With medical expenses increasing by the day, it’s important to be conscious about preventive healthcare, which includes keeping yourself fit. Not doing enough could make you vulnerable to diseases, especially if you have a sedentary lifestyle. Insurers too emphasize on preventive healthcare; in the last few years, many of them have started bundling reward programs to encourage fitness. In fact, not keeping fit can add to your health insurance premiums, especially if you are 40 or above.

Recognizing the need of the hour, the Insurance Regulatory and Development Authority of India (Irdai) has also sought to promote preventive healthcare, through its latest draft guidelines on wellness and preventive benefits. The biggest takeaway from these guidelines is the fact that insurers can now offer a discount on premiums or bump up your sum insured if you keep fit.

“It has become important to prioritize health and include preventive healthcare measures in one’s daily life. With this move, we believe that health insurance will no longer be perceived just as a measure to secure oneself against unforeseen illnesses; rather it will become a part of one’s daily health needs," said Ashish Mehrotra, managing director and chief executive officer, Max Bupa Health Insurance Co. Ltd.

The guidelines shall come into force with immediate effect. We tell you how the health insurance industry rewards you for keeping fit and what’s on the cards.

Taking a step ahead

Wellness is already being promoted as part of many health insurance policies across insurers, but not in a big way. The Health Insurance Regulations (HIR), 2016, included guidelines on wellness. However, it allowed only OPD consultation or treatment, some discount on pharmaceuticals and free health check-ups and diagnostics. Amit Chabbra, head, health insurance, Policybazaar.com, an online insurance marketplace, said the OPD benefits didn’t become mainstream because insurers had to build in the cost of OPD expenses which are more common than hospitalization.

Mehrotra said the new draft guidelines take the earlier regulations a step forward to increase the bouquet of health services which can be provided to policyholders.

Shreeraj Deshpande, chief operating officer, Future Generali India Insurance Co. Ltd, said these new guidelines complement the earlier ones by allowing ways in which utilization of the wellness features can be incentivized. “While the earlier guidelines introduced wellness as a feature in health insurance, there were no avenues of encouraging customers to actually use those features," added Deshpande.

Wellness perks

Irdai has proposed certain ways through which insurers can offer wellness perks to policyholders.

Based on the disclosed fitness and wellness criteria, insurers can offer redeemable vouchers for the purchase of protein supplements and other consumable health supplements. Policyholders may also get redeemable vouchers for memberships in yoga centres, gymnasiums and for participating in other fitness activities. The earlier discounts (through vouchers) on OPD consultations and treatments, pharmaceuticals and health check-ups done by network hospitals would also continue.

Of all the benefits proposed, what stands out is the discounts on premiums and an increase in sum insured at the time of renewal, depending on how well you’ve followed the wellness regime.

Irdai has also allowed insurers to stretch the benefits by covering non-payable items of cost of treatment. “Insurers can vary the benefits offered on the basis of geography, product design and claims experience. Insurers could come up with customized health-risk assessment tools to help policyholders realize their fitness levels. The associated cost may vary from insurer to insurer based on the design of the wellness programme," said Subrata Mondal, executive vice-president, IFFCO Tokio General Insurance Co.

The benefits can be offered only after they are filed or incorporated as part of a product in line with product filing guidelines. Insurers cannot discriminate in providing the wellness features and benefits offered to the same or similar category of policyholders for a specific product. However, there would be some distinction in the kind of benefits offered based on the cost of the policy. “Distinction would be there because product differentiation can be brought about only if wellness benefits are graded based on premium paid," Deshpande said.

Insurance companies have also been asked to assess the impact of such features on pricing. If there’s any impact on pricing, the insurer will have to disclose it upfront.

What the draft says

Irdai has asked insurers to refrain from promoting third-party merchandise in their advertisements. However, they can disclose the items or services offered on their website in detail and also provide a link in the policy documents. They also can’t accept any liability towards quality of the products or services offered by a third party.

Insurers have been asked to ensure that the agreed services or products under the wellness programme of every product are discharged accurately by the service providers. Also, other than the monetized value of reward points redeemed by policyholders, insurers can’t make payments to the third party service or product providers. Insurance companies will have to, as a rule, disclose product-wise payouts for every third-party merchant in the annual public disclosures.

All insurers will have to factor in the costs towards wellness services into the pricing of the product which shall be disclosed in all the advertisements promoting wellness features. “The regulator has allowed insurers to appropriately price the products based on predefined factors. The costs towards wellness services are to be kept transparent in the insurance advertisements," said Mondal.

For family floater plans, insurers will have to disclose the manner in which the accrual and redemption of benefits will be considered with respect to all the members covered. For all policies, whether the accrued benefits can be carried forward or not at the time of renewal will have to be specified clearly in the policy document stating the period of validity of the benefits. Benefits accrued cannot be linked to any dynamic factor and will have to be declared upfront at the commencement of the policy.

At least once every year, insurers shall notify the benefits accrued to the policyholder. In view of policyholders’ privacy, insurers must ensure that the information gathered during the process of offering wellness benefits is kept confidential and isn’t used for other purposes.

How you will benefit

Though these benefits could impact premiums, it will help insurers reduce the claims ratio, which would encourage them to provide wellness features at affordable prices. “The wellness regime followed by the policyholders would help in keeping them fit and in turn could result into lesser claims which would help us in providing better discounts to customers," said Mehrotra.

Most insurers said there would be a pricing impact on the policies but because companies would be sourcing these services at an aggregate level on behalf of customers, access to preventive healthcare would end up becoming cheaper.

Health insurers in developed countries and some developing countries like South Africa have a strong wellness framework embedded in their business strategy, which has helped them in getting detailed information about customers’ lifestyle and frame customized wellness interventions for them, said Deshpande. “South African insurers such as Discovery and Clover Health are able to do far better disease management for their policyholders through wellness benefits," said Chabbra.

With the new guidelines, Indian insurers too will now be able to incentivize people to adopt a healthy lifestyle. This would lower the chances of hospitalization due to lifestyle-related diseases. Experts said what the guidelines aim to achieve will be a win-win for both the policyholders and insurers.