IRDAI plans to regulate, simplify policy wordings of health indemnity insurance policies

The Insurance Regulatory and Development Authority of India (IRDAI) has released a draft proposal on January 10, "The objective of the guidelines on 'Standardization of General Clauses in Health Insurance Policy Contracts'  which seeks to standardise the common general clauses incorporated in indemnity based Health Insurance (excluding Personal Accident (hereinafter called as PA) and Domestic /Overseas Travel) products covering Hospitalization, Domiciliary hospitalization and Day care treatment in order to simplify the wordings of general clauses in the policy contracts and ensure uniformity and greater transparency.
 
The objective of the guidelines on 'Standardization of General Clauses in Health Insurance Policy Contracts' is to standardise the common general clauses incorporated in indemnity based health insurance policies.
 
IRDAI has sought to standardise and simplify policy wordings of standard health indemnity plans. By doing this, the Insurance Regulatory and Development Authority of India (IRDAI) wants to bring in standardisation and transparency in policy agreements. 
 
As per the draft proposal (exposure draft), "These guidelines are applicable to all general and health insurers offering indemnity-based health insurance (both Individual and Group) covering hospitalisation, domiciliary hospitalization and day-care treatment." 
 
The draft proposes to make the guidelines on 'Standardization of General Clauses in Health Insurance Policy Contracts' applicable to all individual and group health insurance policies. 
 
In cases where the premium payment is made in instalments (half-yearly, quarterly or monthly, as mentioned in the policy schedule/certificate of insurance) by the policyholder, IRDAI has asked insurers to give their opinion on how many days grace period should be given to such policyholders as per the health insurance product offering. 
 
The Economic Times (ET) has reported that as per the draft proposal, "Grace period of (Insurer to fill as per product design) days would be given to Pay the instalment premium due for the Policy." 
 
The insurance company can also include other general clauses based on their product design, it added. The regulator has sought public comments by January 25.
 
Draft norms: 
 
  • Claim Settlement 
 
The draft guidelines have integrated the IRDAI’s continual directive to settle or reject claims within 30 days, failing which, the insurance company will have to pay a penal interest of 2 percent above the bank rate. In case of an investigation, the insurer should settle or reject the claim within 45 days.
 
In case an insured person has bought multiple policies, he or she shall have the right to settlement of claim from any of the policies.
 
  • Renewal of Policy
 
The draft norms have also proposed that policyholders can also cancel the policy by giving 15 days written notice, and the insurer should refund premium on short-term rates for the unexpired policy period.
In the same way, for migration to any other policy of the insurance company, the policy holder can apply for it 30 days before the premium due date. The insured person would have the option to port the policy anywhere between 45 days to 60 days of the premium due date.
 
  • Disclosure of information
 
The policy shall be void, and all premium paid thereon shall be forfeited to the company in the event of misrepresentation, mis-description or non-disclosure of any material fact. 
 
  • Nomination 
 
The policyholder is required at the inception of the policy to make a nomination for the purpose of payment of claims under the policy in the event of the death of the policyholder.
Complete Discharge
 
Any payment to the insured person or his/ her nominees or his/ her legal representative or to the hospital/nursing home or assignee, as the case may be, for any benefit under the policy shall in all cases be a full, valid and an effectual discharge towards payment of claim by the company to the extent of that amount for the particular claim.
 
As per the draft guidelines, all benefits under the policy will be forfeited in the case of fraudulent claims, and any amount already paid against such claims shall be repaid by all person(s) named in the policy.
 
This current move to standardise general clauses in health insurance policy contracts comes soon after the IRDAI launched a standardised health insurance product, named ‘Arogya Sanjeevani Policy’, which will be offered by health and general insurance companies.
 

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