National Insurance Awareness Day 2021: In the time of the pandemic, the Insurance Regulatory and Development Authority of India (IRDAI) has introduced several policies and rule changes in Life, Health and Motor cover for the benefit of policyholders since the last year. One can say that it has been quite an eventful year for the insurance industry even as the Covid-19 pandemic led to a nationwide lockdown. Dhirendra Mahyavanshi, Co-Founder, Turtlemint, says there were several changes in the life, health and motor insurance domain with at least three main objectives: To offer policyholders desired coverage; to make insurance plans relevant to consumers’ needs; to increase the penetration of insurance in India
Vikas Gupta, Chief Compliance Officer, Canara HSBC Oriental Bank of Commerce Life Insurance, said in the wake of the Covid-19 outbreak and its severe implications on masses, insurance has become one of the most important financial tools. Due to recent insurance awareness owing to the pandemic, customer is much more informed about the product propositions and its benefits. Thus, the purchase of insurance as financial security for the family towards an unexpected contingency has also gained momentum.
The changes introduced by the insurance regulator proved to be beneficial for policyholders. On this National Insurance Awareness Day, let’s take a look at some of the top changes in different insurance segments:
1. Launch of Saral Jeevan Bima
The regulator introduced the concept of standardized insurance plans to provide much-needed coverage at affordable rates. “In the life insurance segment, a standard term plan, Saral Jeevan Bima was launched to provide affordable term insurance coverage. The policy offers coverage of up to Rs 25 lakhs at affordable premiums,” Mahyavanshi said.
IRDAI has made some key changes to help customer get better access to protection. The key change in the last year was the introduction of Standard polices across the industry, said Casparus Kromhout, MD & CEO, Shriram Life Insurance.
The standard life insurance products are fabricated in such a way that they broadly meet the needs of the average customer without differentiating between gender/place of residence/occupation, etc. The life insurance standard product introduced was a simple term protection plan with SA as low as 5 lakhs. “The introduction of standard products would be very beneficial for customers that currently do not have life insurance but are interested in protecting their families in the face of the pandemic,” he added.
2. Policy issuance through e-KYC
To make it easy for insurers to offer insurance plans, the concept of issuing policies through e-KYC, video KYC, digital signatures and online verifications was allowed.
3. Simplified claim process
Insurers were asked to honour death claims resulting from COVID-19 so that policyholders got the financial assistance in trying times.
4. Launch of Arogya Sanjeevani policy
Another standardized insurance plan, this time in the health insurance space, was the Arogya Sanjeevani policy. The policy was launched on 1st April 2020, as an indemnity plan to allow affordable health insurance coverage. Policyholders can enjoy a sum insured of up to INR 10 lakhs and get coverage for their entire family under this policy.
Commenting on the significance of this policy, Nikhil Chopra, Chief Business Officer, Medi Assist Healthcare Services, told FE Online, “The health insurance products available in the market can be complex and overwhelming to understand. Arogya Sanjeevani is a basic and standard health insurance plan that has been introduced by every insurer to support Indian citizens to purchase health insurance. This plan also covers coronavirus treatment expenses. It has played a significant role in developing strong faith in customers towards the health insurance ecosystems.”
5. Corona Kavach policy for COVID treatment and hospitalization
Treatments of COVID can be expensive, especially for people with severe coronavirus symptoms. The Corona Kavach policy helps policyholders avail treatment without having to worry about hospital expenses.
These plans were launched to allow individuals coverage against the pandemic. These plans are also standard health plans that cover COVID related claims on an indemnity (Kavach) or on a fixed-benefit (Rakshak) basis.
6. Introduction of the monthly, quarterly, and half-yearly EMI options
Nikhil Chopra of medi Assist said that for the first time in health insurance history, policyholders can pay health insurance premiums in installments. “EMI options allow policyholders to opt for any plan that they deem fit according to their preferences. However, with monthly or quarterly payments, they get a lesser free-look period than yearly premiums.”
7. Transparent policy terms and conditions
According to IRDAI, insurers need to specify pre-existing diseases that won’t be covered up to 4 years from the date of inception of the policy. The customers can now declare any disease diagnosed after around three months from the date of purchase of the policy.
8. Claim-related guidelines
To provide financial assistance to policyholders dealing with the repercussions of the pandemic, the regulator directed insurers to provide a cashless claim facility for hospitalisation claims due to COVID. The regulator also directed insurers to cover COVID claims under existing plans from Day 1 and have a waiting period of 15 days for covering COVID for new plans, said Dhirendra Mahyavanshi.
9. Increment and decrement of the maximum and minimum ages covered by health insurance policies, respectively
Health insurance providers can now increase the maximum age limit specified in health insurance plans, which earlier used to be 65. The IRDAI also allowed the insurers to decrease the minimum age specified for purchasing health insurance plans. The insurance company has to inform IRDAI about the change through a certificate.
The concept of e-KYC was extended to health insurance plans too wherein insurers were allowed to issue policies without physical documentation through the e-KYC process.
11. Coverage inclusions
To make health plans more comprehensive, the regulator directed insurance companies to include telemedicine, mental disorders, and modern treatments under the scope of indemnity-based health insurance plans.
12. Continuing to include critical illnesses, mental health, genetic diseases
Nikhil Chopra said that critical illness cover for genetic diseases, psychological disorders, and neural disorders which were earlier from health insurance plans have now been asked to be made inclusive in the health insurance plans by IRDAI. Notwithstanding the pandemic, people might still need help with these treatments as they remain unavoidable. IRDAI also introduced mental health cover in health insurance policies, so policyholders don’t have to think about expenses before therapy.
13. Liberty to increase/decrease the health insurance premiums based on the loss-ratio
Health insurance providers are allowed, according to the IRDAI, to increase or decrease health insurance premiums by 15%, owing to changes in the terms and conditions of health insurance policies. As per IRDAI, this can be done based on loss-ratio numbers of the previous three financial years. However, health insurance premiums should only increase after the expiration of three years from when the product was approved or modified.
14. Freedom to policyholders to choose TPAs of their preference
Health insurance companies need to provide a list of TPAs to policyholders when selling a health insurance product to them. Policyholders will now have the option to choose a TPA of their preference from the list. However, insurers will decide the number of TPAs based on the policyholder’s geographical location and health insurance product. Policyholders need to note that they can only change TPA at the time of policy renewal.
15. Cover for modern treatment
Biresh Giri, appointed actuary, Head – Product Development & CRO, ACKO Insurance, said that to ensure the availability of Modern treatment methods such as oral chemotherapy, balloon sinuplasty, deep brain stimulation, among others, will now be included into the coverage and cannot be denied. These treatments shall be covered either as in-patient or as part of domiciliary hospitalization or as day-care treatment in a hospital. The insurers may impose sub-limits as per the product design. This will allow access to modern treatment in an insurance contract.
The coverage for claims of Oral Chemotherapy, where Chemotherapy is allowed and Peritoneal Dialysis, where dialysis is allowed in the product cannot be denied.
16. No look back and rejection of Claim After 8 Years
Biresh Giri further said that after completion of eight continuous years under the policy no look back to be applied and no health insurance policy shall be contestable except for proven fraud and permanent exclusions. This means, a customer’s health insurance claim will not be rejected post expiry of eight continuous years of coverage unless they have indulged in fraud or are making a claim for a permanent exclusion. This period of eight years is called the moratorium period.
17. Standardized policy wordings and exclusions
The wordings of the exclusions or waiting periods shall be specific and unambiguous. No open-ended exclusions like “Indirectly related to”, “such as”, “etc.” are allowed while incorporating the exclusions and in the waiting periods. The regulations have also standardized the wording of exclusions, this will enable product transparency between the insured and the insurer. Such exclusions are specific and coded. As a result, customers should know the extent of coverage and exclusion.
18. New definition of Pre-existing disease
The definition of pre-existing diseases (PED) has been revised, as per new definition “any condition, ailment, injury or disease that is/are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer or “for which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy or its reinstatement”. This would result in transparency among policyholders on what is being treated as Pre-existing disease.
19. Withdrawal of long term comprehensive plans
To avoid mis-selling and to make motor insurance plans more affordable, long term comprehensive plans were scrapped. Now, new vehicle owners are required to buy only long term third party coverage while own damage coverage for 3 or 5 years has been scrapped.
20. Pay –as-you-use cover
The concept of pay-as-you-use motor insurance plans was launched that allowed policyholders to switch on and switch off their motor insurance coverage depending on their usage. This reduced the premium cost and made motor insurance plans more popular.
These changes have increased the popularity of insurance plans and made them the need of the hour over the last year.
21. New concept of long term own damage coverage
Neeraj Prakash, Managing Director, Shriram General Insurance said that in the motor insurance segment there was only one change in 2020. IRDAI removed the concept of long term own damage coverage. From August 1, 2020, the IRDAI has withdrawn permission for motor long-term package cover offered for both motor third-party insurance and own damage cover for three or five years for new cars and two-wheelers, respectively. Now only third party coverage is available for a long term period and that too only for new vehicles. General insurance companies can no longer offer a long-term own damage cover for new vehicles and will be limited to providing just a single-year own damage protection term at a time with the mandatory three-year or five-year third party liability for cars and bikes, respectively.