Insurers will have to ensure that the premium for a health insurance policy is based on age and other relevant risk factors and standard declarations in the proposal form for a health insurance policy are not required. This will mean flexibility to insurers to have own set of declarations for the customer which will help in better investigation.
The Insurance Regulatory and Development Authority of India (Irdai) has issued new Health Insurance Regulations, which will replace the 2013 rules. It will be applicable to all registered life insurers, general insurers and health insurers conducting health insurance business.
Life insurers can no longer offer indemnity-based health insurance products either as an individual or a group policy. Insurers also cannot offer single premium health insurance product under unit-linked platform. General and health insurers can offer individual health products with a minimum tenure of one year and a maximum tenure of three years, provided that the premium remains unchanged for the tenure. In fact, the new regulations have helped differentiate the product offerings by life and health insurers for the first time. While life insurers will offer financial protection plans, comprehensive health plans will only be offered by health insurers.
General and health insurers will have to devise mechanism or incentives to reward policyholders for early entry, continued renewals, favourable claims experience, preventive and wellness habits and disclose upfront the incentives in the prospectus and the policy document. Insurers will have to ensure that the premium for a health insurance policy will be based on the age for both individual and group policies. For cover under family floater, the multiple incidence of rates of all family members proposed will be considered.
The new regulations allow general and health insurers to come out with pilot products for a policy tenure of one year but not over five years for providing innovative insurance covers. This will help insurers overcome the fear of launching new schemes, as they would now not be stuck with the policy because of the lifelong renewability clause. After five years of the launch of the pilot products, it needs to be converted into a regular product or withdrawn based on valid reason. In that case, the insured will be given an option to migrate to another product. An Insurer cannot resort to fresh underwriting by calling for medical examination, fresh proposal form, etc. at the renewal stage where there is no change in the sum insured offered.
An insurer cannot deny the renewal of a health insurance policy on the ground that the insured had made a claim or claims in the preceding policy years, except for benefit-based policies where the policy terminates following the payment of the benefit covered under the policy like critical illness policy. All new individual health insurance policies will have 15 days of free-look period from the date of receipt of the policy to review the terms and conditions of the policy and to return it if not acceptable.
The cost of any pre-insurance medical examination will form part of the expenses in arriving at the premium. However, in case of products with term of one year and less, if such cost is to be incurred by the insured, not less than 50% of such cost shall be borne by the insurer once the proposal is accepted. Cumulative bonuses offered under policies will be stated explicitly in the prospectus and the policy document and if a claim is made in any particular year, the cumulative bonus accrued will be reduced at the same rate at which it has accrued.
General and health insurers will provide coverage for one or more systems covered under Ayush treatment, provided the treatment has been undergone in a government hospital or in any institute recognised by government or accredited by the Quality Council of India.
Ashish Mehrotra, MD & CEO, Max Bupa, says, the overall regulatory sentiments are in the best interests of customers and insurers. “Incentivising healthy behaviours of customers, ability to launch pilot products, promoting combi-health and life insurance products, and credit-linked, long-term products, will all help boost penetration of holistic health insurance products, tailored to the evolving needs of customers.”
As a part of product design for insurers, the new regulations have encouraged wellness and preventive aspects. Exports say this will enable health insurers to reward customers on healthy wellness habits, early entry and continued renewal, which will have a positive impact on the quality of portfolio.