Health Insurance: IRDAI Issues Draft Norms to Ease Policyholders’ Experience

Health insurance documents are often lengthy written in a way that may direct the policyholders to pay attention to a lot of unimportant stuff. But the new attempt of IRDAI (Insurance Regulatory and Development Authority of India) will help the policyholders understand their health insurance plans much better.

The regulatory authority has issued draft norms on standardisation of general clauses which includes definitions and policy wordings, the list of exclusions etc. Previously, IRDAI had also made it mandatory for the insurance companies to offer standardised health insurance plans from April 1, 2020.

Now, IRDAI has raised a proposal to standardise some common general clauses in indemnity based health insurance plans. Which means, it has specified a format for those cases where the policyholders first pay for the policy and claim later.

The Chief Executive Officer of Aditya Birla Health Insurance, Mayank Bathwal shares, “The health insurance space has seen a host of changes in recent months, so a consolidated set of uniform common clauses, will eliminate ambiguity across key terms and conditions.”

5 such uniform clauses are mentioned below:

1. Migrating between products

IRDAI has defined migration between two products as switching between the same insurer’s product, group or retail. The President of Accident and Health in HDFC Ergo says, “So far, it was not clearly defined, with portability and migration being used interchangeably. Now, it (migration) refers to transferring the waiting period credit gained for pre-existing conditions and time-bound exclusions.”

He further adds that until now there were no standardised norms to carry forward continuity benefits at the time of migration. Portability norms were clear though. Now IRDAI has clarified that complete waiting period credit for pre-existing diseases will be transferred to new policy even in case of migration. The insurer will determine the new premium amount.

2.Policy renewal

Health insurance plans are renewable for life except in cases of fraud, moral hazard and misinterpretation. Health insurance companies don’t have any right to increase the premium amount on renewal or deny health insurance plans on the basis of claims made earlier.

But it is not compulsory for the insurer to notify the policyholder for renewal. So, one must remember their renewal deadline and pay health insurance premiums on time.

3. Withdrawal of health insurance plans

Policyholders, especially senior citizens are often witnessed withdrawing their existing health insurance plans stating them as unsuccessful or as their insurers force them to shift to a new one.

But IRDAI’s draft does not offer much relief to the policyholders in this part. But the health insurance companies are required to inform the policyholders about withdrawal 90 days prior to the renewal date. Also, information related to terms and conditions or premiums etc shall be informed 3 months in advance to the policyholders.

4.Multiple health insurance plans

For people who buy cover under more than 1 health insurance plans, seeking claims may be a matter of confusion. On this IRDAI says, “If multiple policies are taken by a person during a period from one or more insurers to indemnify treatment costs, the insured shall have the right to require a settlement of his/her claim in terms of any of his/her policies.”

Now, you will be able to choose the insurer of your choice to settle claims with. Earlier, the claims were made with two policies in the proportion of the sum insured which is not the case now.

5.Penalty for delay in claim settlement

Health insurance companies can accept or reject health insurance claims within a stipulated time of 30 days from receiving the ‘last necessary document’. If the company is unable to meet the deadline, it will pay a penalty at the bank rate and 2 percentage points for the delay period. If the insurance company wants to investigate, it can do so within 30 days after receiving the last required document.

As per the IRDAI’s draft statement, “In such cases, the company shall settle the claim within 45 days from the date of receipt of last necessary document.”

The insurance regulator has asked for public comments on the same which the general public can send by 25 January 2020.