Regulations play an important role in defining the
growth and future of any industry. Recently, the Insurance Regulatory and
Development Authority of India (IRDAI) introduced (Health Insurance)
Regulations, 2016, replacing the rules set in 2013.
The
six important changes brought about by the regulations are:
* Combi plans can be a mix of any life (earlier only
term plan) and medical insurance plans
* Cumulative bonus in benefit plans allowed
* Wellness benefits
* Insurers have been asked to launch pilot products
* Standard declarations format can be flexible and
insurers may design them independently
* Life insurers will not be allowed to offer
indemnity-based products
Let's
take a look at the implications of each of them:
Combi plans can be a mix of any life (earlier only
term plan) and health plan
In December 2009, IRDAI had come out with the
guidelines for combi plans that would allow a life and a non-life (or a
standalone health) insurer to enter into an agreement to offer such plans.
Recently, India First Life Insurance announced collaboration with Star Medical
insurance plansto introduce Star First Combi Plans - a combination of health
and life insurance plans. It was a mix of a pure term ..
Cumulative
bonus in benefit plans allowed
Currently, cumulative bonus is not a feature in
defined benefit policies such as critical illness plans. Going forward, it will
be offered and explicitly stated in the prospectus and policy document. The
addition of cumulative bonus increases the sum insured over a period of time
and helps in meeting a higher treatment expense in future. But, will there be a
corresponding increase in the premium of critical illness plans?
Wellness
benefits
Medical insurance plans premium is largely a function
of age and sum insured, followed by health maintenance and healthy habits. The
guidelines to reward policyholders with an early entry and continued renewals
were already present in the IRDAI guidelines of 2013. To incentivize healthy
lives, the recent guidelines stress on rewarding policyholders on the basis of
preventive and wellness habits by disclosing upfront such mechanism or
incentives in the prospectus and the policy document. "This type of benefit
might help customers in monitoring and improving their health. On the other
hand, the insurer recognizes the same and offers discount on the renewal
premium," says Mehrotra.
No discount, however, will be provided on any
third-party service or merchandise. For instance, insurers can't offer
discounts on a health club's membership just because they have a tie-up with
the club. Instead, discounts in premium or on diagnostic or pharmaceuticals or
consultation services of providers in the network will still be allowed.
Insurers
have been asked to launch pilot products
This new initiative may usher in a new wave in the
insurance industry. IRDAI has allowed insurers to test the water by launching
'pilot products'. Close-ended with a one-year policy term, the products will be
offered only by general or health insurers for just five years initially. The
product can be withdrawn or rolled over into a regular one. The idea is to
cover risks which have not been covered by insurers till now. Such experiments,
however, should not be detrimental to the interests of policyholders. Mehrotra
says, "While the insurers have the flexibility to withdraw or continue the
product after 5 years, the regulator has protected the interest of the
customers by putting an obligation on the insurance companies to port the
customers of pilot policies to an existing product of a health insurer. This
will provide customers continuity benefit and at the same time encourage
insurers to innovate more and test new products."
Proposal
form can be flexible and insurers may design them independently
All insurance companies, including life, general and
health, can now have their own proposal form with separate set of standard
declarations as part of it. The regulations, however, strictly prohibit any
explicit or implicit consent of prospective buyers to part information with
third-parties.
Life
insurers are not allowed to offer indemnity-based products
From now on, life insurers will not be allowed to
offer indemnity products. For existing policyholders, however, the policy shall
continue until the expiry of the respective policy term. But won't their claim
experience be hit if new policies can't be sold? "Actuarial assumptions
take into account several factors, including continuity of a product and the
volume of business. As a prudent insurance company.
Indemnity plans are medical insurance plans policies
such as medi claim which reimburse the actual hospital expense incurred, i.e.,
indemnify the policyholder. Few years back, life insurers had started offering
such plans, but now IRDAI has put brakes to it. Non-life and standalone health
insurers will, however, continue to offer them. Importantly, life insurers may
still offer defined-benefit health plans such as critical illness plans in
which a lump sum amount, irrespective of the actual hospital expect ..
Conclusion
One should ideally have adequate medical insurance plans
cover for not just oneself, but the entire family as well. Young families may
opt for family floater health covers where children up to the age of 25 are
covered. At around age 40, one may consider buying a critical illness cover.
Keep reviewing the amount of coverage every 3-5 years and, more importantly,
maintain a healthy lifestyle.
Source:
[http://economictimes.indiatimes.com/wealth/insure/6-important-changes-brought-about-by-new-health-insurance-rules/articleshow/53735274.cms]
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