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Life insurance companies, which have been asked to provide cover for people living with HIV/AIDS from April 1, 2014, have said the lack of proper data on the ailment would be a hurdle in pricing the product.
“While the insurance regulator has asked us to provide cover, taking into account the need for HIV/AIDS patients to take insurance, underwriting these risks will be a huge challenge,” said the chief actuary of a private life insurance firm.
In a draft circular last week, the Insurance Regulatory and Development Authority (Irda) proposed life insurance cover for people living with HIV/AIDS (PLHA) should not be denied if the eligibility criteria, according to the board-approved underwriting policy, is met. Irda said the board-approved policy should provide clear guidelines on PLHA and clearly indicate all possible risks to be considered for underwriting, along with the eligibility criteria to consider such proposals.
The regulator added the policy should also specify all the risks to be deferred and denied/declined.
Other bodies have also taken various steps to ensure such patients are given adequate medical cover. Last year, the National Aids Control Organisation, with representation from the finance ministry and the insurance sector, set up a working group to accumulate data to assist in pricing such products.
But experts have said even if such data is available, it would take some time before patients openly come out to procure a cover.
Irda has said for people found to be HIV-positive after the commencement of their policy contract, insurers shouldn’t reject/deny any claim on such grounds. A life insurance company’s product head said for this, HIV tests would have to be conducted. “Currently, we do not check people for HIV/AIDS. So, unless they declare they are under the PLHA category, we will have no idea of their physical conditions,” the official said.
Pricing the risk is another concern for life insurers. While Irda has said the mortality study conducted by the Institute of Actuaries of India, along with a working group constituted by the National AIDS Control Organisation, could be referred for pricing, insurers do not find it viable. The biggest concern, said the chief executive of a large private life insurer, was HIV/AIDS wasn’t completely curable. “On the one hand, while we are finding it difficult to price conditions such as cancer, a product for PLHA would become unaffordable for the masses,” he added.
Irda has said in the case of health insurance products offered by life insurers to those who acquire HIV/AIDS after the commencement of the insurance policy, various options could be provided—PLHA as a critical illness; providing a lump sum on becoming HIV-positive; conversion of the lump sum into annuity for life in the event of the insured becoming HIV-positive; and providing health cover on a benefit basis, excluding the treatment for HIV/AIDS.
All insurers would have to have a board-approved underwriting manual, a claims manual, a proposal form and all other necessary systems in place before April 1, 2014. In 2012, Irda had issued draft guidelines for life and general insurers offering HIV cover. According to these, the underwriting policy would particularly address individuals who were yet to show symptoms of AIDS and were in the first and second stages of the infection.
For PLHA, confidentiality of information is critical. With third-party channels and brokers working with insurers, protecting data on PLHA policyholders could be an arduous task, said industry players.
However, one area of relief for companies is the fact that Irda has said the eligibility criteria for PLHA can be decided by individual insurers. “The guidelines have said if, as a company, we are not comfortable insuring PLHA in their last stages, we can exclude them. This is a major factor, as smaller players like us are not in a position to insure these risks,” said the chief marketing officer of a new private life insurer.
