A person’s health becomes a matter of concern when a medical emergency hits. It can be equally drowning for the patient and the loved ones both in terms of sufficient financial aid and emotional support. The financial support can be provided by a health insurance company if the patient is covered with a comprehensive policy. A potential policyholder has complete freedom over choosing a policy as buying health insurance is not a legal requirement. But how can the policyholder trust an insurance company? This is where IRDA’s New Standardization Guidelines come into the picture.

IRDAI’s New Rules/Standardization Guidelines for Health Insurance - Acko

This article sheds light on what exactly is the role of IRDA in health insurance and how they regulate the insurance industry in India for ensuring fair practices in the business.

What is IRDA? 

IRDA is an acronym of the Insurance Regulatory and Development Authority. The IRDA meaning is explained in this section. The sole purpose of constituting IRDA was to optimise the existing insurance industry in India and to provide new avenues for development. The formation of IRDA was suggested in 1999 as an autonomous body. However, in April 2000, it became a statutory body for the regulation of the Indian insurance sector.

The trends in the insurance industry change at a rapid pace. Be it the introduction of digital insurers with the advent of the internet, or the globalization of technological advancements with respect to insurance products. IRDA needs to keep up to date and this is done periodically with the help of standardization guidelines. The latest edition was IRDA new guidelines of 2020.

IRDA Rules for Health Insurance:

The IRDA has meticulously jotted down multiple rules that need to be complied with. These rules help both the insurer and the insured to provide and avail a fair deal in terms of health insurance and allied services. Following is a list of some important rules laid down by the IRDA, if interested you can visit here to read more health insurance rules.

  1. If the policyholder renews a health insurance policy in time (without any gaps in renewal), then the policy may not have an exit age.
  1. The validity of a Group Health insurance policy can only be of one year.
  1. It is an obligation of the insurance company to inform the policyholder about the terms and conditions of a health insurance policy with respect to availing treatment at medical facilities across India.
  1. For specific health insurance policies that provide coverage to a particular group of people (for example children up to a certain age, students, pregnant women, etc.) the insurance company shall provide an option to the policyholder for migrating to another plan upon meeting the exit criteria. And provide suitable credits if the policy was renewed without any gaps.
  1. If an application for buying a health insurance policy is denied, the insurance company should provide a fair, justifiable, and transparent reason in writing to the applicant.
  1. The policyholder that renews the policy in time, has bought the policy early in life or provides a favourable claims experience with an insurance company shall be rewarded. The rewards (as approved by the board) should be clearly mentioned on the prospectus and policy document.
  2. The insurance company should provide a list of medical facilities (government or others) to the policyholder from where the medical reports will be accepted by the company before issuing the policy.
  3. The amount of premium charged, especially for senior citizens, should be justified, fair, and transparent. The final amount should also be communicated in a clear manner to the potential policyholder.

IRDAI’s New Rules: Standardization Guidelines for Health Insurance Policy: 

IRDA guidelines for health insurance 2020 focus on aspects related to claim settlement, use of multiple policies, etc. Take a look at the following new IRDA rules:

  1. Claim Rejection

A health insurance company cannot reject a claim if the policy is renewed without a break for 8 years by the policyholder. The 8-year period will be called the moratorium period. The insurance company cannot appeal to the IRDA against the settlement of such claim except for fraud and/or a claim raised against the exclusion of the policy after the moratorium period.

The insurance company cannot reject a claim on the basis of misrepresentation or non-disclosure. IRDAI has given a period of 8 years to the insurance company for verifying the information provided by the policyholder and thus, a claim cannot be rejected on those grounds.

  1. Inclusion Of Telemedicine Under Health Insurance

The COVID-19 pandemic has forced both healthcare providers and patients to provide and avail remote consultations. The fee for such online consultations can amount to a large sum that would prove to be a financial loss to the insured person. Thus, IRDA has decided to ask health insurance companies to include telemedicine in the coverage where applicable. This move has allowed medical practitioners and patients to freely avail medical opinions.

  1. Claim Settlement

In case of a delay in claim settlement from the insurer’s end, the insurance company is liable to pay the interest on the claim amount at the rate of 2% more than the bank rate. The claim should be settled within 30 to 45 days from the date of communicating the last required document to the policyholder. The time duration will be dependent upon the nature of the claim and investigation required.

The above guidelines will be applicable to health insurance products filed from October 01, 2020. As far as existing products are concerned, the terms and conditions will be modified to comply with the rules upon renewal after April 01, 2021, and onwards.

Benefits For Health Insurance Policyholders:

IRDA new rules for health insurance are not limited to the insurance company, they also apply to the policyholder. The following rules are to be followed by a policyholder for the corresponding situations.

  1. Multiple Policies

A person could have bought multiple policies of the same type. In case of a claim, the insured can choose to raise a claim at a preferred insurance company and the insurer will be liable to settle the claim as per the terms and conditions of the policy. The insured can choose to raise a claim for an amount that has been disapproved by one insurer, by raising a claim for the balance amount with another insurer in case of multiple policies. This stands true in case the sum insured gets exhausted under one policy. 

  1. Health Insurance Portability

A health insurance policyholder can choose to migrate to a new plan of a similar nature in case he/she is not satisfied with the services provided by the insurance company. There can be two situations when it comes to health insurance portability. First, migrating to another plan offered by the current insurance company or migrating to a new plan with another insurance company. 

For both cases, the timeline to apply for migration is at least 30 days before the date of renewal. The application can be made as early as 60 days before the date of expiry but not before that. If the policyholder had renewed the policy without any gaps, he/she can expect to port the entire policy along with the benefits and nominees under the agreed terms and conditions.   

Also, read: What is a TPA in Health Insurance?

What Are The Functions Of IRDA?

The constitution of India has given authority to the IRDAI for looking into the regulation and development of the Indian insurance industry. As per the law, the following are the main functions of IRDAI:  

  1. The authority to register, renew, update, suspend, withdraw, or cancel the registration of an insurance company.
  2. Reviewing, authorising, or rejecting insurance products.
  3. Working in the interest of a policyholder as well as the insurance company for fair practices at all stages of providing insurance to a policyholder.
  4. Ensuring the regulation and development of businesses allied to the insurance industry.
  5. The Tariff Advisory Committee is supposed to be supervised by the IRDAI.
  6. Looking into the regulation of investment of funds by an insurance company.
  7. Addressing and solving the disputes between various entities related to insurance.
  8. Conducting audits of insurance companies.

Benefits of Online Health Insurance Policy:

Buying a health insurance policy online can be beneficial in multiple ways. First of all buying health insurance policy online allows you to review the coverage and compare plans from various insurance companies. If you are buying a policy from a digital insurance company, you will notice that it is cheaper as compared to its offline counterpart. Lastly, one can access the insurance company’s website anytime, from anywhere with the help of an internet-enabled device.

Frequently Asked Questions:

On which date are the new rules for health insurance published by the IRDAI?

The new rules for health insurance were published by IRDAI on July 22, 2020.

I have been continuously renewing my health insurance policy for the past 9 years, can my insurance company reject my claim for Diabetes?

No. According to the new rules published by IRDAI, your health insurance company cannot reject a claim for pre-existing diseases if you have been renewing your policy without any breaks for 8 years or more.

Can I raise a claim if my insurance policy has expired?

No. A claim can be raised only against active insurance policies.

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