The Insurance Regulatory Development Authority of India (IRDAI) has been on a roll when it comes to mandating standardised insurance policies this year. It has already announced life, health, dedicated COVID-19 insurance, disease-specific and personal accident insurance policies with uniform features. Some are already being offered, while others are at the proposal stage.
The latest on the block are domestic and overseas travel insurance policies that are proposed to be introduced from April 1, 2021. These will be called Standard Travel Insurance Policies followed by the insurer’s name. All general and health insurance companies will have to offer these covers on individual, floater and group bases. Interestingly, the optional plans of these policies specifically cover trip cancellation due to pandemics and natural calamities.
International travel policy with uniform clauses
Like other standard plans, features and clauses will be standardised, but premiums will be determined by the insurers and hence could vary as per the product and variant on offer.
Overseas travel insurance covers will be offered in four variants (F to I), with mandatory and optional plans clearly demarcated. Plan F is a long-term cover, with tenure of 6-36 months, targeted at students, while Plan G is for short-term leisure trips with a duration of one to 180 days. Plan H, an annual policy, is meant for business travellers going on multiple trips. Plan I will come into play only during the journey and not stay, unlike the other three variants.
Some coverage elements in these plans are on a reimbursement basis – that is, the insurer will pay the actual expenses incurred by you, up to the sum assured. In the case of some covers, a pre-fixed sum will be handed out to you. The standardised overseas travel policy will mandatorily cover hospitalisation expenses (up to $1 lakh or equivalent currency) and hospital cash ($25 for up to seven days, with two-day deductible), among others.
It will also pay for the treatment of life-threatening conditions arising due to pre-existing diseases up to $10,000 – this is crucial as many travel policies from insurers, especially cheaper variants, do not offer this cover. Accidental death, permanent total and partial disabilities will also be covered. Optional benefits include flight delay beyond three hours (up to $500), loss of baggage (up to $500) and personal liability (up to $50,000). Trip cancellation due to pandemics or natural calamities (up to $10,000) is available under plans G and H.
Insurers can offer differential premiums based on destinations – for example, Asia (except Japan and Korea), Europe, USA and Canada, and (Japan & Korea) – IRDAI has proposed.
For travel within India
Domestic travel policies, with five variants (A to E), will reimburse accidental hospitalisation expenses up to Rs 2 lakh. Accidental death, permanent total and partial disability risks will get fixed benefit covers of Rs 10 lakh, Rs 10 lakh and Rs 5 lakh respectively per person. Also, this policy will come with room rent sub-limits up to 2 percent of the sum insured, maximum Rs 5,000 per day. Intensive Care Unit (ICU) charges will be capped at 5 percent of the sum insured or maximum Rs 10,000 per day.
Variant A covers journeys – by any mode of public transport – I ranging from 20 minutes to 12 hours within the city. Variant B covers a single trip with a duration of 12 hours to seven days outside the city. Plan E covers domestic tours using several modes of transport including road, water, train and flight, with tenure of 24 hours to one year. Optional covers, depending on the variants, include hospital cash (Rs 1,000 per day), missed flight or train (up to Rs 10,000) and loss of checked-in baggage (for air travel, flat Rs 10,000). Trip cancellation due to pandemics and natural calamities will be covered up to Rs 1 lakh. While insurers can decide the premiums, this product does not allow geographical, zone-based differential pricing
Year 2021 could see a resumption of business and leisure travels, which have remained dormant for a large part of 2020. COVID-19 left the travel space completely ravaged this year. Flights were suspended by various governments in March and April, leaving travellers stranded in destination countries. This, even as they faced the risk of getting infected and running out of accommodation options, making many recognise the importance of buying travel insurance even when not mandatory in destination countries. There was confusion around applicability of travel insurance policies in the initial days of the pandemic, as the scope of coverage is linked to the type of travel policy chosen. Features and clauses vary across insurers, so a travel policy, which is set to be critical this year, with uniform clauses will help first-time or infrequent international travellers, in particular.
However, the standard product construct is hardly simple in its current form. Sifting through long list of features – mandatory and optional – of multiple variants could defeat the purpose of a uniform cover. Nevertheless, buying a product with structure designed by the regulator will offer some comfort to policyholders. But the IRDAI could consider reducing and consolidating the number of variants.
Also, trip-cancellation coverage for the pandemic must form a part of mandatory covers, as the COVID-19 fear is likely to drive policy purchases in 2021, too, despite likely availability of vaccines. Moving it to the optional category could result in less-informed travellers missing out.At your end, when you select a product, however, focus not only on the premium, which will be different across insurers, but also the insurer’s tie-ups with hospital networks overseas.