More illnesses to come under insurance coverDecember 13, 2018
Health insurance policies will soon cover more diseases, with the Insurance and Regulatory Authority of India (IRDAI) initiating the process to minimise the number of diseases that are not covered under the health insurance policies at present.
In order to examine the matter, the regulator has constituted a ten-member working committee headed by Suresh Mathur, Executive Director, Health, IRDAI. The committee will examine the exclusions that are prevalent in health insurance policies and rationalize the exclusions by minimizing the number, so as to enhance the scope of health insurance coverage
The terms of reference (ToR) of the working committee include rationalising the exclusions that disallow coverage with respect to new modalities of treatments and technologically advanced medical treatments and identifying the type of exclusions which shall not be allowed. The committee has also been asked to study the wordings/language of the exclusions and standardize the wordings of exclusions in simple and easily understandable language, study the scope for allowing individual specific and/or ailment/disease specific permanent exclusions at the time of underwriting so that policyholders are not denied health insurance claims unrelated to the exclusions, and any other matter relevant to the subject of exclusions.
Welcoming the move, Subramanyam Brahmajosyula, Head of Underwriting and Reinsurance at SBI General Insurance, said: “We are broadly supportive of the regulator’s move to expand the ambit of health insurance coverage, both in terms of increasing the number of people covered, as well as the various illnesses/diseases for which coverage is granted under health insurance policies. This needs to be viewed as a national priority, and not purely from the narrow perspective of any challenges it might pose to the insurance industry.”
He added that the move will benefit policyholders in a great way as the scope of cover available under health insurance policy will be expanded.
Improve penetration; increase rates
The insurers feel that an enhancement in insurance coverage will lead to greater penetration. “The order will have implications for both the consumer and the industry. It will be beneficial to consumers, because less exclusion will mean more coverage for diseases. From the industry perspective, it will lead to a higher degree of insurance penetration, thus more sales,” said Vaidyanathan Ramani, Head, Product andInnovation, Policybazaar.com.
Brahmajosyula also agreed that the move will lead to greater awareness of insurance and improve the penetration of health insurance in the country.
However, insurance companies hinted at the possibility of an increase in policy rates. They said that some of the conditions which are proposed to be covered are either partially or completely excluded under the current health insurance policy coverage. “With the enhancement of coverage, it will be necessary for the insurance companies to relook at their pricing in order to cater to the expected claims from allowing coverage of such conditions,” said Brahmajosyula.
“The premium may go up marginally in the long run, because enhanced coverage will lead to more claims and hence, the premium will also go up. In spite of this, the order will impact positively for all those involved in the insurance business – the buyer and the seller,” according to Ramani.
Cover for mental illness?
Meanwhile, in another significant development, the IRDAI has asked insurers to make provision for medical insurance for the treatment of mental illness on the same basis as is available for the treatment of physical illness. The move is set to benefit a large number of people. The regulator has issued a circular in this direction after The Mental Healthcare Act 2017 came into force in May 2018. The act has stipulated that every insurer shall make provisions for the treatment of mental illness. “The insurance companies will have to re-price the products to cater to the coverage of mental illness. Other associated challenges would be to define, in precise terms, what constitutes mental illness to avoid disputes in the event of claims, as well as compiling sufficient and accurate data to decide the appropriate premium to be charged,” said Brahmajosyula.
Ramani also welcomed the decision to cover the treatment of mental illness under health insurance policies. “This is a great step for the country as, with this move, we have started to accept that mental illness is a serious affair and needs treatment. Therefore, medical insurance covering the same is a great step. Mental illness will probably be a much higher risk than physical illness in the future,” he said. However, he added, there are a few issues which are still in the grey, like what are considered mental illnesses and what are the degrees of those, with the recommended treatments attributed to them. He added that it will be easier to define fair expenses and procedures for such treatments if some light was thrown over these issues, as mental illness is a very vague and big topic in itself.