In a move aimed at fostering greater inclusivity, flexibility, and customer-friendliness, the Insurance Regulatory and Development Authority of India (IRDAI) has released a comprehensive master circular introducing sweeping reforms to health insurance policies. These reforms are poised to empower policyholders and enhance transparency within the industry.

 

Enhanced Refunds on Policy Cancellations:

Policyholders can now discontinue their health insurance policies at any time by providing a seven-day written notice to their insurer. Notably, they will be entitled to a refund of the premium on a pro-rata basis, even if they have made claims during the policy period. This marks a significant departure from the previous norms, which imposed stringent conditions and forfeited premiums in certain cases.

 

Introduction of No-Claim Bonus Options:

IRDAI has specified guidelines for insurers to offer no-claim bonuses to policyholders. During annual renewals, if the policyholder has not made any claims during the preceding year, insurers must provide two options: a) Cumulative Bonus: Increasing the sum insured without a premium hike, or b) Premium Discount: Offering a discount on the renewal premium. Policyholders will have the flexibility to choose either option, subject to providing consent annually.

 

Strengthened Claims Review Process:

To enhance transparency and fairness in claim settlements, IRDAI has mandated insurers to establish a three-member Claims Review Committee (CRC). No claim can be rejected without the approval of this committee. Furthermore, in cases where a claim is repudiated or partially disallowed, insurers must convey the specific policy terms and conditions that led to the decision, providing policyholders with greater clarity.

 

Streamlined Claim Documentation:

IRDAI has directed insurers and third-party administrators (TPAs) to collect the required documents from hospitals, relieving policyholders of this burden. This measure aims to simplify the claim process and reduce the administrative hassle for policyholders.

 

Higher Penalties for Non-Compliance with Ombudsman Orders:

To ensure timely implementation of ombudsman orders, IRDAI has introduced higher penalties for insurance companies in cases of delay. Insurers must now pay a penal interest rate that is two percentage points above the prevailing bank rate if they fail to comply with an ombudsman's order within 30 days.

 

Enhanced Website Transparency:

In a bid to promote transparency and accessibility, IRDAI has directed insurers to prominently display crucial information on their websites. This includes details on empaneled hospitals, cashless claim settlement procedures, reimbursement processes, policy servicing turnaround times, and a comprehensive list of available and withdrawn products.

 

These customer-centric reforms introduced by IRDAI are expected to significantly enhance the health insurance experience for policyholders across India. By prioritizing transparency, fairness, and consumer protection, IRDAI aims to foster greater trust between insurers and policyholders, ultimately driving increased adoption of health insurance and ensuring a more reliable and resilient healthcare ecosystem.