IRDAI has brought in some new rules in health insurance that bring in standard definitions, strict timelines for claims, and changes in inclusions and exclusions. This can mean enhanced coverage, standardised policies, a higher ratio of settled claims, and less ambiguity.
1) IRDAI has issued new guidelines for general and health insurance in India. These rules are applicable from October 1, 2020. Let us look at them and their impact -
Insurance companies will have to settle or reject a claim within 30 days from the date of the claim made unless more investigation is warranted. If the insurer has to carry out further investigations, the insurance company must settle/reject the claim within 45 days from the date of receipt of the last necessary document. If there is a delay in payment in either of the cases, the insurer will have to pay 2% interest above the applicable bank rates on the amount due.
It is beneficial to the insured as they get a quick response to their claim.
2) An insurer can cancel a policy, reject a claim, or put a clause that is applicable from earlier for misrepresentation of facts or oversight of certain things if a claim is made within eight years of the existence of the policy. But insurers cannot contest the policy or its declarations beyond eight years unless the insurer can prove fraud. If the insured has made a mistake or an oversight without any intention to gain from the insurance policy, the insurer cannot reject the claim or cancel the policy but can ask for further information.
It is beneficial for people holding insurance policies for several years and may have made some mistakes in the form. Moreover buying insurance policies was less streamlined earlier, which could have resulted in oversight.
3) All insurers have to put the same standard definitions for 18 exclusions. Exclusions result in many grievances as the wordings differ from one company to another and can be interpreted in multiple ways. So exclusions such as pre-existing diseases, waiting period, conditions related to cosmetic surgery and obesity, etc. are consistent across the industry. For example, the clause of pre-existing disease refers to the professional treatment of diagnosis rather than pre-existing symptoms, etc.
The aim here is to reduce ambiguity and the number of complaints. The policies will be more objective.
4) IRDAI has created a list of 16 permanent exclusions, like HIV/AIDS, chronic kidney disease, chronic liver disease, epilepsy, and Hepatitis B. An insurer can offer a policy without coverage for these illnesses. It will help patients who suffer from any of these ailments to be covered for other health issues. Before this clause was added, it was difficult for them to get any health coverage.
More people can be covered under health insurance.
5) Health insurance coverage has been broadened with insurance for treatments for mental illnesses, internal congenital diseases, and genetic disorders. It includes artificial life maintenance and other modern treatments like stem cell therapy. Companies could exclude these conditions earlier.
It is advantageous for insurer and insured to keep pace with advancement in medical science.
These changes have to be incorporated into new products filed on or after October 1, 2020. Existing products have to be modified to allow for the above changes from April 1, 2021. If a policy does not fulfil these conditions, it will have to be discontinued.
Most of these changes are useful to the insured or policyholder. They help settle claims easily and enhance coverage. For the insurer, this can reduce the number of complaints and also increase the number of customers. These changes can result in higher premiums to compensate for broader coverage and higher claims.