Irda has issued a slew of instructions to make health insurance standardised

In a bid to streamline health insurance in the country, the Insurance Regulatory and Development Authority (Irda) has issued a slew of instructions through a gazette notification. Health insurance companies can no longer load an individual policy claim. Also, discounts on premiums will not be at the discretion of the insurer. Discounts will have to be disclosed up front in the prospectus and the policy document, along with the objective criteria, which has to be approved by Irda under the file-and-use procedure.

Also, the cost of any pre-insurance medical examination will have to be factored in at the time of calculating the premium. However, in case of products with a term of one year or less and where such a cost is to be incurred by the insured, not less than 50% of the cost will have to be borne by the insurer once the proposal is accepted. In travel insurance, however, such costs will not be reimbursed by the insurer.

The Irda notification underlines that insurers can offer cumulative bonuses on indemnity-based health insurance policies, which will be stated explicitly in the prospectus and the policy document. If the insured makes a claim in a particular year, the cumulative bonus accrued may be reduced at the same rate at which it is accrued. However, cumulative bonus will not be allowed on benefit-based policies.

Irda has also mandated that all health insurance policies will have entry age of at least up to 65 years and once a policy has been issued, it will have to be renewed periodically without any break. Insurers cannot deny renewal on ground of age. Irda has said that a health policy will ordinarily be renewable except on grounds of fraud and misrepresentation by the insured.

Also, insurers cannot deny the renewal of a health insurance policy on the ground that the insured had made claim/s previously, except for benefit-based policies. Like all other policies, health insurance plans will also have a 15-day free-look period. If the insured has not made any claim during the free-look period, a refund of the premium paid, less any expenses incurred by the insurer on medical examination of the insured person and the stamp duty charges, will be made. If the risk has already commenced and the policyholder wants to cancel the policy under the free-look period, a deduction towards the proportionate risk premium for the period under cover will be deducted.

While portability has been allowed in health insurance, insurers offering health cover specific to age groups, such as maternity covers, will offer an option to migrate to a suitable policy at the end of the specified exit age or at the renewal of the policy by providing suitable credits for all the previous policy years, provided the policy has been maintained without a break.

The regulator has also defined standard definitions of terminology, procedures for critical illness, pre-authorisation and claims form and even standard excluded expenses in hospitalisation indemnity policies. There will be a standard file-and-use application form, database sheet and customer information sheet and even standard agreement between third-party administrators (TPA), insurers, provider and the insurer.

A common industry wide pre-authorisation and claim form will significantly streamline processes at all stages and will enhance the ability of providers to obtain a timely prior authorisation. Moreover, the data will have to be presented in an optical character format, which will go directly into the IT system and reduce data-entry issues for TPAs and the insurers.

All procedure related to claim processing will be handled by the TPA regional offices and any intimation of claim and receipt of claim papers by the respective underwriting office of the insurance company will be forwarded to the regional processing office of the TPA. On its part, the TPA will process the claim and facilitate the insurer to take decision on claim settlement or rejection. Insurers will only have the right to settle or repudiate a claim and the TPA can only convey the repudiation of a claim to the insured. As a norm, if the TPA sends the letter of repudiation to the claimant, it will have to be clearly indicated that ?the claim has been repudiated as advised by the insurer? and specific reasons will have to be mentioned. The repudiation letter will also clearly mention that the insured may approach the grievance cell of the insurer.

The TPA will process all claim applications within two working days after receipt of the complete set of claim documents. The TPA will provide management information system reports and the insurer will be provided the information regarding the enrolment, pre-authorisation/reauthorisation and claims processed.

In case of emergency cases, which result in symptoms that occur suddenly and unexpectedly and require immediate care by a medical practitioner to prevent death or serious long-term impairment, the provider should initiate the procedure for preauthorisation using the format provided and the insurer will discuss with the doctor the eligibility of coverage. For any life, limb or sight saving procedure, the provider cannot withhold or delay emergency medical attention on the pretext of waiting for preauthorisation.

The provider may treat the insured by taking a token deposit and once the pre-authorisation is issued, the provider will have to refund the deposit. Once the patient is medically stable, he must be transferred to the room he is eligible for as per the health plan. If the TPA is not satisfied with the medical details, it may call for all relevant details immediately. The TPA will have to verify from the network service provider the nature of ailment and if the policyholder is found to be eligible under the terms of the policy, the TPA will convey the guarantee of payment letter to the network service provider.

The discharge card will have to mention the duration of ailment. The signature or thumb impression of the policyholder must be obtained on the final provider bill. The provider will submit all original medical bills, discharge summary and investigation reports with the final preauthorisation request. All payments to the insured will have to made by direct electronic fund transfer within 24 hours of submission of the claim documents. If payments are not made within 24 hours of such submission, the insurer will have to make payment of all eligible bills within the 21 days of receipt of such submission.

what?s new

* Health insurance companies can no longer load an individual policy claim

* Discounts on premiums will not be at the discretion of the insurer. It will have to be disclosed upfront in the prospectus and the policy document, along with the objective criteria, which has to be approved by Irda under the file-and-use procedure

* The cost of any pre-insurance medical examination will have to be factored in at the time of calculating the premium

* Insurers can offer cumulative bonuses on indemnity-based health insurance policies, which will be stated in prospectus & policy document

* If the insured makes a claim in a particular year, the cumulative bonus accrued may be reduced at the same rate at which it is accrued

* All health insurance policies will have entry age of at least up to 65 years and once a policy has been issued, it will have to be renewed periodically without any break