)
Life insurance companies have been asked to put in place board-approved underwriting policies with respect to products for people living with HIV/AIDS (PLHA). In a draft circular issued on Friday, the Insurance Regulatory and Development Authority (Irda) proposed life insurance cover for PLHA should not be denied if the eligibility criteria according to the board-approved underwriting policy were met.
Irda said the board-approved underwriting 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 in terms of medical and non-medical parameters. The regulator added the policy should also specify all the risks that would be deferred and denied/declined.
The circular is effective April 1, 2014.
Irda said the underwriting policy should clearly indicate the specific loadings applicable for PLHA, in terms of the different stages of the disease, over and above the tabular premium of a product filed and approved by the authority under the ‘file-and-use’ procedure. This would be reviewed regularly.
With respect to people who were HIV-negative on the date of commencement of the contract and were, subsequently, found to be HIV-positive during the term of the policy, Irda proposed insurers shouldn’t reject/deny any claim on such grounds. In all such cases, the underwriting guidelines and claims settlement guidelines applicable during the commencement of the contract would be applicable.
For pricing the risk, Irda said a mortality study conducted by the Institute of Actuaries of India, along with a working group constituted by the National AIDS Control Organisation, in annexure-I might be referred. The standard underwriting guidelines for life insurance products framed by the Life Insurance Council in annexure-II may be adopted for underwriting till individual companies gained experience.
Insurers, however, feel it would be extremely difficult to price the product. A senior life insurance official said due to lack of data on HIV/AIDS and the fact that it was still perceived as non-curable, it would be a challenge to cover the risk. “Even if we price it, it might not be affordable for the common man,” said a senior executive of another private life insurance company.
Irda said in the case of health insurance products offered by life insurers to those who had acquired 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.
“With respect to those who are HIV-negative on the date of commencement of the contract and are, subsequently, found to be HIV-positive during the term of the policy, insurers shall not reject/deny any claim on such grounds,” Irda proposed in the circular. In all such cases, the underwriting guidelines and claims settlement guidelines applicable at the time of commencement would be applicable. The insurer may also renew the cover based on the company’s board-approved underwriting policy for PLHA.
All insurers would put board-approved underwriting manual, claims manual, proposal form and all other necessary systems in place before April 1, 2014. Companies have been given 15 days to send their views/comments to Irda.
