BackWill inclusive health insurance covers become more expensive?
A recent report by the insurance regulator recommends a more inclusive cover and simplifies exclusion clauses like pre-existing diseases. Will these measures impact the cost of health insurance?
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Cost will be affected but on small scale
There will definitely be a small impact on the cost, but the number of grievances will significantly go down. When these go down and the experience of the customer is enhanced, naturally we expect that to bring more business.
Many times those selling or buying a policy are not aware about exclusions. So when they go to a hospital, they are taken for a surprise. That is because there are different clauses of exclusion for different companies and even for different policies from the same company. So when this is made uniform, over a period of time, every customer, every front desk of a hospital as well as a medical practitioner will come to know that these are the exclusions. This will reduce the confrontation that follows.
Now there is more focus on mental health and HIV-positive patients. So in a way, these recommendations will also help the industry run in a more righteous way. The premium will not go up immediately, though outgo will go up. But the outgo will also depend on efficient management and creating a network of hospitals. In fact, the recommendations can be implemented without a cost impact if the insurers are prudent.
—S Prakash, chief operating officer, Star Health Insurance
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Beneficial for both customers, insurers
From bringing mental health in the ambit of health insurance to standardising the wordings in the exclusions, Irdai has taken constructive steps towards broadening the scope of coverage. The committee report, among other recommendations, limits the number of illnesses or diseases which remain outside the ambit of health insurance coverage. Irdai has taken a positive step to regulate insurance contracts by bringing uniformity in policy wordings and emphasising on clearer definition of pre-existing diseases.
Standardisation of exclusions would also remove differences across different products and across different insurers.
These measures would make health insurance policies more inclusive and products more comprehensive. Though the current products might not be able to accommodate these guidelines as the same have not been priced for, new health insurance products with standard policy wordings and appropriate pricing would be beneficial for both customers as well as the insurers.
—Ashish Mehrotra, MD and CEO, Max Bupa Health Insurance
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Higher cost won’t be a hindrance
Health insurance has been known for the highest number of consumer grievances across services. The recommended changes are likely to standardise terms and significantly reduce ambiguity.
The resultant premium hike is one that the customer would be more than keen to pay. In the past decade, at the behest of solving for losses and frauds, random conditions have been force fitted in many policies. Though the policy conditions have historically always been complex, such arbitrary introduction of conditions, sometimes during renewal, resulted in bona fide customers feeling cheated at the time of making claims.
The maximum number of grievances have been due to lack of awareness of terms and conditions of the policy. We need to come to terms with the fact that policies are not being sold by healthcare or legal experts, but by salesmen. Once the customers understand the policy terms and how they can benefit from them, they will be more than keen to renew or buy the policy, even at a higher premium.
—Mahavir Chopra, director, health, life and travel insurance, Coverfox.com
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Premium will not go up immediately
The recommendations by the working committee is a positive move for policyholders and the non-life insurance sector. It will provide more clarity to the insured and bring about uniformity in the exclusions under health insurance policies. Moreover, this also will standardise the waiting periods which currently vary from insurer to insurer depending on the illnesses. As an added advantage, these recommendations will help in reducing claim rejections as well.
It is unlikely to have a significant impact on the cost in the short run. However, individuals with pre-existing condition might have to pay a higher cost. Also, the waiting periods for common health conditions like hypertension, diabetes, etc have been substantially cut down to not more than 30 days, but greater emphasis may be laid by the insurers on pre-policy examinations. We can expect significant innovation in health insurance products. Coverage for all pre-existing conditions after eight years of continuous renewals will also encourage product innovation, but tighten underwriting at entry. Standardising the exclusions across the industry is likely to boost individual’s confidence to purchase a health policy.
—Anurag Rastogi, chief actuary and head - Retail Underwriting and claims, HDFC Ergo General Insurance
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