IRDAI sets criteria for add-on, optional cover in health policies

Insurance regulator IRDAI has advised health insurers not to modify existing benefits and add new benefits to existing products which leads to increase in premiums.

Any addition and upgrade of existing benefits can only be done as an add-on or optional cover with a standalone premium rate, it stated in a circular for general insurance and standalone health insurance companies.

According to the circular, on the revised guidelines on product filing in the health insurance business, “general and health insurers are not allowed to modify existing benefits, add new benefits to existing products that increase premiums.”

However, “in addition to new benefits / upgrade of existing benefits can be offered as stand-alone premium rate to ensure informed choice to policyholders in the form of add-on cover or optional cover,” the regulator said.

On the revised guidelines, Tapan Singhal, MD and CEO of Bajaj Allianz General Insurance said that IRDAI is working towards simplifying the insurance offerings and bringing transparency to encourage more people to opt for insurance. The revised guideline is a step in that direction.

The clarification that insurers can add new benefits / upgrade existing benefits as an add-on cover with a standalone premium rate will help customers make an informed choice. This will provide them an opportunity to increase the coverage for the add-on cover according to their needs, he said.

IRDAI has also prescribed a draft policy agreement, which the insurance companies have to follow all the policies issued from 1 October. The criteria on presentation of a policy contract is to enable policyholders of all classes to easily understand the contents of the contract, General Manager (Health)) DVS Ramesh said in the circular.

In order to get their attention to the insurers, it is necessary to present a description of all health insurance products with a clear title. The details include the policy schedule, preamble, definitions, benefits covered under the policy, exclusions as well as conditions and clauses.

Mr Singhal said that the criteria for the presentation format of the policy contract would create further simplification and better understanding of the policy for customers as it would have to be used by all insurers using “uniform and simple language”.