IRDA proposes sweeping changes in health insurance (Cafe Mutual 3rd June 2012))

The regulator proposes to extend the age limit to 65 years for availing a health insurance policy and lifetime renewability.  

IRDA’s objective for extending the age limit is cover more senior citizens under health insurance.  Also, insurers would have to provide cashless facility to policyholders undergoing treatment in a particular hospital even if it is removed from the list of preferred service providers.

The guidelines seek to address the problems of the health insurance sector which came into light in 2010 after four public sector insurers removed private hospitals from their preferred list citing over charging by them under the cashless scheme. In addition, the regulator has proposed the following key changes:

Cap on policy term – Health policies offered by life insurers should have a minimum term of four years. On the other hand, any health product from general insurance companies will have a minimum term of three years.

Critical Illness and claim settlement – IRDA in its exposure draft has defined critical illness properly. Henceforth, no insurer can deny any claim on grounds of non availability of definition for critical illness.

If a policy holder has more than one health insurance policy, they can get the claim settled completely by any one of the insurers. It is left to the companies to settle the bill amongst themselves later.   

Eligibility for insurance - Non-allopathic treatment in any government recognised hospital will also be eligible for insurance.

Reimbursement Policy - Policy holders will get a full refund for the medical test they undertake before taking a policy. The medical reimbursement can be availed at 50% for non-life and 100% for life.

Hospitals that policyholders can visit – Policy holders can go to any hospital for any health issues and won’t have to go through a booklet provided by the insurer to find out which hospital has an agreement with their insurer. IRDA has also sought more clarity from insurers at the time of policy issuance and settlement. A standard policy form will be issued, which will highlight important policy details of the customer.

Combi Products- According to the regulator ‘Combi Products’ can be sold through “direct marketing channels, brokers, composite individual and corporate agents, common to both insurers.”

The draft further said, ‘Combi Products’ are not allowed to be marketed through bank referral arrangements. Insurers shall ensure that the product is not marketed by those insurance intermediaries who are not authorized to market either of the products of either of the insurers.”

Besides distribution, the draft also mentions that since the product is jointly offered by a non life insurer and life insurer, specific name of the non life and life insurer should be properly mentioned.

Do New Irda Rules on Health Cover Benefit Policy Holders? (ET 6th June 2012)

Preeti Kulkarni analyses the impact of the regulator’s proposed measures to bring about the much-desired transparency and standardization in health insurance

Following the Bombay High Court order in December last year, the Insurance Regulatory and Development Authority (Irda) had promised to release draft guidelines to protect health insurance policyholders’ interest and bring more transparency into the system. 
Last week, the insurance regulator proposed certain norms, which could bring about the muchneeded standardization in the health insurance space. While some of the norms are already in place, there are also several fresh proposals. Here’s a look at the newer ones: 

Measure: 30-day deadline for claim settlement

Impact: You can take insurers to task if the claim is not processed within 30 days of submitting the required documents. “While it was part of Irda (Protection of Policyholders’ Interest) Regulations, 2002, it never found a mention in insurance policy documents. Henceforth, it will have to be included in the policy documents,” explains civic activist Gaurang Damani, who had filed the public interest litigation (PIL) in the Bombay High Court demanding that regulations be framed for the health insurance sector. Irda's undertaking to devise draft guidelines was a fallout from this case. 

Measure: Specific reason required for claim denial Impact: Since the insurance company has to give the reason for rejecting a claim in writing, it could bring down the instances of claim repudiation on flimsy grounds. 

Measure: Insurers to pay hospitals directly Impact: Payments will become smooth. “In cases where the cheques for claim settlement were issued by the third-party administrators (TPA), payments used to be delayed often. Besides, it was difficult to ascertain whether the TPA had passed on the entire claim amount approved by the insurer to the claimant,” says Damani. 

Measure: Contribution clause will not come into play in the case of multiple policies

Impact: Policyholders with two or more indemnity-based policies can make optimum use of their total coverage. Until now, claim made on two policies was split between the two insurers in the ratio of the sum insured. “The policyholder will have the option of choosing the insurer with whom the claim is to be settled,” says Amarnath Ananthanarayanan, CEO, Bharti-AXA General Insurance. 

Measure: Standardization of cumulative (no-claim) bonus

Impact: Better understanding of the benefits for every claim-free year. Irda has asked insurers to state its workings of the same explicitly in the policy document. It has also laid down norms for withdrawing this benefit in the event of a claim. The no-claim bonus can be rolled back at the rate at which it was offered or it can be included in the sum insured after charging the premium applicable to this additional cover. 

Measure: No arbitrary hikes in premiums

Impact: No more nasty surprises at the time of renewal. Insurers can hike premiums only after explaining the reasons for it to the Irda. They will have to justify it on the basis of the preceding three years’ claims experience, expected claims experience and the rationale for the proposed pricing. 

Measure: Loading policies to be more transparent

Impact: You will know the likely premium increase in advance. If an individual’s claims in each of the three consecutive policy years (except the current one) exceed 500% of the current premium, the insurer can hike the premium as per the pre-determined table disclosed at the time of issuing the policy. This step will benefit policyholders immensely,” says Segar Sampath Kumar, DGM, New India Assurance. 

Measure: Rewards for good claim record and continued renewals

Impact:You can hope for an enhanced cover or discounts on premiums for low claims and renewing the policy without fail. 

Measure: Part-reimbursement of pre-insurance check-up expenses

Impact:Non-life insurers may have to reimburse at least 50% of the cost for check-ups conducted before issuing the policy.