Taking another step towards “Insurance for All by 2047”, the Insurance Regulatory and Development Authority of India (IRDAI) recently released a master circular to make health insurance policies more inclusive, flexible and customer-friendly. From reducing cancellation charges in indemnity-based health insurance policies to specifying how to offer a no-claim bonus to making claim-settlement procedures more transparent — the regulator has introduced some key rule changes to make health insurance policyholders more empowered. ET Wealth Online explains what these mean for health insurance customers and how these rule changes in the health insurance policies will help policyholders.
Higher refund on cancelling health insurance policies
Policyholders can now discontinue a health insurance policy whenever they want and get a refund of the premium on a pro-rata basis if they have made any claims. All they have to do is to give their insurer a notice of seven days in writing.
Earlier, the refund on the premium was not on a pro-rata basis. Abhishek Kumar, a SEBI-registered investment advisor and Founder of SahajMoney.com, says, “Previously, if one cancelled the policy within one month, three months or six months after completion of the free-look period, then the refund of the premium amount will be 75%, 50% and 25% respectively.”
If you cancel a health insurance policy six months after the free-look period, you typically don’t get any refund from the insurer, says Pankaj Nawani, CEO of CarePal Secure. A standard administrative fee is usually deducted from the refund amount, he adds.
Now, the regulator has said, the refund will be a “proportionate premium for the unexpired policy period if the term of the policy is up to one year and there is no claim(s) made during the policy period”.
When policies are cancelled after a year, the insurer must refund the premium for the unexpired policy period, provided that the risk coverage for those future policy years has not commenced.
So, if a policyholder has paid Rs 10,000 as annual premium for her health insurance policy and discontinues it after six months, she is likely to get a refund of Rs 5,000 now, provided there is no claim. According to previous norms, she would not have got any refund for cancelling the policy after six months.
“A notable aspect of the new guidelines is the reduction of the notice period for policy cancellation from 15 days to just seven days,” says Bhaskar Nerurkar, Head – Health Administration Team, Bajaj Allianz General Insurance.
Further, the circular does not mention any additional administrative fees or penalties for cancellation, which simplifies the process and potentially makes it more favourable for policyholders, he points out.
Also, the cancellation charges on health insurance policies have been reduced now.
“These changes are designed to provide more flexibility and clarity to policyholders, making it easier for them to cancel their policies and receive refunds proportional to the unexpired term of the policy,” Nawani says.
The regulator has provided all insurers with a timeline until September 30 2024 to implement the modifications as per the new guidelines, Nerurkar adds.
No-claim bonus for health insurance: Options to reduce insurance premium
The regulator has specified how insurers can offer no-claim bonuses to policyholders. Till now, auto-insurance plans typically offer a no-claim bonus to policyholders by reducing the renewal premium if there has not been any claim the previous year. In the case of health insurance policies, insurers usually hike the sum insured at the time of renewal even if the policyholder has not not made a claim.
Now the regulator says insurers can provide two options during annual renewal if the policyholder has not made any claims during the year. The two options are:
1) Cumulative bonus: The sum-insured amount will be increased without a hike in the premium amount
2) A discount on the premium: Policyholders can choose either of the two options and have to provide consent every year at the time of renewing their health insurance policies. Amid rising premiums of health insurance policies, reducing premiums bring some much-needed relief to policyholders.
No health insurance claim can be rejected with the approval of the Claims Review Committee
The regulator has asked insurance companies to set up a three-member Claims Review Committee (CRC) to review all claims. The insurer cannot reject any claims without the approval of the committee. IRDAI says, “In case, the claim is repudiated or disallowed partially, details shall be conveyed to the claimant along with full details giving reference to the specific terms and conditions of the policy document.”
Further, the regulator said, “Pursuant to intimation of the claim, insurers and third party administrators (TPAs) shall collect the required documents from the hospitals. Policyholder shall not be required to submit the documents.”
Higher penalties for not complying with ombudsman orders
Now, insurance companies have to pay more penalties if there is a delay in implementing an order of the ombudsman. Insurance companies are required to comply with the ombudsman’s order within 30 days. When there is a delay in this, they have to pay a penal interest that is two percentage points over the prevailing bank rate, as per the Protection of Policyholders’ Regulations.
Insurers have to display these details clearly on their website
To make it easier for consumers, the regulator has asked insurance companies to display the following information prominently on their websites:
i) The hospitals/healthcare service providers with whom they have a tie-up for cashless claim settlement
ii) Hospitals/healthcare service providers that are on the list of common network of hospitals.
iii) Information that policyholders need to file to claim for reimbursement when healthcare services of non-empanelled hospitals are used.
iv) A list of procedures to be followed by policyholders for claim settlement under a cashless facility and reimbursement of claims.
iv) Turn around time for policy servicing, approvals of cashless as well as reimbursement claim settlement
v) List of products on offer and products withdrawn.
These will help policyholders stay updated. When policyholders go for planned treatment, they can quickly visit the website of the insurer concerned to get the necessary details. Several insurance companies have already put out all these details but the IRDAI’s instructions streamlines the process to help policyholders in an emergency.
Welcoming these moves, Sanjiv Bajaj, Joint Chairman & MD, BajajCapital Ltd, says, “These measures are not only expected to increase the adoption of health insurance across India but also foster higher levels of trust between insurers and policyholders. With stricter review processes and a focus on maintaining high standards of customer service, IRDAI is ensuring a more transparent and reliable health insurance environment, ultimately benefiting the consumer.”
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Copyright for syndicated content belongs to the linked Source : The Economic Times of India – https://economictimes.indiatimes.com/wealth/insure/health-insurance/health-insurance-premiums-to-be-reduced-if-you-dont-make-a-claim-policy-cancellations-to-be-less-costly-and-more-5-irdai-rule-changes/articleshow/110612599.cms