The Insurance and Regulatory Development Authority of India (IRDAI) in its latest circular has announced that health insurance companies would not be allowed to make changes to the existing policies, which could lead to an increase in the premium cost for the policyholder.
The circular, however, added that "new benefits, upgradation of existing benefits may be offered as add-on covers."
"Under the additional norms on modification of health products (including PA and Travel), the regulator has clarified that insurers can choose to add new benefits or upgrade existing benefits as an add-on cover with a standalone premium rate for it. Thus, helping the customer make an informed choice and providing them with an opportunity to enhance the coverage by opting for add-on covers as per their needs", says Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance.
"General and health insurers are not allowed to modify the existing benefits, add new benefits in the existing products which lead to imposing an increase in premium. However, it is clarified insurers are permitted to effect minor modifications as stipulated in the consolidated guideline on product filing in the health insurance business. Addition of new benefits or up-gradation of existing benefits may be offered as add-on covers or optional covers with a standalone premium rate to ensure an informed choice to the policyholders," said IRDAI.
The insurers were already not allowed to make modifications to a product within one year of its clearance from IRDAI. The new circular would help in avoiding any new surprises for the policyholder at the time of renewal.
The IRDAI has also specified the format of the policy contract which the insurers have to follow from October 1. The circular added that the new format would enable all sections of policyholders to easily understand the contents of the contract.
"This will lead to further simplification and a better understanding of the policy for customers as the same format will be used across all insurers using plain and simple language", adds Singhel.
The details of health insurance products have to be presented in a specified order by all health insurers with a clear heading to draw customers' attention. The details would be on the policy schedule, preamble, definitions, benefits covered under the policy, exclusions, and terms and clauses.
