Arbitrary premium hikes by insurance companies at the time of renewal and inordinate delays in claim settlement, among others, could be a thing of the past from this month. The new health insurance norms that came into effect from October would do away with quite a few arbitrary rules that caused heartburn among customers.
Sure, we have to wait for a few months to see how the scenario would unfold, but that shouldn't stop us from celebrating the passing away of arbitrary premium hikes by insurance companies.
"Irda has made it mandatory for insurers to specify the loading of premium and the reason for loading in the product file-and-use application," explains Divya Gandhi, principal officer and head of general insurance at Emkay Insurance Brokers. This means the insurance company can load premium only on the basis of claims experience, ailment-wise, among other parameters approved by the insurance regulator.
Easy claim settlement
From now on, your insurance company will have to process the claims within 30 days of receiving all required documents. It means the company won't be able to sit on a claim for more than a month. If there is a delay beyond this period, the company will have to pay a penal interest to the policyholder.
"If the claim is rejected, the company will have to specify the medical grounds on which the decision was taken," says activist Gaurang Damani, who had filed a petition seeking regulations for the health insurance space, which triggered the drafting of these new rules.
Bonus for claim-free years
Before the new regulations were implemented, a policyholder stood to lose the entire noclaim bonus earned over the years due to a single claim made. For instance, say, you have earned an annual bonus of 5% for three years.
If you were to make a claim in the fourth year, you would stand to lose the entire bonus (15%) you had earned during the previous three years. "The customer will now not lose the cumulative bonus entirely when a claim is made. The reduction of the bonus will be at the same rate as it is accrued," says Bhaskar Jyoti Sarma, managing director and CEO, SBI General.
That means, your cumulative bonus will not go down to zero after the claim on the fourth year — it will shrink to 10%.
Insurer is solely responsible
Insurance companies will be directly responsible for claim settlement now. Third-party administrators' role will be limited to processing the claims.
"Insurers will also have to play a greater role in claims handling. Earlier, third-party administrators were given the authority to deny or accept a claim. Now, such decision-making powers can't be delegated and the insurer will need to be involved directly with the hospitals in settling claims," says Manasije Mishra, CEO, Max Bupa.
"Now, insurers will not be allowed to offer any incentives to TPAs to reduce claims," adds Gaurang Damani.
Standardisation of definitions
"Standard definition for 46 commonly-used terms in health insurance policies will provide clarity in interpretation on these terms and reduce disputes or complaints and would enable just and speedier settlement of claims," says Gandhi. The new formula prescribed for calculating co-pay amount will also benefit policyholders.
The Insurance Regulatory Development Authority has also prescribed uniform definitions for 11 critical illnesses. "It also reduces the ambiguity in respect of various terms. For example, co-payment has been defined by the regulation to be linked to the claim amount (earlier it could have been defined as linked to claim amount or sum insured). And therefore, the room for different interpretations is removed," adds Arvind Laddha, CEO, Vantage Insurance Brokers.
Similarly, quantifying and defining the 199 exclusions — expenses not payable by the insurer — will also help reduce the ambiguity.
Uniform claim forms
The impact of this measure may not be felt immediately, but will surely help policyholders in the long term. It is expected to reduce the procedural hurdles faced by policyholders, besides streamlining the processes across the industry.
"The standardisation of claim forms and cashless pre-authorisation forms will help develop a robust information system. In the long run, the interface between insurers, TPAs and hospitals would be well regulated," says Segar Sampathkumar, general manager, New India Assurance.
For the policyholder, more efficient process could mean smoother claim settlement. Besides these newly-introduced measures, the regulations also cover some of the major changes announced earlier, including minimum entry age of 65 years and mandatory life-long renewal for all policies.
Therefore, 60-65 year-old senior citizens, whose proposals were rejected earlier due to their age, can now hope to buy a policy. Similarly, insurers can no longer refuse to renew your policy beyond a particular age, as the rules stipulate renewability for life except in cases of fraud or misrepresentation.