It appears that life insurance companies may be allowed to offer indemnity-based health insurance policies. The Insurance Regulatory and Development Authority of India (IRDAI) has set up committee to study the feasibility of allowing life insurers to offer indemnity-based health insurance policies. Currently, IRDAI (Health Insurance) Regulations 2016 allow life insurers to offer defined benefit-based health insurance products only. Until now, these companies were allowed to sell only benefits-based health products.
In indemnity-based health plans the insured is reimbursed the actual expense incurred during hospitalisation up to the total sum insured under the insurance policy. This means that the policy pays the money that is spent on the treatment within the limit of the sum insured. Indemnity type health insurance policy can be a regular individual health insurance policy or a family floater policy.
One of the objectives of allowing life insurers to issue indemnity-based insurance is to control premiums. Health insurance premiums have been going up at around 20% over the last 10 years in India. IRDAI (Health Insurance) Regulations 2016 allows life insurance companies to offer benefit-based health insurance products only.
IRDAI has got “representations from life Insurance Companies to allow them to offer indemnity products as well”, said IRDAI in a press release. Life insurance companies have argued that they can bring in the knowledge of long-term pricing using actuarial models for customer benefit. The nine members committee has been asked to submit its recommendations within two months of issue of this order, according to the press release.
The committee has been asked to review:
The feasibility and the business scope for Life insurance companies to offer indemnity-based health insurance products;
Current statutory provisions that are applicable in this regard;
Any other matter as permitted by the chairperson