Soon, there may be innovative health insurance covers in the market — say, a policy that covers diabetic patients or one which covers obesity — thanks to IRDAI.
In July, the regulator introduced new regulations for health insurance policies replacing the Health Insurance Regulations, 2013.
The new regulations allow launch of innovative products on a pilot basis with a maximum term of five years. If the product works well, it will be converted into a regular product at the end of five years; if not, it is allowed to be withdrawn.
Here, we highlight the many changes that the new regulation has brought about and their impact.
Incentives to buy a policy
The new regulation brings the concept of ‘entry-age based pricing’, which allows insurers to reward people for buying health insurance early in life. This means, a buyer who signs up for a medical policy for the first time will be charged more than someone who is only renewing it. For instance, a person aged 35 who buys a health insurance policy today will pay a lower premium when he turns 40 compared to someone who buys his first health policy at the age of 40. Currently, health insurance premiums are determined based on age, irrespective of when it is being bought.
Insurers can also now incentivise customers for maintaining good health by offering rewards in the form of discounted rates for outpatient consultations and health check-ups. A discount on renewal premium is also allowed.
The new regulation also lets insurers to remove loading on the premium for an individual if he improves his health (can be done at the time of policy renewal). It also specifies clearly that no insurer can get a fresh evaluation by the underwriter done during a policy renewal and ask the policyholder to go through a medical examination unless there is a request for higher sum insured.
Another highlight in the new regulation is that it allows benefit policies (critical illness and personal accident policies) to offer the ‘bonus’ advantage. Currently, only hospitalisation policies offer bonus in no-claim years for the policyholder which is usually a certain percentage of the sum insured.
This bonus accumulates over a period of time giving an increased sum insured to the individual. Ashish Mehrotra, MD & CEO, Max Bupa, says, “The new regulation omits the provision stipulating that cumulative bonus cannot be allowed on benefit-based policies which was there in the earlier regulation. So now, even critical illness policies may offer cumulative bonuses…”
Innovative products
Insurers have been restrained from introducing innovative policies all along as, once offered, there was no option of withdrawing it. But, now, this rule has been altered for policies launched on test basis.
The new regulations say that insurers can launch innovative products on pilot basis by disclosing upfront that these are close-end products and may be withdrawn (if unviable) in five years. Insurers are required to specify the maximum date within which the pilot product will be converted into a regular policy or withdrawn (after giving an option to migrate to another product).
Sandeep Patel, MD & CEO, of Cigna TTK Health Insurance, says, “The idea here is to test new ideas where we do not know the price risk now. Today, if we want to create a diabetes product, we would be very constrained in the way we would underwrite customers. But, if it is launched as a pilot product, we may take even patients with higher sugar levels provided they are willing to work on health management …Then, in five years, if we see the product working for us, I will go ahead and launch it…”
Benefits for senior citizens
The new health insurance regulation has special provisions for senior citizens. It says that premium on health policies offered for senior citizens will be fair, justified and disclosed upfront. If there is any loading on the premium, the insurer has to inform it to the prospective customer and his consent received before issuing the policy.
It also requires life, health and general insurers selling health insurance policies to have a separate channel to address the grievances of senior citizens.
[Source: The Hindu]
