\"Corporate Buffer\\\" (if the company has opted for it). This rider adds to your premium but provides an extra safety net for critical cases.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Will my premium decrease if my employees work from home instead of a factory?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Yes. Occupational risk is a major pricing factor. Employees in clerical or desk-based roles are considered \\\"low risk,\\\" while those working with heavy machinery, in offshore units, or in healthcare are \\\"high risk.\\\" Shifting the risk profile of the group can lead to lower quotes.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What happens if our \\\"Claim Ratio\\\" exceeds 100%?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"This means the insurance company paid out more in claims than they received from you in premiums. At the time of renewal, the insurer will likely increase your premium\u2014often by a significant percentage\u2014to rebalance the risk.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Can we use a Co-pay to lower our company\u2019s insurance bill?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Absolutely. By introducing a co-payment clause (where the employee pays, for example, 10% or 20% of every bill), the insurer's liability reduces. This is one of the most effective ways for an employer to lower the total premium cost.\"\n      }\n    }\n  ]\n}\n<\/script><\/p>\n<h4><b>About The Author<\/b><\/h4>\n<p><strong>Mayank Sharma\u00a0<\/strong><\/p>\n<p><strong>MBA Finance<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">He is a professional who brings extensive knowledge and expertise to the field of group health insurance. He has dedicated 7years to helping individuals and businesses navigate the complexities of insurance. Having worked closely with numerous clients and insurance providers, he deeply understands the nuances of group health insurance policies. With a reputation for providing insightful and informative content, he leverages his industry experience to educate readers about the importance of group health insurance and its benefits. Through their articles, Mayank Sharma aims to empower individuals and businesses to make informed decisions about their healthcare coverage, ultimately promoting healthier and more secure communities.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Group health insurance refers to medical insurance coverage for a group. Such a group mediclaim policy can be availed by employer-employees, banks and their customers, and clubs and their members. Key Takeaways Economy of Scale: Large FMCG firms with thousands of employees can negotiate much lower premiums compared to small startups, even if the coverage [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_lmt_disableupdate":"no","_lmt_disable":"no","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1,289],"tags":[48],"class_list":["post-1092","post","type-post","status-publish","format-standard","hentry","category-group-health-insurance","category-pricing-group-health-insurance","tag-group-health-insurance"],"acf":[],"modified_by":"SecureNow","_links":{"self":[{"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/posts\/1092","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/comments?post=1092"}],"version-history":[{"count":23,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/posts\/1092\/revisions"}],"predecessor-version":[{"id":35765,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/posts\/1092\/revisions\/35765"}],"wp:attachment":[{"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/media?parent=1092"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/categories?post=1092"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/tags?post=1092"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}