The health insurance vertical will benefit from a special clause in the recently notified Health Insurance Regulations 2016, wherein insurers have been allowed the freedom to test pilot innovative, unconventional products for up to five years.
The health insurance vertical will benefit from a special clause in the recently notified Health Insurance Regulations 2016, wherein insurers have been allowed the freedom to test pilot innovative, unconventional products for up to five years. A whole new health insurance umbrella could open up for those consumers who seek special covers.
I see a multitude of breakthrough innovations in the coming years as a result of the new guidelines. For instance, currently bariatric surgery—which is out of the purview of standard health insurance plans—may find its place in a pilot health product covering treatment of obesity and other medically prescribed weight management treatments. Similarly, doctor consultations aren’t covered unless the product selectively offers out patient coverage.
Ayurveda could see health covers specifically targeting alternative traditional forms of treatments such as Unnani, Siddha and Homeopathy. I see emergence of pilot products offering customised benefits to those individuals who have diabetes, cancer or other life-threatening diseases.
There could be a host of innovative policies launched with the “Pilot” tag to study the pricing of such health risks and the claims. Not that insurers couldn’t offer such products before the Insurance Regulatory and Development Authority of India guidelines. But the nascent state of the Indian health insurance market has left insurers empty handed in terms of reliable standardised data. Currently, accessible morbidity data offers no peek into risk factors that lead to health conditions, limiting the ability of insurance companies to develop and price new health insurance risks. The pilot experience of five years would offer various insights to insurers and allow them to seed unconventional products that could later bloom into full-fledged products. While the focus would be on innovation, novelty wouldn’t be limited to products alone, service equation too could get influenced. Given that innovations would revolve around customers, it will help insurance companies to gain insights on consumption behaviour. This will enable them to enhance their service basket.
While we all hope for a smooth sail, there could be turbulences. Insurers need to clearly communicate the unique ‘time bound’ product structure and the post ‘pilot’ scenario to avoid any post sale confusion. Customers need to understand that these products can be in pilot phase for a maximum period of five years and their design and premium could change at the end of that period.
If the pilot product is withdrawn, the policyholder would have to migrate to another health insurance product offered by the same insurer or similar products available in the industry complying with the portability terms and conditions. If feasible, the pilot product could also be reintroduced with modifications, including change in premium based on the claims experience.
Even as the regulator has announced a broad framework, it is important to go a step further and specify detailed, operational guidelines on pilot products. This will ensure clarity from the planning stage itself and complete ‘match’ between consumer expectations and insurer deliverables from the beginning.
The writer is executive director, ICICI Lombard General Insurance