Business

No ‘word play’ in health insurance policies: IRDAI

Threat of forfeit: Policy will become void in the event of misrepresentation by the insured.

Threat of forfeit: Policy will become void in the event of misrepresentation by the insured.  

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Insurance regulator proposes standardising clauses commonly incorporated in the policies

Health insurance policy clauses, at least a clutch that are common, will soon be easier to comprehend, become more transparent and not vary across companies, with regulator IRDAI setting in motion the process towards uniformity in wordings of the contracts.

“It is proposed to standardise some of the general clauses that are commonly incorporated in the health insurance policy contracts of indemnity-based health products,” the Insurance Regulatory and Development Authority of India (IRDAI) said, soliciting comments on an exposure draft.

One of the key aspects under the proposed guidelines on ‘Standardisation of General Clauses in Health Insurance Policy Contracts’ will be insurers committing to a timeline in handling claims and in the event of failure to comply, pay interest to the policyholder.

“The company shall settle or reject a claim, as the case may be, within 30 days from the date of receipt of the last necessary document. In case of delay in the payment of a claim, the company shall be liable to pay interest from the date of receipt of the last necessary document to the date of payment of claim at a rate 2% above the bank rate,” the IRDAI draft said.

Where a claim warrants an investigation in the company’s opinion, it has to be settled within 45 days from the date of receipt of the last necessary document. Beyond that, the insurer will be liable to pay interest at a rate of 2% above the bank rate from the date of receipt of last necessary document to the date of payment of claim.

Another aspect for which wordings are proposed to be common relates to action against the insured. “The policy shall be void and all premium paid thereon shall be forfeited to the company in the event of misrepresentation, mis-description or non-disclosure of any material fact,” the draft said.

Uniformity in wordings have been proposed by IRDAI with regard to complete discharge, multiple policies, cancellation, renewal of policy, including the company not being bound to give any notice for renewal, as well as migration and portability.

The proposed guidelines assume significance in the backdrop of robust growth in the segment. Health insurance premium continues to grow over 20% year-on-year in the past four fiscal years, IRDAI’s annual report for 2018-19 said.

General and health insurance companies collected ₹44,873 crore as health insurance premium last fiscal or 21.2% higher compared to 2017-18. Share of group health insurance was the highest, in 2018-19, at 48%, followed by individual business at 39% and government business the remaining 13%. Both individual and group businesses (other than government schemes) have doubled during the last five year period, the annual report said.

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Printable version | Jan 28, 2020 6:24:05 PM | https://www.thehindu.com/business/no-word-play-in-health-insurance-policies-irdai/article30545657.ece

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