IRDA- The Insurance regulator, has come out with an exposure draft of Regulations for health insurance policies. If finally notified they can change the face of the health insurance industry entirely. The regulations incorporate some existing guidelines but also propose some fairly far reaching changes that will benefit the consumers.
Some of the beneficial proposed changes (which currently are not covered by any guidelines) are:
- All health insurance policies will be renewable for life. This will ensure that you will not be left without a cover when you need it the most at an advanced age.
- All insurance companies will need to provide standard definitions of various terms, permanent exclusions and critical illnesses as stipulated by IRDA. This will go a very long way in ensuring that all health insurance policies are understood in a standard way by consumers.
- Children who have to compulsorily drop out of a family floater policy on reaching a certain age will be able to shift to another policy of the same insurer with continuity benefits. This will take away the single biggest shortcoming of the family floater policy and perhaps enable families to take higher floater covers.
- The manner of reducing the no claim bonus (if offered) will need to be standardized when a claim is made. This will ensure that a single claim will not be sufficient to wipe out the long no claim history built up by the consumer.
- Increase in premium (over and above the notified premium for that age) due to claims will be allowed only if the claim amount has been at least 5 times the annual premium in each of the 3 years preceding the year of loading . Again this will ensure that a single large claim will not lead to increase in the premium and only if you make repeated claims in 3 consecutive years will loading be allowed (that too if it had originally been provided for in the policy document).
- If the insured person has multiple policies it will be his choice to decide which policy he will make the claim on. This is particularly relevant for people who get covers from their employers and also take out individual covers. While they are in service they can make the claim on the group policies and when the group policies are no longer available due to cessation of employment then they can start using their individual policies.
- The entire portability guidelines have been codified in the new regulations and are more or less in line with the existing guidelines.
If one has to point an obvious omission in the regulations, it is the absence of any provision to enable consumers to increase their insurance coverage in line with Inflation. Also there is an inexplicable provision that disallows the payment of commission on ported policies. This is very difficult to understand given that the broker/agent is otherwise entitled to a commission every year if the consumer continues the policy with the incumbent insurance provider. All that this provision will do is to make the intermediaries as a class to de-market portability and the whole concept of portability might suffer as a consequence.
In any case this is only an exposure draft and hopefully when the final regulations are notified they will provide for many of the omissions pointed out above.
The author is a CEO at ApnaPaisa
ApnaPaisa is India's leading Online market place for financial products such as loans, credit cards and insurance plans . Author can be reached at www.facebook.com/apnapaisa .