NEW DELHI: The Insurance Regulatory and Development Authority of India (IRDAI), the insurance sector regulator, has come out with a large set of revised guidelines last week which seek to standardise the indemnity-based health insurance segment. Among the major new rules is a provision which says that insurers cannot contest the claims of any health insurance policy-holder who has continuously paid premiums for eight years.
Such provisions already exist in the case of life insurance policies, where insurers are not allowed to contest claims made on a life insurance policy once premiums have been paid for three years continuously.
“After completion of eight continuous years under the policy no look back to be applied… After expiry of the moratorium period (of eight years) no health insurance claim shall be contestable except for proven fraud and permanent exclusions specified in the policy contract,” the IRDAI said. All policies, however, will be subject to all limits as per the policy contract.
The new rules for indemnity-based health insurance policies will be applicable on all products filed on or before Octover 1 this year. All existing policy contracts which are not in compliance with the new rules have to be mandatorily modified during renewal from April 1, 2021 onwards.
As for claims, the new rules will go into effect for all claims as per policy limits beginning April 1, 2021 onwards.The measures are likely to provide considerable relief to policy-holders since they will not have to wait or worry whether their claims will be honoured as long as they have paid premiums for eight years--they are to be settled within the admissible limits of the medical insurance product without any contest from the insurer.
IRDAI has also prevented insurers from repudiating claims on the basis of fraud if the policy-holder can prove that there was no deliberate intention to suppress information.
The regulator introduced several other changes. For instance, in the case of claim settlement, an insurance company should either settle or reject a claim within 30 days from the receipt of the last required document. If there is a delay in the payment or settlement of a claim, the insurer is liable to pay interest to the policy holder from the date of receipt of the last necessary document, at a rate of 2 per cent above the bank rate.
Another important new norm is the provision on potability of policies, where the insured will have the option to port out to another insurer at least 45 days before, but not earlier than 60 days before, the date of renewal for the policy.
If the insured is presently and has been continuously covered without any lapses with, they will also get accrued continuity benefits. If the insurer is planning to increase premiums, the insured will now have to be informed at least three months in advance.