On 1st January, 2020 the Insurance Regulatory and Development Authority of India (“IRDAI”) has issued the Guidelines on Standard Individual Health Insurance Product (“Guidelines”) under the provisions of the Insurance Act, 1938 for bringing uniformity in all Health Insurance Products.
There are various individual health insurance products in the health insurance market with unique features. With all the variations choosing an appropriate product becomes challenging.
With the objective of creating an uniformity, the IRDAI has decided to mandate all general and health insurers to offer standard individual health insurance product to achieve the following:
- Take care of basic health needs of insuring public.
- Have a standard product with common policy unit across entire industry.
- To facilitate portability among insurers.
The Guidelines contain the basic mandatory covers which must be present in all health insurance products.
Please note that the standardized product should be offered by insurers from 1st April, 2020.
Key takeaways from the Guidelines are mentioned below:
- A health insurance product should mandatorily offer the following covers:
Ø Hospitalisation Expenses covering the following:
- In case of room, boarding, nursing expenses – Upto 2% of the sum insured subject to a maximum of Rs.5000/- per day.
- Surgeon, anaesthetist, medical practitioner, consultant , specialist fees whether paid directly to the doctor or to the surgeon.
iii. Anesthesia, blood, oxygen, operation theatre charges, surgical appliances, medicines and drugs, costs towards diagnostics, diagnostic imaging modalities and all other similar expenses.
- Incase of Intensive Care Unit and Intensive Cardiac Care Unit- Expenses upto 5% of the sum insured subject to maximum of Rs.10,000/- per day.
Hospitalisation expenses are admissible for a minimum period of 24 hours. However, the said time limit of 24 hours will not apply when the treatment does not require hospitalization as per the terms and conditions of the policy contract , where the patient is taken to the hospital and released on the same day.
Ø Other expenses will include the following:
- Dental treatment and plastic surgery necessitated due to disease injury.
- All day care treatments.
iii. Expenses incurred on road ambulance subject to Rs.2000/- per hospitalization.
The Guidelines have also covered treatment expenses under cataract which is subject to certain limitations.
- The Standard Product can be distributed under all distribution channels including micro Insurance Agents, point of sale persons and common public service centers. The distribution of standard product has to be regulated by regulations of concerned distribution channels. The standard product will be offered with a policy term of 1 year.
- The Standard Product will be applicable on family product basis also wherein a family will include legally wedded spouse, parents and parents in law and dependent children between 3 to 25 years old.
However, a child above 18 years of age who is financially independent will not be eligible for coverage in subsequent renewals.
- The Cover will be in indemnity basis as a standalone product and the minimum sum insured will be an amount of Rs.1,00,000/- and the maximum sum insured will be Rs.5,00,000/- (in the multiples of fifty thousand). Further, the minimum age of entry into the product will be 18 and the maximum age will be 65.
- The Guidelines further provide for the Benefit Structure, co-payment, sub limits, specific waiting period, renewal, free look period, portability and pricing of the product.
- The Format of terms and conditions are mentioned inAnnexure 1of the Guidelines.
- Further, insurers are mandated to issue Customer Information Sheet as per the format inAnnexure 2.
- Please note that the standard product can be launched without the prior approval of the Authority. However, the following conditions have to be complied with:
- The Product must be approved by the Product Management Committee.
- Insurers must obtain UIN for the product by filing the relevant forms as mentioned in Annexure 3 along with a certificate from the Chief Compliance Officer.
Moreover, the standard product must comply with IRDAI (Health Insurance) Regulations 2016 (“2016 Regulations”).
It is pertinent to mention here that on 1st January, 2020, the IRDAI has issued the following modification to the 2016 Regulations which have become effective immediately.
Two new definitions have been in inserted in Chapter I of the 2016 Regulations which deal with “Standard Definitions of terminology to be used in Health Insurance Policies”.
- “Migration” means, the right accorded to health insurance policyholders (including all members under family cover and members of group health insurance policy), to transfer the credit gained for pre-existing conditions and time bound exclusions, with the same insurer.
- “Portability” means, the right accorded to individual health insurance policyholders (including all members under family cover), to transfer the credit gained for pre-existing conditions and time bound exclusions, from one insurer to another insurer.
Please note that these definitions are applicable in respect of all health insurance products (both Individual and Group) filed immediately after 1st January, 2020.