The insurance regulator on Monday prohibited health insurers from changing or adding new benefits to current health plans if doing so would result in higher premiums, in an effort to shield policyholders from any unexpected increases in premiums as a result of such reforms.
In a circular on product filing in health insurance on different types of individual goods and add-ons, the Insurance Regulatory and Development Authority of India (IRDAI) declared the new law (riders).
IRDAI stated, “General and health insurers are not permitted to change existing benefits or apply additional benefits to existing products, resulting in a cost rise. However, as specified in the guidance on product filing in the health insurance business, insurers are allowed to make minor modifications. To ensure that policyholders get an active preference, additional benefits or enhancements to current benefits may be provided as add-on covers or alternative covers at a standalone premium rate.”
Mahavir Chopra, founder of Beshak.org, an independent consumer awareness site for individual insurance buyers said, “This ensures insurers cannot add additional benefits to an existing product to hike rates of health insurance products. They’ll have to offer extra benefits only as complementary add-ons that customers can choose to participate in.”
A product cannot be altered or amended by an insurer after one year of the regulator’s approval. Every financial year, the appointed actuary shall review the financial feasibility of each health insurance product and request a status report by September 30.
The latest guideline, according to Naval Goel, founder, and CEO of PolicyX.com, an online insurance aggregator, seeks to secure policyholders’ interests and privileges in terms of accessing new features. Previously, insurance companies raised annual premiums significantly, putting unexpected pressure on policyholders at renewal time. However, policyholders would be able to select additional benefits based on their preferences as a result of this notice. As a result, this seems to be a positive development for both new and existing customers.
“However, this guideline will prevent insurance companies from imposing extra premiums, which means that new features will be limited in current policies. Also, rather than being included as basic features in the policy, certain key features can be added as add-ons,” Goel said.
