In order to address mis-selling of indemnity-based health insurance policies and increasing out-of-pocket expenses incurred by policyholders during treatment, the insurance regulator has directed all insurers to standardise the terms for all policies they underwrite. It has also directed them to include telemedicine as part of claim settlement of policy.
In three separate circulars, the Insurance Regulatory and Development Authority of India (IRDAI) has directed insurers not to bracket costs associated with pharmacy and consumables and implants. It has also directed companies to simplify the wordings of terms and clauses of policies.
Norms on proportionate deductions
Insurers will no longer be allowed to include associate medical expenses such as pharmacy and consumables, implants and medical devices and diagnostics. So, health insurers cannot recover any expenses towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims.
In health insurance, proportionate deduction happens when a policy holder opts for a room where the tariff is more than the tariff capped by the insurer.
The regulator has directed insurers to ensure that proportionate deductions are not applied in hospitals which do not follow differential billing or for those expenses in which differential billing is not adopted based on the room category. Insurers are not permitted to apply proportionate deduction for ICU charges as the regulator has underlined that different categories of ICU are not there.
Experts say these changes will benefit those policyholders who have opted for sub-limits as they do not get the entire claim amount. However, the provisions of these guidelines will be applicable on new products filed after October 1, 2020. “All policy contracts of the existing health insurance products that are not in compliance with these guidelines shall be modified as and when they are due for renewal from April 1, 2021 onwards,” the regulator’s circular notes.
Insurers to cover telemedicine
The regulator has directed insurers to include telemedicine as part of medical consultation cover in health policies. This was done as the Medical Council of India has issued telemedicine practice guidelines in March 2020 enabling doctors to provide healthcare using telemedicine. The provision of allowing telemedicine shall be part of claim settlement of policy of the insurers and need not be filed separately with the authority for any modification. However, the norms of sub limits, monthly/ annual limits, etc., of the product shall apply without any relaxation.
Standardisation of terms
The regulator’s guidelines on standardisation of general terms and clauses cover disclosure of information, admission of liability, claim settlement, discharge, etc. If the policyholder misrepresents or does not disclose any material fact, then the policy will be void and all premium paid will be forfeited to the company.
The insurer will have to settle or reject a claim within 30 days from the date of receipt of last necessary document. In case of delay in the payment of a claim, the insurer will be liable to pay interest to the policyholder from the date of receipt of last necessary document to the date of payment of claim at a rate 2% above the bank rate. If the claim warrants an investigation, then the company will initiate and complete it within 30 days from the date of receipt of last necessary document.
If a person has bought multiple policies, then the insurer chosen by him will have to settle the claim as within the terms of the chosen policy. If the amount to be claimed exceeds the sum insured under a single policy, then the policyholder can claim the balance amount from the other insurer.