Insurers ask IRDA to defer new health insurance norms

Insurance companies have asked the Insurance Regulatory and Development Authority (Irda) to postpone the implementation of the health insurance regulations to the next financial year, fearing delays in product approvals will result in loss of business for them.

Irda, in February, had released the final health insurance regulations and mentioned that all group health insurance products will have to comply by these regulations by July 1, while all retail policies will have to comply by it by October 1. Given the fact that the insurance regulator takes months in product approvals and with most companies having to file their products, insurers fear that a delay in product approval would result in loss of business.

A chief executive officer of an insurance company told Financial Chronicle, “Irda usually takes months to approve one product of a company. Now, with all life and non-life insurance companies filing their existing health insurance products with the regulator, it will take several months for us to get approvals. We won’t have the products to sell for so many months, which will result in loss of business. So, we have asked for postponement of the date for making the regulations effective.”

The non-life insurers through the General Insurance Council (an association of non-life insurance companies) in their letter to Irda have said that the deadline is too short to make the required changes in products features, informing customers, changing brochures and sales material besides modifying the systems.

R Chandrasekaran, secretary general, General Insurance Council, said, “We have asked for certain clarifications in the definition and formats of forms. The deadline is short as all customers have to be informed about the changes that are going to be made in the products and the brochure and sales literature will have to be changed. So, we have asked for more time.”

KG Krishnamoorthy Rao, managing director and chief executive officer of Future Generali India Insurance, said, “The product features have to change, premium will change, the sales force has to be trained; so we have said that the July and October deadlines are too short and these regulations should be postponed to April 1, 2014.”

According to industry officials, more than 50-60 per cent of the health insurance products for life and non-life insurance companies will require changes in features and premium rates in line with the regulations. The regulations have tried to reduce the ambiguity and conflicts in policy wordings and to protect the interest of policyholders. The new norms are applicable to all kinds of health, personal accident and travel insurance products sold by (life, non-life and standalone health insurers).

According to the new norms, insurers will have to offer lifetime coverage on all policies. The entry age limit in health covers would be minimum 65 years, 30 days grace period beyond the expiry date of the policy will have to be provided by insurers to renew the policy. Also, insurers cannot increase your premium if you have claimed but can increase the premium on the overall portfolio of customers. In case, an insurers is likely to increase the premium rates, they will have to inform their customers three months in advance so that a customer can port (read shift) to another insurer.

Policies will have to offer a free look period of 15 days from the date the documents received by the customer. An insurance company will have to pay minimum 50 per cent of the pre-insurance medical checkup, if a proposal is accepted.

No claim bonus (NCB), a discount offered by an insurer if the policyholder has not claimed, cannot reduce to zero in case of a claim. The NCB will reduce at the same level as it increases when there are no claims. The regulations has also provided a standard listing of 199 exclusions, standardised 46 definitions and standardised the claim form.