All health conditions arising after the inception of a health insurance policy should be covered and cannot be permanently excluded, a committee has recommended to the insurance regulator.
This is among the key recommendations of a committee appointed to look into standardisation of exclusions under health insurance policies. The panel has submitted its report to the Insurance Regulatory and Development Authority of India.
It has said that all health conditions acquired after policy inception, other than those that are not covered under the policy contract (such as infertility and maternity), should be covered under the policy and cannot be permanently excluded.
Thus, exclusion of diseases contracted after taking the policy such as Alzheimer’s , Parkinson’s , AIDs/HIV infection, morbid obesity, etc., cannot be permitted, the panel recommended. “Exclusions for specific disease conditions are incorporated as permanent exclusions in the policy wordings. This result in many claims becoming not payable for diseases being contracted even after the policy has been incepted. Specific cases were highlighted where claims were repudiated when the policy has been in force for 6-7 years for conditions such as Parkinson’s, Alzheimer’s, etc,” it said.
The working group, as part of its methodology, met various stakeholders of the health insurance industry including representatives of health insurers, general insurers, life insurers, insurance brokers, third-party administrators, agents, Ministry officials, NGOs, consumer activists, medical experts and reinsurers, and collected their views.
Practices studied
In addition, the working group also studied the practices in other countries as well as Indian laws, regulations and regulatory guidelines that could have an impact on health insurance products. The recommendations of the working group are largely based on the interactions with stakeholders and are in the context of the prevailing laws and regulations.
The panel recommended that there should not be any permanent exclusions in the policy wordings for any specific disease condition(s), whether they are degenerative, physiological, or chronic in nature.
It has initially recommended a list of 17 conditions (including epilepsy, heart ailment congenital, heart disease and valvular heart disease, chronic liver diseases, loss of hearing, HIV & AIDS, Alzheimer’s, Parkinson’s) for which insurers can incorporate permanent exclusions if they are pre-existing at the time of underwriting. As developments in healthcare were dynamic, there was a need to regularly review the list of permanent exclusions allowed at the time of underwriting, the report said.
Insurers must be allowed to incorporate permanent exclusions with due consent of the proposer, which will allow a wider section of the population who have serious pre-existing diseases including persons with disabilities to be insured under health insurance, the panel said. “The permanent exclusion would be specific for conditions which are listed, and this list may be reviewed on a yearly basis by the committee that may be set up by the regulator. However, these permanent exclusions shall be allowed only in cases where the policyholder may be denied coverage as per the underwriting policy of the Insurer for the diseases disclosed at the point of underwriting,” the report said.
The Working Group recommends that insurers may be allowed to incorporate waiting periods (duration when a claim is not admissible) for any specific disease condition(s) however to a maximum of 4 years. Waiting period for conditions namely, hypertension, diabetes, cardiac conditions may not be allowed for more than 30 days, it added.
The working group also noted that the changes recommended in this report would have some effect on pricing of the respective products. The policy wordings would also have to be reworded and filed with the regulator.
