Raising a genuine toast to your health and wealth
3 min read . Updated: 30 Dec 2013, 11:55 PM IST
PremiumFor the general insurance industry the year 2013 has been challenging
If it is soaring medical bills that have made health insurance popular, reforms in the sector in 2013 will ensure that you are able to place more faith in them. Insurance Regulatory and Development Authority (Irda) rolled out two key pieces of regulation that not only make these policies better in terms of benefits but also improve the customer’s understanding of the policy and processes by standardizing key health insurance terms and claims processes.
We take you through some of these changes.
Age no bar
This is the biggest game-changer in the health insurance space. Earlier, even if you bought a health insurance policy in your younger days, you would be left deprived of its benefits in your sunset years because health was covered only for a certain number of years. The advent of stand-alone health insurance companies changed that when policies began allowing policyholders to renew the insurance for life. This is now the norm. Health insurance regulations, which kicked in from October 2013, mandate that all health insurance policies will need to be renewable for life.
The other important change is that the minimum entry age for first time buyers of health insurance policies is now 65 years, unless the policy is customized for a certain age group. So, unless there is a serious health condition, a person as old as 65 can buy health insurance.
No premium surprises
According to the new rules, insurers now can’t increase premiums based on an individual’s claims record (a person’s premium was increased at the time of renewal because she made a claim earlier). Any increase in premium will have to be done on the basis of the insurer’s experience with all its health policies. Insurers are also not allowed to change their premiums for the first three years; it can be changed every year from the fourth year, but with proper justification. This should bring about sustainable pricing and put an end to predatory pricing practices that were seen a couple of years back, when policies were sold at rock bottom prices only to become much more expensive in a few years.
Standardization
Standardization in two areas—terminology and claim processes—will go a long way. It will not only improve policyholders’ understanding of the health insurance process but also in speedy settlement of claims. Insurers will have to adopt standardized terminology to explain health insurance coverage. About 46 health insurance terms in a policy document have been standardized. This makes your job of understanding a health insurance policy a lot easier. Even the list of exclusions—be it certain treatments of sexually transmitted disease, or items such as laundry and barber charges—have to be clearly explained.
The claim process has also been made more consistent. Now, hospitals have to furnish information, such as discharge summary report, in set formats. In fact, insurance companies will also have to play a greater role in claims handling as the new rules encourage them to be involved directly with the hospitals in settling claims and not depend solely on third-party administrators (TPAs, who function as middlemen between the hospital and the insurance company).
“These regulations have also worked towards better coordination between the hospital and insurers. By standardizing the claim form and other claim procedures, the effect of having multiple parties will get minimized. Earlier a customer had to deal with multiple TPAs and each came with their pre-defined claims process," says Anuj Gulati, managing director and chief executive officer, Religare Health Insurance Co. Ltd. All these customer-friendly regulations mean that the layman can buy health insurance policies with greater confidence and use the benefits with more ease.
However, for the general insurance industry this year has been challenging. “Growth fell this year. Insurers have been reducing their premiums to get a high market share. This will increase industry losses in the coming years. The industry was de-tariffed only in terms of pricing, but now the regulator should allow freedom is designing the policies so that insurers don’t continue to undercut each other," says Tapan Singhel, managing director and chief executive officer, Bajaj Allianz General Insurance Co Ltd.
Here’s hoping that 2014 will see more user- and insurer-friendly changes.
