A set of new health insurance norms the country's top industry regulator has proposed seeks to rationalise the rules to provide customers more coverage with fewer exclusions at more cost-effective rates, reports say. The Insurance Regulatory and Development Authority of India (Iradai) has published a draft with six major changes to the rules that could enlarge the coverage and may also affect pricing. The Iradai has sought a public response to the draft before May 31 and wants to make the new laws effective by April 2020.
The Iradai draft says that an insurer cannot exclude any illness contracted after the customer has bought a policy. According to an unidentified source that a report on the Mint website cites, currently, other than standard exclusions, some ailments like the Parkinson's disease and Alzheimer's disease are also excluded. The draft seeks to trim the standard exclusions list.
To bring clarity to the issue and help customers, the draft limits the list of pre-existing ailments that can be excluded at the time of selling a policy to 17. The draft has tightened the definition of 'pre-existing ailment' to prevent customer exploitation. A pre-existing condition is defined as a condition that has been diagnosed by a physician or for which medical advice or treatment had been received.
The draft also seeks to remove the exclusion on account of mental illness, internal congenital diseases or genetic disorders. "Health insurance contracts sometimes excluded these ailments even if these ailments were contracted or found out after the policy was taken," the report quoted Kapil Mehta, co-founder, securenow.in, as saying. "Of course, these ailments are covered only if any of these results in hospitalisation. In case they are identified before buying the insurance, the insurer can take a call whether to ensure the policyholder or not."
In effect, the draft law makes it impossible for the insurance company to deny policy cover for ailments contracted after buying health insurance. It trims the list of exclusions to make policy cover available for more cases. It standardises the list of exclusions to prevent exploitation of customers. The draft allows for a permanent exclusion of pre-existing ailment that was diagnosed at the time of before issuing the policy. The law will allow patients to explore new lines of treatment that emerge because of medical advancements like chemotherapy and stem cell therapy. The law will also seek the enforce a moratorium of eight years for claims against exclusion or prosecuting an insurance offence.
There are five types of insurance cover exclusions that the report lists. Three of these exclusions are time bound. The first is the initial 30-day period during which the policy will not entertain claims for any illness. The second is disease-specific and allows insurance companies to exclude claims on certain ailments for a predefined period. The type of exclusion relates to pre-existing ailments in which the disease is excluded in the initial years of up to four years. The fourth type is the permanent exclusion in which insurers exclude certain medical procedures from the scope of the cover: like cosmetic surgeries – unless required due to an accident and requires hospitalisation; medical expenses on account of alcoholism or drug use or birth control; and sterility and infertility. The fifth type of exclusion is item-specific like consumables and other non-medical items.