With modified norms now in force, premium for health policies set to rise

Health insurance premiums are likely to rise, in the wake of the recent changes in regulations under the health policies of insurance firms.

The Insurance Regulatory and Development Authority of India (IRDAI) had recently modified regulations for standardisation of certain wordings, conditions which cannot be excluded under health insurance policies and coverage for modern treatments. “It is possible that insurance premiums could increase due to these changes, especially due to coverage being made mandatory for certain conditions which were hitherto excluded under health insurance policies,” said Subramanyam Brahmajosyula, head—underwriting and reinsurance, SBI General Insurance.

“It is too early to comment on the quantum of increase as insurance companies would have to monitor and assess the impact of these changes on their loss ratios before approaching the regulator for approval for increased premium rates. The quantum of increase may also vary from company to company,” he added. However, insurance experts said premium can rise by 10-15 per cent in view of the changes.

Experts say the primary objective of these modifications is to promote uniformity, keeping the customer in focus. These changes will enable customers to take more informed decisions while purchasing their insurance cover, they say. The modifications on guidelines, effective October 1, 2019, basically cover three areas: definition of pre-existing disease; optional covers and costs that are included in the definition of room charges, medical or surgical procedures; and treatment costs

“Optional covers and costs are basically clarificatory in nature and will help standardisation in health products across insurers. But these lists can’t be fixed for all time to come and IRDAI may have to bring out need-based and knowledge-based changes from time to time,” said KK Srinivasan, former member, IRDAI. Regarding definition of pre-existing diseases, a simple reading gives an impression that as per the new definition, conditions ore illnesses discovered within 3 months of issuance of policy will be treated as pre-existing. “It does hit the policy holders but can prevent frauds,” Srinivasan added.

Insurers would have to incorporate all these modifications in their existing products by October 1, 2020 and any new products filed post October 1, 2019 would have to be in conformity with the regulations. There could be some impact on pricing of health insurance products as a result of these changes, said an official.

During FY18, insurance firms collected Rs 37,029 crore as health insurance premium, registering a growth of 21.8 per cent over the previous fiscal. The share of group health insurance was the highest at 48 per cent, followed by individual business (41 per cent) and the government business (11 per cent). Five states — Maharashtra, Tamil Nadu, Karnataka, Delhi UT and Gujarat — contributed 68 per cent of total health insurance premium, according to IRDAI.

As per the IRDAI Annual Report 2017-18, the insurance sector has covered 48 crore lives under health insurance, of which 36 crore persons are covered under various government schemes. The industry has processed 1.6 crore health insurance claims during that year. The PMJAY scheme, launched in September 2018, had 18 lakh plus pre-authorisations approved amounting to over Rs 2,400 crore as on March 31, 2019.

In a circular issued to the CEOs of insurance companies recently, IRDAI allowed health insurers to effect a decrease in minimum and/or increase in maximum premiums and maximum entry age. Typically, the maximum age limit of health insurance policies filed is up to 65 years; but if the insurer feels that the age limit can be extended, then it can be increased beyond 65 years or as per maximum age filed.

IRDAI has allowed general and standalone health insurance firms to collect premium in various frequencies or instalments such as monthly, quarterly or half-yearly without filing with the regulator. The regulator has also allowed additional distribution channels to be introduced for specific products on certification basis without waiting for the regulatory approval without changes to the terms and conditions. There is a provision to change the premium by increasing or decreasing by 15 per cent, depending on the loss-ratio range.

Source: The Indian Express