In another major decision, the IRDAI’s new regulations have clarified that after completion of sixty continuous months of coverage (including portability and migration) in health insurance policy, no policy and claim can be contestable by the insurer on grounds of non-disclosure, misrepresentation, except on grounds of established fraud
Hyderabad:
In a huge relief for an individual health insurance customers, who are currently burdened with higher premiums frequently and arbitrarily by their insurers, insurance regulator IRDAI has now banned any premium hike for such a policy holder on the basis of higher claims.
However, the regulator has allowed insurers to raise their premium on portfolio basis and has asked the insurers to offer discounts to individual policy holders with good claim experience.
“For individual products, the loadings on renewal premium will be at portfolio and not based upon any individual policy claim experience. However, discount in premium can be provided by insurers to individual policyholders for good claims experience, the IRDAI’s new health insurance regulations, notified recently have outlined.
The new directions from the IRDAI will stop the ongoing trends where insurers are increasing their renewal premium quite arbitrarily not just for some policy holders who have received claims also for some who haven’t got any claims, said industry observers.
All the retail health policy holders have seen stiff premium hikes during last couple of years irrespective of whether they had claims or not.
The insurers had defended their decision to increase the premium in retail policies continuously saying health portfolio is a loss making one and premium has to be hiked across the customers for sustaining the business. According to them, the combined ratio, a key parameter in assessing the profitability of any portfolio, for health insurance business on an average is currently over 120 per cent.
Further, an insurer can’t deny the renewal of a health insurance policy on the ground that the insured had made a claim or claims in the preceding policy years, except for benefit based policies where the policy terminates following payment of the benefit covered under the policy like critical illness policy
In another major decision, the IRDAI’s new regulations have clarified that after completion of sixty continuous months of coverage (including portability and migration) in health insurance policy, no policy and claim can be contestable by the insurer on grounds of non-disclosure, misrepresentation, except on grounds of established fraud.
This period of sixty continuous months is called as moratorium period. The moratorium would be applicable for the sums insured of the first policy, said the IRDAI.
Wherever the sum insured is enhanced, completion of sixty continuous months would be applicable from the date of enhancement of sums insured only on the enhanced limits, clarified the IRDAI.
Earlier such a period was eight years after which health insurance claim cannot be contested except for proven fraud and permanent exclusions.
Some of the other important features of the new regulations are-
-No insurer can resort to fresh underwriting by calling for medical examination, fresh proposal form etc. at renewal stage where there is no change in sum insured offered. Where there is an improvement in the risk profile, the insurer may endeavour to recognize that for removal of loadings at the point of renewal,
-General insurers and health insurers offering indemnity based health insurance policy except Personal Accident and Travel Policies have to provide an option of migration to an alternative health insurance product to the extent of the sum insured and the benefits available in the previous policy. The insurer may underwrite the proposal in case of migration, if the insured is not continuously covered for 36 months,
-All indemnity based health insurance policies issued by general and health insurers except Personal Accident and Travel Policies, shall allow the portability of policies to the extent of the sum insured and the benefits available in the previous policy, irrespective of individual or group policy subject to the Board approved underwriting policy of the insurers,
-Life insurers may allow portability, wherever possible, as per the policy terms,
-Insurers may devise mechanism(s) or incentive(s) to reward policyholders for early entry, continued renewals, favourable claims experience, preventive and wellness habits and disclose upfront such,
-There will provision for mechanism or incentives in the prospectus and the policy document. What is proposed to be covered as part of wellness and preventive habits will be clearly defined in each and every product,
-The grace period for payment of the premium for all types of insurance policies shall be: fifteen days where premium payment mode is monthly and thirty days in all other cases. The insurers shall offer coverage during the grace period, if the premium is paid in instalments during the policy period.