IRDA Bans Life Insurers from Offering Indemnity Based Health Products

The insurance regulator has banned life insurers from offering indemnity-based health products, which constitute 90% of the health insurance market, dealing a blow to their business plans.

Indemnity-based plans are those where one can claim reimbursement after visiting a doctor. The Insurance Regulatory and Development Authority (Irda) has asked insurance companies offering these products to withdraw them by giving three month's notice to policyholders and to continue the existing contracts till the end of their policy term.

"We will have to withdraw our indemnity health insurance products," said RM Vishakha, MD and CEO, IndiaFirst Life Insurance. Irda has allowed insurance companies to offer a combined health and savings product. The regulator said that" Healthplus-Life Combi products" can include life insurance cover offered by a life insurer and a health insurance cover offered by a health insurer or a general insurer.

Earlier, only a pure term life insurance cover was allowed to be combined with a health insurance cover. "There are two other avenues that have opened up after the regulator banned life insurers from writing indemnity plans," said Vishakha. It has allowed, general and standalone health insurance companies to offer long-term health insurance products for a minimum period of one year and a maximum period of three years with no premium changes. These do not include personal accident and travel. The regulator said that no single premium will be allowed under the unit-linked health policies.