IRDAI, which is known as the Insurance Regulatory and Development Authority of India recently launched some big changes in the health insurance space. IRDAI is an autonomous and statutory body responsible for managing and regulating the insurance and reinsurance industry in India.
The regulator has introduced several key rule changes to empower policyholders, including reducing cancellation charges in indemnity-based health insurance policies, specifying procedures for offering a no-claim bonus, and making claim-settlement processes more transparent.
Streamlined renewal process – Insurers are now prohibited from refusing to renew a policy solely because a claim was made in the past. Additionally, insurers cannot conduct fresh underwriting, which involves assessing your health and determining policy terms, unless you request an increase in coverage. These changes aim to simplify the renewal process for policyholders.
Penalties for non-compliance with ombudsman decisions – Insurance companies are now required to implement the orders of the insurance ombudsman within 30 days. Failure to do so will result in penal interest. Additionally, insurers will be liable to pay ₹5,000 per day to the policyholder if ombudsman awards are not implemented within the stipulated time frame. These measures are intended to ensure that insurers comply with ombudsman decisions in a timely manner.
Insurance for all – Insurers are now required to offer products that cater to everyone, including all age groups, individuals with various pre-existing conditions, and disabled individuals. Additionally, policies must cover outpatient department (OPD), daycare treatment, and home care treatment. All advanced surgeries should also be included in coverage. However, a challenge arises as policies that cover such a wide range of people and treatments are typically priced higher. Resolving this pricing challenge would make these new changes even more beneficial for policyholders.
Accelerated cashless claims processing – Starting July 1, 2024, health insurance companies will be required to decide on cashless treatment requests within one hour. Currently, each insurance company has its own policies regarding the timeframe for handling cashless requests and claims, leading to inconsistencies in how quickly these requests are processed.
Faster claim settlement upon discharge – Insurance companies have been instructed to approve the final cashless authorization at discharge within 3 hours of receiving the bills. If there is any delay beyond this 3-hour window, the insurer will be responsible for paying any additional amount charged by the hospital.
Emphasis on simplifying policy details – Insurers are now required to provide a Customer Information Sheet (CIS) that summarises the important terms and conditions of the policy in simple language. This initiative aims to make it easier for policyholders to understand their insurance coverage.
Enhanced transparency in claim rejection process – Claim rejections must now be reviewed by a 3-member group of the product management committee, rather than being decided by a single individual. This change aims to increase transparency and prevent arbitrary claim rejections that customers often encounter.
Protection against rejection after 5 years – After 60 months of continuous coverage, insurers are prohibited from rejecting claims for arbitrary reasons. They can only reject claims if they can demonstrate that the policyholder has committed fraud. This provision aims to provide more security and confidence to policyholders regarding the validity of their claims.
Rewards for claim free years – In motor insurance, if you don’t make a claim, your next year’s premium decreases. Traditionally, in health insurance, the unclaimed bonus is added to your coverage or sum insured. However, the IRDAI is implementing changes to give policyholders a choice, either receive increased coverage or pay a reduced premium upon renewal This new option is particularly beneficial for individuals facing higher premiums, especially in the aftermath of COVID-19.
Reduction in cancellation charges – Policyholders can now cancel their health insurance by providing their insurer with a 7-day notice. The insurer will refund a portion of the premium for the remaining policy period, provided no claims have been made. Previously, cancellation charges were significantly higher, making it costly to terminate a policy early.
In conclusion, the recent changes introduced by IRDAI in the health insurance sector represent a significant step towards enhancing the overall insurance experience for policyholders. These changes include faster cashless claim processing, reduced cancellation charges, increased transparency in claim rejection processes, and a focus on simplifying policy information.
Moreover, the emphasis on providing insurance for all, regardless of age or pre-existing conditions, along with coverage for advanced surgeries, demonstrates a commitment to making insurance more inclusive and accessible. While challenges such as pricing for comprehensive coverage remain, these changes are a positive development towards achieving the goal of “Insurance for All” by 2047.
Rohit Gyanchandani is Managing Director at Nandi Nivesh Private Limited