The draft health insurance regulations released last week by the insurance regulator although lauded by policyholders, senior citizens and consumer activists for being pro-customer, may pose several challenges for insurance companies.
Insurance companies will no longer be allowed to force their health insurance policyholders to switch to other products if the draft health insurance regulations released last week are finalised. Insurers complain that this means they will have to continue renewing a loss-making policy if a policyholder insists, even if it has withdrawn the product.
Says an official of a leading public sector insurance company, “If a (health insurance) product is loss making for us, the standard practice is to ask customers to switch to another product and withdraw the old product. But, here the (proposed) norm says that you can only suggest a policyholder to switch to another product. If he wishes to stay with the old product, we will have to renew it.â€
The draft health insurance regulations proposed by the Insurance Regulatory and Development Authority (Irda) said, “Insurer shall not compel the insured to migrate to other health insurance products, if it is to the disadvantage of insured.â€
“If a product has a high claims ratio, the insurer will still have to offer it to policyholders, if they insist. According to the proposed norms, an insurer can only suggest to a policyholder to migrate to a new product. Usually, a new product will have restrictive features and higher premium, so, you cannot force him to switch,†added Subrahmanyam B, senior VP, health, Bharti Axa General Insurance.
Insurance companies said another big challenge would be to recover dues from another insurance company if an individual has multiple policies. The guideline says, “If two or more policies are taken by an insured during a period from one or more insurers, the insurer shall not apply the contribution clause, but the policyholder shall have an option to chose insurer with whom the claim to be settled. In all such cases, the insurer shall be obliged to settle the claim without insisting for contribution clause.â€
“This is a grey area as the first insurer to whom a claim was made may pay 100 per cent of the claim amount, but may be told by the second insurer that according to its interpretation, only 80 per cent of the claim was payable, and so, would not be paid the full dues,†added Subrahmanyam.
At present, in case an insured has two policies, an insurer would apply a contribution clause, pay a part of the claim amount in proportion to the sum insured and would ask the policyholder to recover the remaining claim amount from the second insurer.
Insurance companies also said that another challenge would be to provide disclosure containing coverage and estimated premium for future renewals of the policy. Insurers would be submitting their feedback to the General Insurance Council (association of non-life insurers) to be taken up with the regulator.
The draft regulations on health insurance released by Irda has plugged the various loopholes through which customers are mistreated by insurance companies.
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By Falaknaaz SyedÂ
http://wrd.mydigitalfc.com/insurance/insurers-fear-losses-draft-health-cover-norms-401
