IRDAI Has Announced Policyholder-Friendly Initiatives: How Will They Benefit You?

However, many policyholders have faced challenges with policy features, procedures, etc. To remove these challenges and smoothen the experience of policyholders, the IRDAI has announced some major initiatives in the health insurance business. These initiatives were announced on 29th May 2024 as part of the master circular titled "IRDAI (Insurance Products) Regulations 2024 – Health Insurance".

Let Us Understand Some of These Initiatives and How They Will Benefit You.

1) Free Look Period

The free look period is a 30 days period from the date of receipt of the policy document by the policyholder. During this period, the policyholder can review the terms and conditions of the policy. If they are not satisfied with any of the terms and conditions, they have the option to cancel the policy. The option is available for policies with a term of one year or more.

2) Cancellation of Indemnity-Based Health Insurance

The policyholder can cancel their policy at any time during its term by giving the insurer a seven-day notice in writing. For a policy with a tenure of up to one year, the insurer has to refund the proportionate premium for the unexpired policy period if no claim(s) is made during the policy period.

3) Nomination

The policyholder can give their nomination. In the event of the policyholder’s death, the claim proceeds will be paid to the nominee. The insured can change the nomination at any time during the policy term.

4) Grace Period for Payment of Premium

For premium payment, the policyholder will have a grace period on the premium payment due date. The grace period will be:

1. 15 days where the premium is paid in monthly instalments
2.  30 days where the premium is paid in quarterly, half-yearly or annual instalments

If the policy is renewed during the grace period, all the policy credits accrued shall be protected. The policy credits include (sum insured, no claim bonus (NCB), specific waiting periods, waiting periods for pre-existing diseases, moratorium period, etc.).

If the premium is paid in instalments during the policy period, coverage will also be available for the grace period.

5) Renewal of Health Insurance

The insurer must renew the health insurance policy, except in the case of established fraud, non-disclosure or misrepresentation by the insured. The insurer cannot deny policy renewal on the grounds of claim(s) made in the preceding policy years.

If the health insurance product has been withdrawn, the policyholder shall be provided with suitable options to migrate. In the case of migration from one health insurance product to another with the same insurer, the policyholder (including all members covered under the family floater policy) can transfer the credits gained from the previous policy to the migrated policy. The credits gained include those to the extent of the sum insured, no claim bonus, specific waiting periods, waiting period for pre-existing diseases, moratorium period, etc.

6) Portability in Case of Indemnity Policies

A policyholder can port/transfer their policy from one insurer to another. Both insurers involved have to ensure that the policyholders' entire underwriting details and claims history are transferred seamlessly.

Suppose you are porting your health insurance policy from Insurer A (existing insurer) to Insurer B (acquiring insurer). Insurer A has to provide the information sought by Insurer B within 72 hours of receipt of the request through the Insurance Information Bureau (IIB) of India portal. Insurer B has to decide and communicate on the proposal within five days of receipt of information from Insurer A.

The policyholder is entitled to transfer the credits gained from Insurer A in the previous policy to Insurer B. The credits gained include those to the extent of the sum insured, no claim bonus, specific waiting periods, waiting period for pre-existing disease, moratorium period, etc.

7) Policy/Claim Cannot Be Contested

The insurance company cannot contest any health insurance policy and claim on the grounds of non-disclosure and/or misrepresentation after the completion of the moratorium period (60 months of continuous coverage). The only exception is if the insurer can establish a fraud. For calculating the moratorium period, the accrued credits gained under the ported and migrated policies have to be counted.

8) No Claim Bonus (NCB)

If you don't make a claim during the policy year, the insurer rewards you in the form of a no claim bonus (NCB). The NCB is either in the form of a cumulative bonus (addition in sum insured) or a discount on renewal premium. Earlier, the insurer would decide on the form of NCB and would include it in the product literature as a policy feature/benefit.

In the new guidelines, the IRDAI has said that the policyholder would choose to take the NCB in the form of a cumulative bonus or discount on renewal premium.

9) Approval for Cashless Facility

The IRDAI has asked every insurer to strive to achieve 100% cashless claim settlement in a time-bound manner. The insurer has to decide on the request for cashless authorisation (approve/reject) within an hour of receipt of the request. The insurer has to put in place the necessary systems and procedures for this by 31st July 2024.

10) Final Authorisation for Discharge From Hospital

The insurer has to grant final authorisation within three hours of the receipt of the discharge authorisation request from the hospital. The IRDAI has said, the policyholder should not be made to wait to be discharged from the hospital.

If there is a delay beyond three hours, the insurer must bear the additional amount, if any, charged by the hospital.

11)  Implementation of Ombudsman Award

The insurer has to comply with the award of the Insurance Ombudsman within 30 days of the receipt of the award. If the insurer does not honour the Ombudsman award, a penalty of Rs. 5,000/day has to be paid to the complainant. 

IRDAI Initiatives to Benefit Policyholders

From time to time, based on feedback received from policyholders, the IRDAI introduces guidelines in all forms of insurance, including health insurance, for the benefit of policyholders. The current set of guidelines on health insurance are policyholder-friendly and address many issues they face. They will make the system transparent and efficient and make claim procedures smooth. Thus, the guidelines will empower health insurance policyholders and benefit them.