Insurers hail IRDAI's norms on modification of health products

Mumbai: In a bid to check any unjustified and arbitrary rise of health premia by insurers, the insurance regulator IRDAI, on Tuesday, has revamped the existing regulations and has asked insurers to file its compliance reports to their boards and to the regulator on the yearly basis.

Insurers have termed the IRDAI's move as simplifying insurance offerings and bringing in more transparency in order to encourage more people to opt for insurance.

The insurance regulator has also disallowed general and health insurers to modify the existing benefits, add new benefits in the existing health insurance products, which leads to imposing an increase in premium.

"Addition of new benefits / up-gradation of existing benefits may be offered as add-on covers or optional covers with a standalone premium rate to ensure an informed choice to the policyholders,'" said the IRDAI in a statement.

However, it has allowed insurers to effect minor modifications as stipulated in the existing regulations.

Commenting on it, Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance said, "Under the additional norms on modification of health products (including PA and Travel), IRDAI has clarified that insurers can choose to add new benefits/upgrade existing benefits as an add-on cover with a standalone premium rate for it."

Thus, helping the customer make an informed choice and providing them with an opportunity to enhance the coverage by opting for add-on covers as per their needs. Additionally, the Regulator has also shared norms on presentation format of Policy Contract, which insurers need to follow for all health insurance products with effect from October 1, 2021. This will lead to further simplification and better understanding of the policy for customers as the same format will be used across all insurers using plain & simple language, he added.

The IRDAI has said the appointed actuary of an insurance company should review the financial viability of every health insurance product at the end of every financial year and the report of such review should be submitted to their board along with the analysis of favourable or unfavourable experience of each product as well as recommended corrective action, to ensure sustainability of the product and to protect the interests of policyholders of the underlying product.

A status report of insurers' health portfolio should be submitted by 30th September of every financial year to the IRDAI along with the board's suggestions and the corrective actions to be taken in the format specified by us, said IRDAI.

Moreover, IRDAI has asked insurers to ensure that the policy wordings must be simple using plain language.

In order to enable all sections of policyholders easily understand the contents of policy contract, all insurers should arrange the policy contracts of all health insurance products in the order we have specified and with clear heading so as to draw the attention of policyholders, it said.

This format should be adopted in respect of all policies issued from 01 October, 2021 onwards.

The status report for FY 2020-21 should be filed by 30th September, 2021.

Among other things, the policy should clearly mention benefits covered under the policy, exclusions to be divided into Standard Exclusions (exclusions for which standard wordings are specified by IRDAI) and specific exclusions, general terms and clauses with clear demarcation and sub title and other terms and conditions.

The wordings of all the standard exclusions, standard terms and clauses and standard definitions used in the policy contract should comply with the wordings as specified by the IRDAI.