Insurers will give you carrots for your health

Health insurers would venture into riskier territories such as covering pre-existing diseases, diabetes, dental insurance and offering a cover to claim OPD and pharmacy expenses without being hospitalised

Hitting the gym every other day, working out in your backyard and quitting smoking or even buying a health insurance cover early in life was never as rewarding as it would turn out now.

Insurance regulator Irda has enabled health insurance providers to encourage customers to walk on the wellness path. “General insurers and health insurers may devise mechanisms or incentives to reward policyholders for early entry, continued renewals (wherever applicable), favourable claims experience, preventive and wellness habits and disclose upfront such mechanism or incentives in the prospectus and the policy document,” states the Health Insurance Regulations, 2016, notified recently.

A leeway given to health insurers to launch “Pilot products” for a period of one to five years would go hand in glove with the reward mechanism to benefit policyholders. Now those with pre-existing conditions such as a heart attack, diabetes, cancer, etc, too would find themselves being covered.

While HDFC ERGO says it is working on innovative products such as OPD products, international plans, Religare Health says it would explore covers for chronic conditions or even dental insurance.

“Everyone is insurable, albeit at a price point. But in India, there isn’t enough information available. The pilot products initiative in conjunction with the wellness offering would enable us to study the behavior and claim history of people with pre-existing conditions such as heart attacks, diabetes and how they respond and claim when they are willing to work with the insurance company to bring about lifestyle changes, alter food habits, etc,” says Anuj Gulati, MD and CEO, Religare Health Insurance.

However, to ensure insurers don’t go overboard with reward, the regulator has barred them from offering discounts on any third party service or merchandise. Instead, they can opt for discounts in premium, discounts and/or benefits on diagnostic or pharmaceuticals or consultation services of providers in the network.

Some specific rewards mentioned in the regulations are outpatient consultations or treatments, pharmaceuticals or health check-ups including discounts on all the above at specific Network Providers. Discounts on premiums on renewals based on the fitness and wellness criteria too may be offered. “But rewards or penalties based on claims at individual level is not appropriate and not intended in the regulation,” states M Ravichandran, president – insurance at Tata AIG General Insurance.

The wellness initiatives would help both the policyholders and the insurance companies. For instance, offering a health check-up as a reward would mean an early diagnosis of any condition, preventive measures to correct or curb the disease from snowballing to a bigger health risk and ensuring the policyholder brings in lifestyle changes to take care of his/ her health. For insurers, it would mean a better portfolio.

But those with a network would be in a better position to roll out the wellness initiatives. “Our parentage has a network of hospital, diagnostic chain, pharmacy, and hence, it would be much easier for us to process the rewards in a seamless way especially during the initial phase. So, a card handed out to policyholders saying you have free out-patient consultations for instance would be better recognised within our parent network and technologically would be easier to roll out,” notes Gulati.

Insurers claim that they currently offer coverage to people for at least up to 65 years. But the guidelines now mandate that once a proposal is accepted and a policy is issued, thereafter renewed periodically without any break, further renewal shall not be denied on grounds of the age of the insured.

A major change is that life insurers have been barred from offering indemnity-based products (which reimburse hospital expenses) either at individual or group level. Further, no single-premium health insurance product can be offered under Unit Linked platform.

Ashish Mehrotra, MD & CEO, Max Bupa, “The new regulations have helped differentiate the product offerings by life and health insurers. While life insurers will offer financial protection plans, comprehensive health plans will only be offered by health insurers. With this move, more trust has been reposed on the core competency of health insurers.”

If you have subscribed to such a plan, then the notifications state that “For existing policyholders, the policy shall continue until the expiry of the respective policy term.” With respect to the product basket, life insurance companies need to close the plan by giving a prospective date of closure within three months from the date of notification of the new regulations.

However, life Insurers may offer long-term individual health insurance products for a term of 5 years or more, but the premium for such products shall remain unchanged for at least a period of every block of three years.

Life insurers aren’t the only ones who get to offer long-duration products. General insurance companies and standalone health insurers too can devise longer-term individual health covers for a period of one to three years, wherein the premium would remain unchanged for the tenure of the policy. “This assures a guaranteed price of 3 years for the customer. The regulations also stipulate periodic review and repricing of the portfolio. This would bring in more objectivity and viability to the business,” says Mukesh Kumar (executive director, HDFC ERGO General Insurance).

This apart, significant standardisation would be brought into the industry with various other clauses. As Ravichandran says, “The impact is going to be positive due to the focus on customer centricity, standardisation, long-term sustenance of the portfolio, etc.” For instance, a product-wise specific list of excluded items would need to be disclosed on the website of insurers.

The notifications also help policyholders heave a sigh of relief on renewability of cover. “A health insurance policy shall ordinarily be renewable except on grounds of fraud, moral hazard or misrepresentation or non-cooperation by the insured. An insurer shall not deny the renewal of a health insurance policy on the ground that the insured had made a claim or claims in the preceding policy years,” state the new rules.

A delay of up to 30 days in renewing the policy wouldn’t be considered a policy break and denial of offering a health cover would have to be communicated in writing, by recording the reasons.

If two or more policies are taken by an insured during a period then the policyholder shall have the right to require a settlement of his/her claim in terms of his/her policies and each insurer shall make the claim payments independent of payments received under other similar policies. “The regulations provide the flexibility to claim from whichever insurer he wishes to. Also if the sum insured in one policy exhausts and the expenses still remain, the customer can choose to get indemnified for the remnant amount from another insurance policy,” says Kumar of HDFC ERGO.

Asked whether there would be any change in premium amount, Ravichandran of Tata AIG says there would be no additional impact on pricing for family floater plans as the impact of multiple-incidence is already reflected in existing pricing.

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