The Insurance Regulatory and Development Authority of India (Irdai) has proposed three definite changes in its health insurance regulation drafts: discounts on improved profile, lifelong renewal of personal accident cover and time-bound porting.
The Insurance Regulatory and Development Authority of India (Irdai) plans to amend the insurance rules so that insurers cannot deny lifelong renewal of a personal accident policy if the policy has been renewed earlier without a break. According to an exposure draft issued by Irdai on February 16, 2022, the insurer will not be able to deny lifelong renewal of a personal accident insurance policy on the grounds of age of the policyholder.
Similarly, in case a policyholder wishes to port his insurance policy from one insurer to another, after the portability form is received, the insurance company will seek necessary details from the existing insurance company within five days. This change has been proposed to make the portability of insurance policy a time-bound exercise. Also, insurer companies have been encouraged to offer discounts wherever there is an improvement in the risk profile of policyholder, according to the Irdai draft.
Considering the fact that the number of road accidents is quite high in India, personal accident insurance has been made mandatory for people, regardless of their age. However, when it comes to personal accidents, a large ratio of people remains uninsured as personal accident plans usually come with an age limit.
“Now, as per the new amendment proposed by the Irdai, once a proposal has been accepted, a policy is issued and is periodically renewed thereafter without any break, further renewal shall not be denied on grounds of the age of the insured,” says Sanjiv Sood, vice president, PolicyX.com, an insurance comparison portal. This will ensure cover for the policyholder throughout his or her life. The words ‘personal accident products’ are proposed to be deleted from this clause, according to the Irdai draft.
It has been proposed that wherever there is an improvement in risk profile, insurers should offer discounts. At present, in case of improvement of risk profile of customer, only removal of loading is allowed at the time of renewal. Loading is an additional amount added to the insurance premium amount to provide coverage to high-risk customers.
As per the existing regulations, “No insurer shall resort to fresh underwriting by calling for medical examination, fresh proposal form etc., at renewal stage where there is no change in sum assured offered. Provided that where there is an improvement in the risk profile, the insurer may endeavour to recognise that for removal of loadings at the point of renewal.”
Further, the draft proposes to add the word ‘discount’ in the regulations. “No insurer shall resort to fresh underwriting by calling for medical examination, fresh proposal form at renewal stage where there is no change in sum assured offered. Provided that where there is an improvement in the risk profile, the insurer may endeavour to recognise that for removal of loadings or offering discount at the point of renewal.
To make insurance policy portability a time bound exercise, timelines have been suggested for calling for claim details from the existing insurer. Proposed regulation will require the insurance company to collect necessary details such as medical history and claim history of the policyholder from the existing insurance company within five days of receipt of portability form.
According to the existing regulations, “on receipt of the portability form, the insurance company will seek the necessary details of medical history and claim history of the concerned policyholder from the existing insurance company. This shall be done through the web portal of the IRDAI.” The current regulation does not provide any timeline for insurance companies of a policy holder in case of portability of a policy.
Experts say ‘time bound porting’ is an essential step in the wake of policyholders as porting is a common practice in health insurance wherein the customers port their policies in search of a better coverage and protection. This will give the surety to the policyholder that their requests will not remain pending for an undefined period. “Since portability is quite a common trend in health insurance and it was primarily done manually which you used to consume at least 15 days or more period therefore this mandate was quite necessary. During this course, the policyholders were never sure whether they would get the new policy or not. If they didn’t get the health insurance from the new insurer, that would have put them in a difficult situation. However, this won’t be the case with these new amendments,” adds Sood.
Irdai has issued the above draft to seek comments from stakeholders in the insurance industry before notifying the proposed changes in the rules.