IRDAI to standardise disease exclusions in health insurance - here's how it will benefit policyholders

On October 31, 2018, IRDAI released a Working Group report for standardisation of exclusions in health insurance policies. The proposed changes can benefit health insurance buyers in many ways.

Let us understand the major recommendations that will benefit you:

After 8 years the insurer cannot deny the claim on account of any health constraints. Technically, any rejection can happen only on account of potential investigation/fraud. It is a safety net for customers who have been denied a claim after 10 or 14 years of paying the premium.

Vaidyanathan Ramani, Head - Product and Innovation, Policybazaar.com said that it gives time to the insurers to potentially observe the customer’s history in terms of declaration and claims.

Eight years is a good time for anyone with some kind of existing issue to end up manifesting it and have a claim settled eventually. Even if something is detected within 8 years which is a potential pre-existing disease, it can either be classified under permanent or temporary exclusion, co-pay may be applied, the policy can be loaded etc.

“This is a fair mechanism for customers as whatever the situation be the insured will still be protected,” he said.

Ramnani said that now there can be only 17 defined exclusions in the policy. Other than this any exclusion is underwritten. These exclusions will mostly be aligned with WHO’s definition of diseases which is International Classification of Diseases (ICD) and further will be elaborated in terms of what they mean and what is therefore allowed to be excluded and not allowed to be excluded.

“In order to provide a comprehensive coverage to the customers, the panel has suggested that if someone is suffering from any critical ailment including those with disabilities, can get proper health insurance where the insurers can consider it as a permanent exclusion with due consent of the customer,” he said.

Anything that happens to a customer after the policy was bought (as long as they are defined and are a part of the stated 17 exclusions in the policy) will be covered including mental illnesses, HIV and lifestyle diseases like hypertension also.

Another big change to look for is that there might be a bit of protection around alcoholism and related incidents. Unless someone is going for alcohol de-addiction type of treatment, incidents occurring under the influence of alcohol will be covered except the ones committed or occurred under what is considered to be an illegal activity.

Waiting period is being more standardised now, almost all the policies will have a standard waiting period of 4 years or less. “For certain ailments such as hypertension, diabetes, and cardiac problems, the waiting period will be reduced to 30 days,” said Ramnani.

Under this proposal, a dedicated Health Technology Assessment committee will be formed which will allow the inclusion of advanced treatments and drugs. The committee will act as a self-regulatory body and will work on deciding whether the said treatment to be considered is insurable or not.  The insurance provider will not be able to exclude any of the important procedures already added in the list by the working committee.