Health Insurance Set For Major Reforms

The IRDAI (Insurance Regulatory Development Authority of India) recently published the results of it’s working group for the standardisation of exclusions in Health Insurance policies; and it would appear from the report that significant value creation is in the offing for policy buyers.

The Health Insurance industry has surged exponentially over the past decade and a half - with premiums growing from a paltry Rs 741 crores in 2001-02 to Rs 37,000 crores in 2017-18. Per the report, the industry is expected to continue booming at a rate of 24-25 % for the next 5-6 years and projected to reach 100,000 crores in 2022.

The general opacity, and the laundry list of clauses present in Mediclaim plans have long flummoxed policy buyers. In fact, many find it difficult to perceive which conditions will be covered and which won’t; clearly not a good state to be in with respect to a health insurance policy!

Most policy holders would be familiar with the term “exclusion” as it relates to Health Insurance – basically, this is a list of conditions that the policy will not cover, and this section of your health insurance policy is likely to be shrouded in fine print. 

The new Working Group report suggests that all health conditions acquired after policy inception, other than those that are not covered under the policy contract (such as Infertility and Maternity) “should be covered under the policy and cannot be permanently excluded”. Previously, Health Insurers have denied claims for conditions such as Alzheimer’s diseases, Parkinson’s disease, HIV, or morbid obesity – even if they were contracted after the policy was taken up.

The report also recommends a standardized list of exclusions, which means that an insurer will no longer be able to exclude a specific condition based on a whim. A pre-specified list of 17 excludable conditions have been given in the report – these include epilepsy, congenital heart disease, inflammatory bowel disease, and chronic liver diseases caused by alcoholism, among others. In addition to the 17 allowed exclusions, the committee has also come up with a list of exclusions that will not be allowed in health insurance policies offered by all insurers.

Also noting that “Non-declaration/ Misrepresentation of material facts is a major concern in health insurance contracts”, the regulator has suggested some clear-cut guidelines for insurers to deal with claims arising in mature policies, from conditions that are found to have been pre-existing at the time of taking up the policy. If implemented, these guidelines will encourage full disclosure from policy buyers at the time of purchase – something that will make the industry a lot cleaner.

To make sure that policy holders can avail the benefits accruing from the latest medical developments, the working group has recommended the formation of a Health Technology Assessment Committee that shall continuously examine and recommend inclusions of advanced medical technologies as well as new treatments into existing health insurance policies. 

All in all, we can look forward to material developments within the health insurance space in India in the coming months, with offerings (and subsequent pricing!) getting more standardised and useful for policy holders.