Insurers can Offer Diabetes, Long-Term Accident Cover

There will be more innovation in health insurance with companies floating niche policies as new regulations allow "pilot policies" that can be discontinued before five years. This new feature will help insurers overcome fear of coming out with popular schemes as they would be stuck with the policy due to a lifelong renewability clause.

At present, the insurance regulator requires that once a policy is issued, the insurance company has to continue and renew the plan as long as the policyholder pays the premium. This was to ensure that customers were not left high and dry due a change in strategy of the insurance company. "This (new norms) will allow us to experiment with a policy on a limited scale" said Segar Sampath Kumar, executive director, New India Assurance. He said the company could look at things like coming out with a scheme for diabetes where it is unclear how the claims experience will be. Insurance companies have also been allowed long-term personal accident policies that can now coincide with the tenure of personal loans.

The Insurance Regulatory and Development Authority of India has been trying to strike a balance between promoting innovation and consumer protection. While IRDAI has been trying to promote development by allowing "file and use" option for some plans, it also has rules on compulsory renewability and portability of plans to protect policy holders. The new health guidelines aim to have stricter approval for group policies, where the group member pays the premium. In a group policy where the administrator pays the premium, for instance an employer's group plan, the approval would be more liberal.

The other change is that the regulator plans to allow portability between different schemes of the same company. Present portability norms allow customers to carry with them the no-claim benefits if they move to a new company. Now, customers will have the option of shifting to a new scheme within the same company.

The new guidelines protect non-life and health insurance companies against competition from life insurers. Life insurance companies are no longer allowed to offer indemnity policies. What this means is that health policies from life companies can only provide lump-sum benefits and cannot provide the cashless claims service that non-life insurers offer.