The insurance sector witnessed significant regulatory changes in 2019. These regulations are primarily to safeguard the policyholder’s interest and provide better insurance solutions. Health insurance, in particular, saw several positive developments.
The changes are focused on pre-existing diseases (PED), disease wise waiting periods, exclusions and payment flexibility. There has also been a consistent effort to standardise health insurance definitions through various regulatory amendments. The industry is experimenting with innovative ways to offer insurance in the form of small, affordable, bite-size policies. However, the tangible impact of this remains to be seen.
Change in definition of pre-existing diseases
A substantial improvement has been in the definition of pre-existing diseases. Previously, an insurer could reject a claim even when an individual had signs or symptoms of a disease for which a claim was filed during the pre-existing disease waiting period. Now, a disease can be classified as pre-existing only if it has been diagnosed previously or specifically treated for.
This shifts the onus of proof on the insurer and will reduce claim rejections where the patient was unaware that they had a specific disease. The regulations have introduced the concept of an eight-year look back period. After eight years a claim cannot be rejected for any reason, except if it is proven to be a fraud. This means that there is a strong incentive for policyholders to renew insurance policies. The combination of a look back and life-long renewability makes health insurance a must-buy when you are young and healthy.
Restrictions on exclusions
The regulations have restricted the exclusions allowed. Diseases such as Alzheimer’s, Parkinson’s or HIV/AIDS cannot be rejected outright. There are 16 such ailments categories which will now be covered in health insurance.
Similarly, mental health related claims must now be covered. This does not mean that insurers are obliged to issue health insurance to you if you suffer from any of these ailments but that these diseases cannot be an exclusion if an insurance is issued. In fact, diseases contracted after purchasing the insurance cannot be rejected.
No more ambiguous statements
There have been efforts to eliminate ambiguous statements from policy contracts such as “such as.” Insurers are allowed to make permanent exclusions if this is a way to issue health insurance to persons who would previously not have been covered. Modern treatments such as Lasik for power over 7.5 dioptres, stem cell surgery in certain conditions are now allowed. These are valuable changes as they will widen the reach and comprehensiveness of the insurance contract.
Payment of benefits
The regulator is also increasing the flexibility of benefit payments. For fixed benefit insurances such as critical illness and personal accident plans, insurers can provide options for lump sum payments and also instalment-based benefit options. The advantage of instalment payments is that the chances of nominees squandering a benefit payment is minimal since payments are staggered.
Bite-size insurance products
Insurers and some distributors are experimenting with bite-size insurance products this year. Bite-size insurances are specific in nature. For example, coverage for vector-borne diseases such as dengue fever, chikungunya and critical illnesses such as cancer. These products take into consideration the seasonality of diseases by offering insurance solutions for a year or less or by restricting cover to specific ailments. This makes the products more economical and accessible. The process of buying these insurances is digitised and there is no pre-requirement of a medical test. Bite-size insurances offer a simple one-click solution. They are most often packaged with other services such as taxi rides or purchases from ecommerce sites.
The issue with bite-size products is that there are many claim restrictions and so the usability still needs to be demonstrated.
Functioning of insurance ombudsman
Although not a regulatory change, there has been an improvement in the functioning of Ombudsman. Some years ago, there were many vacant positions but now these have been filled. The turnaround time on such grievances has now reduced.
OPD insurance products
Many insurers have introduced OPD insurance products. This is an important step because over 50 percent of health care costs are out-patient based. The insurance cover for such OPD costs has been minimal but this seems set to change.
In summary this has been an eventful year. Future priorities could be to improve fixed benefits plans such as critical illness and personal accident and the coverage of OPD insurances.
(The author is Chief Business Officer, SecureNow.in)