Big changes in health insurance

The Insurance Regulatory and Development Authority (Irda) took health insurers by surprise on Thursday, announcing a slew of changes.

After a clean-up act in life insurance, the watchdog appears to have turned its attention to health insurance. Indeed, the exposure draft guideline issued by it has proposed changes in every facet — product structure, renewability and claim settlement included.
“Though these are exposure draft guidelines, the reason they gain such importance is that these are going to be the final guidelines, with some very minor changes,” said an industry official.

Here’s what the guidelines have for you.
a) Product design
These changes will hopefully give you a reason to smile. To begin with, any one up to the age of 65 years can now buy a health insurance product.

This move aims to include more senior citizens under the health insurance ambit. So far, insurers could deny cover to people over 60 as it was not mandatory.

What’s more, a lifetime renewability of health insurance product may also be possible. With some companies setting the renewability age to just 50-55 years on the basis of your past records, this will be a big breather.

b) Hospitalisation & settlement
If these guidelines come into effect, the preferred network of hospitals clause will be removed. This means you can go to any hospital at the time of need and won’t have to pore over a booklet to find out which hospital has an agreement with your insurer.
Irda has also sought more clarity from insurers at the time of policy issuance and settlement.

So, a standard policy form will be issued, which will highlight important policy details for the customer’s ease. The policy document is also required to mention the cumulative bonus that a policyholder earns. A company rewards you with a bonus when you don’t make any claim for a specified period of time.

At the time of settlement, the regulator has introduced a form asking insurance companies to provide clear reasoning for claim rejection.

A detailed explanation will also have to be given at the time of loading of policies. Loading refers to the increase in premium after a claim has been made.

c) Treatment of multiple policies
If you have more than one health insurance policy, you 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. Earlier, the insurers had to share the claim payouts and these generally led to delays in claim settlement.

d) Alternative treatment
With the rising popularity of alternative medication, Irda had been mulling bringing health insurance under the umbrella. Finally, there seems to be headway. These guidelines say that non-allopathic treatment in any government recognised hospital will also be eligible for insurance.

e) Standard definition
In the absence of a standard definition for critical illness, companies were rejecting several claims. Now, there will be a standard definition of the term (and other terms) for all health insurance companies.

f) Medical reimbursement
Once these guidelines come into effect, you will get a full refund for the medical test you undertake before taking a policy. The medical reimbursement for the policyholder will be pegged at 50% for non-life and 100% for life.

g) Policy tenure
Irda has also put a cap on the minimum policy term. With this, policies offered by life insurance companies 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.

“The rationale behind this is that a longer term allows for a better servicing of the policy. Earlier, a few products in the market were of very, very short duration and this is an attempt to correct that,” said Mukesh Kumar, head-marketing and strategic planning, HDFC Ergo.

Somewhat predictably, insurers are not exactly excited about the pro-consumer measures.

“We welcome the regulations on ensuring the transparency of business. But there are some suggestions which restrict competition and innovation in the industry,” said Shreeraj Deshpande, head of health insurance, Future Generali General Insurance.