IRDA New Rules on Helath Insurance

Following the Bombay High Court order in December last year, the Insurance Regulatory and Development Authority (Irda) had promised to release draft guidelines to protect health insurance policy holders' interest and bring more transparency into the system.

Last week, the insurance regulator proposed certain norms, which could bring about the much-needed standardisation in the health insurance space. While some of the norms are already in place, there are also several fresh proposals. Here's a look at the newer ones:

Measure: 30-day deadline for claim settlement

Impact: You can take insurers to task if the claim is not processed within 30 days of submitting the required documents. "While it was part of Irda (Protection of Policyholders' Interest) Regulations, 2002, it never found a mention in insurance policy documents.

Henceforth, it will have to be included in the policy documents," explains civic activist Gaurang Damani, who had filed the public interest litigation (PIL) in the Bombay High Court demanding that regulations be framed for the health insurance sector. Irda's undertaking to devise draft guidelines was a fallout from this case.

Measure: Specific reason required for claim denial

Impact: Since the insurance company has to give the reason for rejecting a claim in writing, it could bring down the instances of claim repudiation on flimsy grounds.

Measure: Insurers to pay hospitals directly

Impact: Payments will become smooth. "In cases where the cheques for claim settlement were issued by the third-party administrators (TPA), payments used to be often delayed. Besides, it was difficult to ascertain whether the TPA had passed on the entire claim amount approved by the insurer to the claimant," says Damani.

Measure: Contribution clause will not come into play in the case of multiple policies

Impact: Policyholders with two or more indemnity-based policies can make optimum use of their total coverage. Until now, claim made on two policies was split between the two insurers in the ratio of the sum insured. "The policyholder will have the option of choosing the insurer with whom the claim is to be settled," says Amarnath Ananthanarayanan, CEO, Bharti-AXA General Insurance.

Measure: Standardisation of cumulative (no-claim) bonus

Impact: Better understanding of the benefits for every claim-free year.

Irda has asked insurers to state its workings of the same explicitly in the policy document. It has also laid down norms for withdrawing this benefit in the event of a claim. The no-claim bonus can be rolled back at the rate at which it was offered or it can be included in the sum insured after charging the premium applicable to this additional cover.

Measure: No arbitrary hikes in premiums

Impact: No more nasty surprises at the time of renewal. Insurers can hike premiums only after explaining the reasons for it to Irda. They will have to justify it on the basis of the preceding three years' claims experience, expected claims experience and the rationale for the proposed pricing.

Measure: Loading policies to be more transparent

Impact: You will know the likely premium increase in advance.

If an individual's claims in each of the three consecutive policy years (except the current one) exceed 500% of the current premium, the insurer can hike the premium as per the pre-determined table disclosed at the time of issuing the policy. This step will benefit policyholders immensely," says Segar Sampath Kumar, DGM, New India Assurance.

Measure: Rewards for good claim record and continued renewals

Impact: You can hope for an enhanced cover or discounts on premiums for low claims and renewing the policy without fail.

Measure: Part-reimbursement of pre-insurance check-up expenses

Impact: Non-life insurers may have to reimburse at least 50% of the cost for check-ups conducted before issuing the policy.