1. How new health insurance norms are making policies more consumer-friendly

How new health insurance norms are making policies more consumer-friendly

Recent revisions in Health Insurance Regulations are an effort by the Insurance Regulatory and Development Authority (IRDAI) to introduce a flexible framework that empower insurers to bring in more intelligence and innovative products and services.

New Delhi | Published: October 4, 2016 10:46 AM
Unlike Term Life Insurance, health insurance products by design do not encourage young individuals or families to enroll early into the plan.  (Representative Image) Unlike Term Life Insurance, health insurance products by design do not encourage young individuals or families to enroll early into the plan. (Representative Image)

Recent revisions in Health Insurance Regulations are an effort by the Insurance Regulatory and Development Authority (IRDAI) to introduce a flexible framework that empower insurers to bring in more intelligence and innovative products and services. This will encourage insurers to make health insurance plans more relevant for modern and new consumers.

Here are some key revisions that will impact the users of health insurance.

Entry-age Based Pricing

Unlike Term Life Insurance, health insurance products by design do not encourage young individuals or families to enroll early into the plan. The premium grids remain the same irrespective of the age you enter into the policy. Hence, young individuals wait till they have a family or suffer from some ailment to start thinking about health insurance. In the recent update to the regulation, IRDAI now allows entry-age based pricing, which means, insurers would now be able to provide attractive pricing to lure younger individuals into health insurance earlier in their life. Apart from entry-age based pricing, IRDAI now allows insurers to price products based on the profile and preferences of the consumer. For instance, insurers may now be able to provide cheaper prices to customers if they opt for a limited network of hospitals.

Integrating Wellness

Till date, health insurers played a very passive role as far as the health and lifestyle of the policyholders and their families. The revisions in the regulations now allow insurers to go a step forward and encourage healthy behavior and lifestyle, making the role of the health insurer more proactive. Health insurers will now be able to proactively promote healthy behavior and lifestyle by offering discounts on renewal premium. For instance, insurers may provide a discount to a consumer if she is able to reduce her body mass index from say obesity to overweight. There are a large number of consumers today who are taking good care of their health and lifestyle, but are being bucketed with all the other consumers just based on a simple parameter like age group. In the current design it’s clear that healthier individuals are more than paying for the sick. This is a step in the right direction, as not only does this help reward healthier lifestyle, but also ensures a better, fairer pricing based on lifestyle of each individual.

Apart from this offering, insurers can also add further value to health insurance products, by giving its consumers discounts on medical checks, medicines or doctor consultation services.

Lower tenure products

By regulation, health insurance products are lifetime covers, which essentially means that once an insurance company introduces a plan, it cannot be withdrawn or discontinued. While this helps protecting consumers from being left high and dry when they need their insurance cover the most, there is a flip side to it. This regulation leaves very little room for insurers to experiment with new innovative benefits, which could have helped in generating real life claims data to test the viability of the products and discover the price of such benefits. Insurance in India is still a young industry that needs to evolve with experience. Insurers need room to experiment with new benefits or features that will enable them to offer better insurance plans to their customers.

In the light of this need, the health insurance regulations have now allowed insurers to launch products with a maximum tenure of five years. While this takes care of one side of the problem, which is the need for space and innovation, IRDAI has also ensured that such experiments are not made at the expense of consumer interest. Thus, such short-term products, will be legitimately marketed as ‘Pilot Products’ that will discontinue at a particular date. The insurer will also have to port customers of such pilot products into their standard products on expiry of the tenure.

Promoting Transparent Claims Experience

A large number of consumers perceive health insurance as a product that is full of hassles as far as claims is concerned. They imagine a lot of phone calls and running around before the claim is settled. In fact, for consumers who have not purchased health insurance, this seems to be one of the main reasons why they procrastinate buying health insurance.

Apart from promoting intelligence and innovation on product design, the regulator has also brought in a host of regulations, such as the following that make the claims process simple and transparent for the consumer.

  • Disclose the exact process for claims submission.

  • Provide timelines with respect to response and claims processes in the policy terms and conditions.

  • Detail the communication channels for escalation in case the process is not followed or the timelines are not met.

  • Mention the entire list of documents and due steps required to follow for making a claim in the policy terms and conditions. Insurers cannot demand any additional document beyond this list.

  • Maintain all the information collected from the customer – right from the proposal form to the claims previously made and endorsements raised – in an electronic format. Insurer cannot demand such information from the insured at the time of settling a claim.

  • Understand the reasons for which an insured could not submit the documents in time. A claim cannot be rejected if there are valid reasons behind a delayed submission.

  • In the event the insurer changes a third party administrator (TPA) or service provider in the mid-term of a customer’s policy, ensure a smooth transition. A customer should receive information of this change 30 days in advance. In case of an under-process claim, the previous TPA and insurer have to ensure that claim is duly settled.

  • Appropriately inform the customer about their claim being denied (or repudiated). An insurer must specifically state the reasons for rejection, and refer to corresponding policy conditions backing the decision.

These revisions by IRDAI if followed in letter and spirit by insurers are sure to create a paradigm shift in how health insurance is doled out and received in our country.

The author is Director – Health, Life and Strategic Initiatives, Coverfox.com

 Mahavir Chopra
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