Health Insurance Regulations, 2016; Health plus life combo products

The Insurance Regulatory and Development Authority of India (IRDAI) has introduced several regulatory changes to health insurance. Insurance Regulatory and Development Authority of India (IRDAI) has reviewed IRDA (Health Insurance) Regulations, 2013 and notified IRDAI (Health Insurance) Regulations, 2016 on 18th July 2016. The Authority prescribed constitution of a Product Management Committee (PMC) for General and Health Insurers, which is an internal oversight mechanism within the company. PMC shall approve roll-out of Group Insurance products under Use and File procedure and also withdrawal of products. Prior approval of IRDAI is dispensed for Group Health Insurance Products and for withdrawal of the products of General and Health Insurers. The revised regulations increase the transparency and flexibility in withdrawal and rolling out of products.

Key Changes of IRDAI (Health Insurance) Regulations, 2016

1. Under Health plus Life Combi Product, Combination of any Life Insurance cover offered by a life insurer and a Health Insurance cover offered by General Insurer or Health Insurer is allowed.
2. General Insurers or Health Insurers are permitted to launch pilot products for a period not exceeding five years. At the end of the five-year period from the date of launch of the product, product shall be continued either as a regular product or shall be withdrawn.
3. Life Insurers may offer long term Individual Health insurance products i.e., for term of 5 years or more. Life insurer may not offer indemnity based products.
4. Credit Linked Group Health/Personal Accident policies can be offered for a term extended up-to the loan period not exceeding five years by all Insurers.
5. Any Health Insurance Product offered by Insurers shall not be marketed or offered unless it is filed with the Authority as per the Product Filing Guidelines. Product Filing Guidelines specified Use and File norms for Group Health Insurance Products offered by General and Health Insurers.
6. Product Management Committee (PMC) of General and Health Insurers can decide on withdrawal of Health Product by complying with the extant Guidelines prescribed in Product Filing Guidelines, 2016.
7. Review of product performance after five years to seek fresh approval stands deleted.
8. Norms specified for Group Insurance.
9. General and Health Insurers may devise mechanisms or incentives to reward policyholders for wellness and preventive habits. It is further specified that the underwriting policy shall also cover the approach and aspects relating to offering health insurance coverage not only to standard lives but also to sub-standard lives. Denial of proposal shall be in writing and shall be the last resort.
10. Insurers are now permitted to use the same proposal form without any change, for any number of their products. Norms are incorporated to protect the privacy of the policyholders.
11. Restriction on allowing Cumulative Bonus to benefit based products stands deleted.
12. General and Health Insurers to endeavour to provide coverage for one or more systems under AYUSH. Earlier exemption to Benefit based products stands deleted.
13. Norms on Wellness & Preventive Aspects of health insurance products are specified.
14. The nomenclature of ‘Standard List of Excluded Expenses in Hospitalization Indemnity policies’ stands changed to ‘Items for which optional cover may be offered by Insurers’ in order to enable the Insurers cover these generally excluded items at their discretion.
15. Policyholder shall have the right to require a settlement of his/her claim in terms of any of his/her policies.
16. No fresh underwriting at renewal stage where there is no change in Sum Insured offered. Where there is an improvement in the risk profile, the Insurer may endeavour to recognise that for removal of loadings at the point of renewal.
17. Earlier Regulatory provision of HIR, 2013 [Reg. No. 8(d)(iv)] on claim event falling during two policy periods stands deleted. No claim shall be closed in the books of the Insurer without proper disposal as per policy terms and conditions.
18. The following other disclosures are to be made:

• Product-wise or location or geography-wise particulars of the TPAs
• Product-wise cashless services offered
• Geography-wise list of Network Providers
• Specific disclosures in case of Pilot Products

19. The Insurer may provide a permanent Identity card (Smart Cards) to avail cashless facility which is valid as long as the policy is renewed with the company.
20. Authority specified certain Standards and benchmarks for hospitals in the provider network through Guidelines.
21. Where a claim is denied or repudiated, the communication shall be made only by the Insurer. Reasons for the denial or repudiation to be specified referring to corresponding policy conditions. Details of grievance redressal procedures available with the Company and with the Insurance Ombudsman to be furnished
22. Insurers and TPAs should put in place systems and procedures to identify, monitor and mitigate frauds.

Health plus life combo products

The ‘Combi Products’ may be promoted by all Life Insurance and Non-Life Insurance Companies.

The ‘Combi Product’ shall be the combination of Pure Term Life Insurance cover offered by life insurance companies and Health Insurance cover offered by non life insurance companies. Health Insurance for the purpose of this product class means effecting of contracts which exclusively provide sickness benefits or medical, surgical or hospital expense benefits, whether in-patient or outpatient, on an indemnity or reimbursement basis.

• The Policy Term and Sum Assured limits are as proposed and cleared under File and Use norms.
• Riders / Add-on covers may be offered subject to File and Use clearance
• The premium components of both risks are to be separately identifiable and disclosed to the policyholders at both pre-sale stage and post-sale stage and in all documents like policy document, sales literature etc.
• The product may be offered both as individual insurance policy and on group insurance basis. However in respect of health insurance floater policies, the pure term life insurance coverage is allowed on the life of one of the earning members of the family who is also the proposer on health insurance policy subject to insurable interest and other applicable underwriting norms of respective insurers.
• The integrated premium amount of the ‘Combi Product’ shall be basis for reckoning the threshold limit / applicability of extant Regulations, guidelines and circulars etc. issued by the Authority or any other statutory body.
• Commission and Claim payouts in respect of ‘Combi Products’ shall be by respective insurers only.
• ‘Combi product’ shall have a free look option as outlined in Regulation (6) (2) of IRDA (Protection of Policyholders’ Interests) Regulations, 2002. Free Look option is to be applied to the ‘Combi Product’ as a whole.
• The Health portion of the ‘Combi Product’ shall entitle its renewability at the option of policy holder to have an independent / standalone health insurance policy from Non-Life Insurance Company of the respective ‘Combi Product’.

Lead Insurer: As two insurance companies are involved in offering the ‘Combi Product’ one of the insurance companies may be mutually agreed to act as a lead insurer in respect of each ‘Combi Product’ marketed with agreed terms, conditions and considerations. The Lead Insurer for the purpose of these guidelines is the insurance company mutually agreed by both the insurers to play a critical role in facilitating the policy service as a contact point for rendering various services as required in these guidelines. It is envisaged that the lead insurer would play a major role in facilitating underwriting and policy service.

• Underwriting: Under the ‘Combi Product’, underwriting of respective portion of risk shall be underwritten by respective insurance companies, that is; Life Insurance risk shall be underwritten by Life Insurance Company and the Health Insurance portion of risk to be underwritten by Non-Life Insurance Company.
• File and Use: It is expected that the common strength of both insurers are leveraged and consequent benefits are passed on to policyholders under this product class. Hence, to examine this aspect it is proposed that both the independent products are integrated as a single product and filed with a common brand name. Both the insurance companies are advised to carry out the cost benefit analysis from the perspective of common policyholders before filing the product. Insurers may also utilize the existing insurance products ‘as it is without modifications’ that are already cleared under the extant File and Use norms. However the ‘Combi Product’ is to be filed at the stage of integrating for getting File and Use approval irrespective of the earlier approval to either of products. ‘Combi Product’ filing shall follow the File and Use guidelines in vogue and all such guidelines that would be issued from time to time. ‘Combi Product’ is to be filed with Actuarial Department of IRDA in File and Use formats that are in vogue.