The Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines to all General and Health Insurers offering indemnity based Health Insurance products of both Individual and Group (excluding PA and Domestic / Overseas Travel). These provisions and guidelines were issued by IRDAI under the provisions of Section 34(1) of the Insurance Act, 1938 and Schedule III of IRDAI (Health Insurance) Regulations, 2016. The health insurance companies required to follow new rules effective from October 1, 2020. As per IRDA notification “All policy contracts of the existing health insurance products that are not in compliance with these guidelines shall be modified as and when they are due for renewal from 01st April, 2021onwards”.
Coverage of health policy:
While COVID-19 has now been included in the plans, standardised list of 17 diseases like Alzheimer’s, Parkinson’s, epilepsy, congenital heart disease, cerebral stroke, chronic liver, Hepatitis B, HIV and AIDS, kidney diseases, loss of hearing and other physical disabilities will not be covered under the new rules. Besides Covid 19, the new health insurance plan will be catering rising issues like mental illnesses, genetic diseases, physochological illness etc. Neuro disorder, oral chemotherapy, robotic surgery, stem cell therapy etc may be included. No ratio reduction will be beared by the patient for ICU chrages. This would come under the ambit of hospital room rent package. Patients shall get full claim for things like Pharmacy, implant and diagnostic among other medical expenses. Telemedicine will be a part of the domestic health cover.
Renewal of Policy
The policy shall ordinarily be renewable except on grounds of fraud; misrepresentation by the insured person. Renewal shall not be denied on the ground that the insured person had made a claim or claims in the preceding policy years and no loading shall be applyed by the insurance company for renewals based on individual claims experience. Although, insurer sends notice for renewal, it is not obligatory to them to give any notice for renewal. Insurer may specify grace period as per their product design to maintain continuity of benefits without break in policy. However, it is important to note that the coverage is not available to the insured person during the grace period, if his/her policy is already expired.
Claim will have a time period of eight years after paying the premium. This period of eight years is called as moratorium period. In short, there will be no-evaluation until eight years once the policy has been taken. Once, eight continuous years is completed under the policy no look back to be applied. The moratorium would be applicable for the sums insured of the first policy and subsequently completion of 8 continuous years would be applicable from date of enhancement of sums insured only on the enhanced limits. After the expiry of Moratorium Period no health insurance claim shall be contestable except for proven fraud and permanent exclusions specified in the policy contract. The policies would however be subject to all limits, sub limits, co-payments, deductibles as per the policy contract.
Claim settlement of Multiple Policies held by a policy holder:
The holder of insurance policy has the option to prefer settlement of claim from a particular insurance claim and the insurer shall be obliged to settle theclaim as long as the claim is within the limits of and according to the terms of the chosen policy. When the amount under the policy is exhausted, the Insured person having multiple policies shall also have the right to prefer claims under this policy for the amounts disallowed under any other policy / policies .In such cases, the specific insurer shall independently settle the claim subject to the terms and conditions of its policy
Provision for interest payment on delayed claim settlement:
As per the guidelines, the insurance company shall make payment or reject the claim as the case may be within 30 days from the recept of last necessary document, failing which the company shall be liable to pay interest to the policyholder from the date of receipt of last necessary document to the date of payment of claim at a rate 2% above the bank rate. However, in certain circumstance an investigation is required in the opinion of the company it shall initiate and complete such investigation within 30 days from the date of receipt of last necessary document. In such cases, the Company shall settle or reject the claim within 45 days from the date of receipt of last necessary document. Any further delay in settlement of claim the company shall pay interest at the rate of 2% above bank rate from the date of receipt of last necessary document to the date of payment of claim. The bank rate applicable is the rate fixed by the Reserve Bank of India (RBI) at the beginning of the financial year in which claim has fallen due.
Cancellation of policy by the policy holder and refund of premium for unexperiod policy period:
A policy holder may cancel his policy by giving 15 days written notice and the insurer shall refund the premium for unexpired policy period. No refund is available if the insured person has cancelled the policy where, anyclaim has been admitted or has been lodged or any benefit has been availed by him/her under the policy.However, insurance companies are allowed to relax this condition as per the product design. The insurance company may also cancel a policy on the ground of misrepresentation, non-disclosure of material facts or fraud. In such an event no refund of premium amount will be paid to the insured person.
All benefits under the policy and the premium paid shall be forfeited in case the claim made found out to be through false statement or or declaration is made or used in support thereof, or if any fraudulent means or devices are used by the insured person or anyone acting on his/her behalf to obtain any benefit under the policy. Any claim settled which are found fraudulent later shall be repaid by all recipient(s)/policyholder(s), who have made that particular claim, who shall be jointly and severally liable for such repayment to the insurer. However, the insurer shall not repudiate the claim and / or forfeit the policy benefits on the ground of Fraud, if the insured person / beneficiary can prove that the misstatement was true to the best of his knowledge and there was no deliberate intention to suppress the fact or that such misstatement of or suppression of material fact are within the knowledge of the insurer.
Migration of policy and accrued continuity of benefits:
The insured person may migrate from existing health insurance products/plans to another health insurance products/plans offered by the same insurance company by applying for migration of the policyatleast30 days before the policy renewal date as per IRDAI guidelineson Migration. If such person is presently covered and has been continuously covered without any lapses under any health insurance product/plan offered by the company, the insured person will get the accrued continuity benefits in waiting periods as per IRDAI guidelines on migration.
If the insurance company withdraws its specific plan/product, it shall intimate the insured person about the same 90 days prior to expiry of the policy. Then insured person has the option to migrate to similar health insurance product available with the Company at the time of renewal with all the accrued continuity benefits such as cumulative bonus, waiver of waiting period, as per IRDAI guidelines, provided the policy has been maintained without a break.
Portability of health insurance policy:
The insured person will have the option to port the policy to other insurers by applying to such insurer to port the entire policy along with all the members of the family, if any, at least 45 days before, but not earlier than 60 days from the policy renewal date as per IRDAI guidelines related to portability. If such person is presently covered and has been continuously covered without any lapses under any health insurance policy with an Indian General/Health insurer, the proposed insured person will get the accrued continuity benefits in waiting periods as per IRDAI guidelines on portability.
While buying health policy the buyer of the policy shall provide a nomination for the purpose of payment of claims under the policy in the event of death of the policyholder. Subsequent change in nomination shall be effective only when an endorsement on the policy is made. The policyholder is required at the inception of the policy to make a nomination for the purpose of payment of claims under the policy in the event of death of the policyholder. Any change of nomination shall be communicated to the company in writing and such change shall be effective only when an endorsement on the policy is made. In case there is no subsisting nominee, the claim will be settled to the legal heirs or legal representatives of the policyholder.