As health products differ significantly with each other in terms of benefits offered, it is considered essential that the potential customers seeking health insurance should have access to the basic health insurance covers. This would enable them to choose the coverage based on the need. At times the prospective customers may have no option, but to choose a product which has embedded certain other covers whether or not such covers are needed.
Insurance regulator IRDAI is planning to change this situation. All general and health Insurers have been told to offer a Standard Individual Health Insurance with up to Rs 10 lakh maximum cover. Simply put, a standardized health policy would make it easy for customers, especially the younger lot. These products will offer the same features with minimal variations, bringing much-needed uniformity.
As per draft guidelines disclosed on Wednesday, IRDAI said this standard product shall have the basic mandatory covers and shall be uniform across the market. No additional add-ons or optional covers allowed to be proposed to offer along with the standard product. Currently, many insurers are offering different variations of the basic product with add-ons and optional covers. Because of this, premium vary from insurer to insurer and there is no basic understanding of what is included in the basic cover to the consumer.
The insurer may determine the price keeping in view the covers proposed to be offered subject to complying with the norms specified in the IRDAI (Health Insurance) Regulations, 2016 and guidelines.
In order to incentivise early entry into health insurance by the young prospective policyholders of the health insurance market, all general insurers/health insurers offering the Standard Product will devise an appropriate pricing mechanism. This would help in continued renewals and favourable claim experience.
Do note that the standard product shall be subject to standard exclusions, as may be specified by IRDAI from time to time.
The standard health insurance product will offer mandatory coverage of hospitalization expenses, Ayush treatment, pre and post hospitalization medical expenses, wellness incentives, cumulative bonus (CB) etc.
Amit Chhabra, Head- Health Insurance, Policybazaar.com, said that this will bring in uniformity across the board in what insurers offer. “The standard product shall be offered on indemnity basis only, with no deductible. However, a standard co-pay of 5% can be considered on the product. The draft exposure says that the basic indemnity health cover policies offered should have a minimum sum insured of Rs 50,000 and the maximum to be capped at Rs 10 lakh,” he said.
Ashish Mehrotra, MD & CEO, Max Bupa Health Insurance, said the IRDAI standardization guidelines are a welcome move which will definitely boost the health insurance industry, driving greater penetration across the nation which is the need of the hour. “Standardised products across health insurers will encourage customers to buy health insurance as the products will be much simpler to comprehend, enable them to analyse the products better and choose what’s right for them based on their need – in the process, significantly simplifying the overall buying journey, especially for first-time buyers,” he added.
The standard health insurance policy shall not be clubbed with any critical illness cover or other benefit based covers. Any standard product can be offered as a family floater plan and children from the age of 0 to 25 years can also be covered under the same.
Minimum entry age shall be 18 years for principal sum insured and maximum shall be 65 years with lifelong renewability. There shall be no maximum exit age.
“The proposed changes can revolutionise the health insurance market by increasing the affordability of the products thus, eliminating out-of-pocket expenses. In the long run, these changes will be able to foster an economy where every Indian is able to create a safety net for them and their families, which shall considerably reduce their out-of-pocket expenses, said Chhabra.
Prasun Sikdar, MD & CEO, Cigna TTK Health Insurance, says the healthcare costs are immensely high and on a continuous rise, but India is one of the least insured countries, with a low health insurance penetration rate. One of the reasons for poor penetration is that most consumers find it difficult to understand what services different health insurance products cover, and do not cover.
“Thus, the IRDAI’s proposed move for standardisation of health product will give consumers greater certainty about the services covered and to find one that meets individual needs. This will also encourage more Indians to purchase health insurance as the new simplified products will be easy to understand and offer an instant solution to the buyer,” he said.