Health insurance: Stopping arbitrary hikes in premium

The regulator had clarified that the increase in premium due to the change in norms would not be more than 5% of the originally approved premium rates.

General and standalone health insurance companies will not be allowed to increase the premium of a policy by modifying the existing benefits and adding new benefits in the existing products. However, insurers can offer addition of new benefits or upgradation of existing benefits as add-on covers or optional covers with a standalone premium rate to ensure an informed choice to the policyholders.

Pricing of products
In a circular, Insurance Regulatory and Development Authority of India (Irdai) has asked insurers to ensure that the appointed actuary reviews the financial viability of every health insurance product at the end of every financial year. The report of such review should be submitted to their board along with the analysis of favourable or unfavourable experience of each product as well as recommended corrective action, to ensure sustainability of the product and to protect the interests of policyholders of the underlying product.

The circular from the regulator comes at a time when several insurers have hiked the premium of health insurance policies citing regulations for wider coverage and standardisation of exclusions. Last year, the regulator had standardised the nomenclature and procedure for 22 critical illnesses that form part of a health insurance policy. All health insurers will have to use the definitions without exception wherever the products are offered for coverage. Insurers have also hiked the premium because of the rising Covid-related claims and increasing medical inflation. The regulator had clarified that the increase in premium due to the change in norms would not be more than 5% of the originally approved premium rates.

Moreover, in order to enable all sections of policyholders to easily understand the contents of policy contracts, the policy contracts of all health insurance products must have a clear heading such as standard definitions, specific definitions, benefits covered under the policy, exclusions, etc., to draw the attention of policyholders. The wordings of all the standard exclusions, standard terms and clauses and standard definitions used in the policy contract will have to comply with the wordings as specified by the regulator. This new format will have to be done for all health insurance policies issued from October 1, 2021.

Claims settlement
In another circular the regulator has underlined that policyholders must get clear and transparent communication at various stages of claim processing. Insurers have to put in place systems to enable policyholders track the status of cashless requests/ claims filed with the Insurer/third-party administrators (TPAs) through the website/portal/app or any other authorised electronic means. The status will cover from the time of receipt of request to the time of disposal of the claim along with the decision taken.

In cases where the claims are processed through TPAs, the insurers can let their TPAs operationalise the claim tracking mechanism and the policyholders will be notified in all the communications. Insurers will have to ensure that the repudiation of the claim is not based on “presumptions and conjectures”. If the claim is denied or repudiated, the communication about the denial or the repudiation has to be made only by the insurer by specifically stating the reasons for the denial or repudiation. The insurer will also furnish the grievance redressal procedures available with the insurance company and with the insurance ombudsman along with the detailed addresses of the respective offices.