 "Innovative health insurance products on the anvil")
Imagine this: exercising regularly in a gym and bringing down your body mass index could bring down your health insurance premium. Similarly, having a health insurance policy from a younger age could bring down the premium when buying another policy later. These are some of the key features that health insurance companies will be able to offer, after issuance of the final guidelines by the Insurance Regulatory and Development Authority of India (Irdai).
Experimental products: Insurers can try out new products for five years and choose to withdraw or continue these, if they do not prove feasible. "When I introduce a product, I am worried about continuing liability. That made innovation difficult. With the pilot product option, I can withdraw it if I want to. Customers can be asked to migrate. There cannot be continuing liability," says S Prakash, senior executive director, Star Health Insurance.
More disease-specific products could be launched. "The pilot product option opens up opportunities for introducing disease (cancer or heart), specific products," says Puneet Sahni, head of product development, SBI General Insurance. The pricing of these could fall, due to the absence of continuing liability.
"Pilot products will enable insurers to offer covers for ailments were untouched until now, such as mental ailments," says Sanjay Dutta, chief, underwriting claims and re-insurance, ICICI Lombard. But these could be add-on covers and not standalone policies.
Differentiation: Covers for specific age, gender, hospitals or regions can be provided, though this will have to be declared in the policy document. Currently, some insurers offer differential pricing based on geographical areas. In future, it could be possible to offer a cover for particular state or region.
According to Dutta, there could also be a policy specifically to cover a chain of ayurvedic hospitals across the country and it could be used only for Ayush treatment.
Wellness features: Features that help consumers to stay healthy have to be filed separately with the regulator. This will make it transparent for the consumer. Similarly, if the insurer wants to offer discounts, that will have to be conveyed upfront. For instance, discounts at diagnostic centres, pharmacies, spas, gyms, etc, can be offered as product features, provided it is filed, says Sahni. "Such features will encourage policyholders to lead a healthy life," he adds.
Then, there are provisions like lower premium for lower entry age to encourage people to buy health insurance at an earlier age.
Group policies: These policies can be much more flexible. They can have different tenures, especially linked to credit products or for specific events. For instance, you could have a personal accident cover linked to a personal loan or home loan. Until now, longer term policies were allowed only in individual policies, up to three years.
Flexibility in pricing of group policies will be possible with the new regulations. The regulations allow insurers to lower or discount premium, based on claims experience for group policies. "Earlier, they could do it only at the portfolio level, not at the policy level, which proved detrimental for group policies," says Sahni. Assume that a company pays a premium of Rs 1 lakh for medical insurance for its employees. At the time of renewal, there is no difference in premium, whether the claim is Rs 50,000 or Rs 2 lakh. With the new regulations encouraging insurers to consider claims experience at the time of renewal, group policies could see better pricing. This benefit is likely to be passed on to customers, as many companies today insist on co-payment.
HOW THE CUSTOMER WILL BENEFIT
REGULATION
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Pilot products with five-year term and option to withdraw or regularise permitted
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Policies allowed for specific geographies/hospitals/age
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Premium for group policies can be adjusted, based on claims experience
- Wellness features to be more structured, mentioned in policy document
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Will allow insurers to innovate, cover new ailments, be flexible in pricing
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Will allow flexibility in coverage
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Will allow flexibility in premiums and benefits could eventually be passed on to employees
- Will make such features transparent for customers; insurers can offer discounts linked to wellness
