The Insurance Regulatory and Development Authority of India (IRDAI) has asked insurers to be transparent about offering health covers to those with HIV/AIDS, mental health issues and for persons with disabilities.
This because even four years after the regulator asked insurers to cover all kinds of risks under health policies, the reality is quite different.
Insurers routinely reject covers for differently-abled citing higher risks. For mental health issues and HIV/AIDS, there are hardly any covers available to individual customers.
In a notification on June 2, IRDAI has asked insurers to provide detailed information on their websites stating their underwriting philosophy on covering people with disabilities, HIV/AIDS or mental illnesses. This has to be done by October 1.
However, mere disclosure will not solve issues caused by absence of products.
Mumbai-based software professional Nikhil Deshpande had sought a cover from his health insurance for his anxiety therapy sessions and related medication which costs almost Rs 7,000 per month. He was also hospitalised twice last year. However, the insurer informed him that no cover was available.
The same goes for the differently-abled as well. Pratigya Tiwari from Kolkata who lost her eyesight due to polio at the age of seven in 1998, still does not have a health cover. Reason? All insurers said that she is prone to higher risks and will cause adverse selection.
“I work in an administrative position in a power facility and also travel to work on a daily basis. Especially with the coronavirus pandemic, I am at a loss because if I am hospitalised I do not have any insurance. Why can’t the regulator make it mandatory?” asks Tiwari.
The magic word here is ‘mandatory’. So far, IRDAI has only ‘advised’ companies to offer covers for all types of risks, defined in insurance parlance as ‘standard’ and ‘sub-standard’ lives.
Here, standard lives are regular able-bodied individuals with no ailments whereas substandard are defined as all others. Lack of data to price products is often cited as a reason to reject covers.
While IRDAI had advised insurers to cover all kinds of health requirements, be it HIV/AIDS, cancer or mental health, the truth is that less than 10 percent of the industry is offering covers.
“Whatever few covers are available, they are not adequate in sum assured sizes. Further, the annual premiums are above Rs 20,000 which is not affordable for the masses,” said disability rights' activist Naveen Das.
Das also questioned that when insurers were offering covers for diabetes, blood pressure and even advanced stages of cancer, why not offer covers for all disabilities. When individuals with some sort of physical disabilities function normally without any major concerns, he explained that it is baffling why insurers don’t want to offer covers.
Insurance companies are of the view that certain sections of the society are high-risk depending on their physical and mental well-being. Companies feel that offering an individual cover to such people would lead to a high ratio of claims because a proportion of the high-risk category would require medical intervention at regular intervals.
Insurance works as a pooling concept where premium is put into a common pool and the claims are paid out of it. Underwriting officials said that insuring individuals who are prone to claim regularly would mean that ‘healthy’ individuals would compensate for premium loss by having to pay a higher annual cost for covers.
A better solution would be to have standardised products of health insurance of say Rs 5-7 lakh size with a premium range of Rs 10,000-12,000 for those with special needs. Those seeking a higher cover size could buy a top-up plan by paying a market-linked premium.This will ensure that no individual in India is denied a health insurance cover. With the absence of a standard social security scheme (except for the Pradhan Mantri Jan Arogya Yojana for those below poverty line), there should be more standard medical covers across the spectrum covering those with all types of physical and mental health.