IRDAI has issued a draft circular in which it has tightened norms for regulating the health insurance sector. This comes in the wake of IRDAI’s plans to segregate regulations governing health insurance and general insurance sector.
Among the sweeping proposed changes, one is to increase the minimum requirement of members from 10 to 20 to avail benefits under group health insurance policies.
Typically, group health insurance policies are cheaper and provide a lot of benefits compared to regular health insurance policies like exclusion of pre-ailment disease, no medical check-up expenses, low expense ratio etc.
Here are the other key proposals:
Uniform premium: Typically, health insurance policies are a one year contract and the premium can be revised every year. Now, the insurance regulator has proposed that insurers should keep the premium amount unchanged, at least for the first three years.
Cost of medical check-ups: IRDAI has asked insurance companies not to offer discounts to policyholders by bearing cost of medical check-up required before buying a health insurance policy. Such expenses should be borne equally by policyholder and insurers, the regulator has now proposed.
Offer discount: In order to promote maintaining fitness among people, IRDAI has proposed insurance companies to extend discount on every renewal premium on the basis of fitness and wellness criteria. So far, insurers extend no claim bonus to policyholders on every renewal premium.
Robust claim settlement mechanism for senior citizens: IRDAI has asked insurers and third party administrators (TPAs) to put in place a mechanism to expedite claim settlement process for senior citizens. In addition, the insurance regulator has stressed the need to create a robust grievance redressal system for such citizens.
Bundled products: IRDAI plans to increase disclosures in bundled products. Typically, bundled or combi product is a combination of a health insurance policy with the benefit of life coverage. The insurance regulator has proposed to disclose break up of premium charged to avail both component – health insurance and life coverage. Also, the commission should be paid accordingly to distributors. While life insurance policies offer first year commission of close to 35% of annual premium, health insurance schemes pay 15% of annual premium.