On July 12th, 2016, the Insurance Regulatory & Development Authority of India (IRDA) announced a new set of Health Insurance Regulations which will have a positive impact for insured individuals. These new revised regulations replace those which were last set in 2013 and will bring about some changes in the health insurance industry as discussed below.
Health Insurance Companies Can Now Offer Pilot Products:
To enable insurers to offer innovative products and features, IRDA’s new regulations governing Health Insurance now allow health insurance companies to offer pilot products. These pilot products will be offered to policyholders for a maximum period of 5 years, following the expiry of which, the products will go back to functioning as regular health insurance products. The continuation of the pilot product for a term of 5 years is solely dependent on its feasibility for the health insurance company. If the product is feasible, it will be converted to a regular health insurance product at the end of 5 years, and if not, the company can discontinue it.
Data Disclosure to Improve Transparency:
The new regulations effective from 2016 will help improve data disclosure, which in turn will help bring about transparency. In addition to repudiated claims, insurers have another category of closed claims, which include claims which couldn’t be paid back due to incomplete documentation or failure on the policy holder’s part to follow up with the insurer. A high number of closed claims allow insurers to project a lower percentage of rejected claims. As per the new regulations, insurers cannot close a claim in their books.
Early Buyers & Health Conscious Customers to Get Discounts:
In order to motivate and increase awareness regarding the importance of health insurance among people, individuals who purchase health insurance early in life, practice wellness or preventive habits or renew their policy regularly will stand to benefit from discounts in premium and/or on medical services like diagnostics, consultation or pharmaceuticals which are a part of the network.
Loan/Credit Linked Health Insurance:
Term insurance based on an individual’s existing loan or credit is offered by many insurance providers. The benefit provided by these plans is dependent on the condition that upon the death of the insured, their nominee can utilize the claim amount of the policy to pay back the loan. These policies however do not give any such option in case the insured has fallen ill and is unable to repay the loan amount due to the sudden medical expenses which he has to incur towards the illness. The new regulations do provide respite in this regard, which means that health insurance companies will now be offering credit linked group health insurance products which will be for a maximum term of 5 years.
Agents Will Not Earn Any Commission from Portability:
According to the new Health Insurance Regulations passed by IRDA this year, insurance agents will not earn any commission if customers choose health insurance portability. They will, however, continue to earn commission when a policyholder renews the same insurance policy regularly. Health insurance portability only implies the portability of your mobile number, which allows you to carry forward the benefits offered by your existing policy (like pre-existing conditions, accumulated bonuses, waiting period, etc.) over to the new policy.
Life Insurers Not Allowed to Offer Indemnity-Based Products:
Following the new regulations, life insurance providers will no longer be allowed to offer indemnity products. Customers currently holding such policies will continue to have them until the respective policy expires. In order to meet the expected claims raised by such policies, insurers have created adequate reserves. This is done to ensure that the existing policyholders will not suffer in terms of policy servicing and claims processing.
Combi Plans Can Comprise of Any Life & Health Plan :
Following the new IRDA Health insurance regulations, health insurers can offer combi-plans which can be a hybrid of any health and life (endowment, money-back or ULIP) plan.
GST rate of 18% applicable for all financial services effective July 1, 2017.
Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.