Insurers likely to seek clarification from Irdai on new health circular

The general and health insurance companies are likely to seek clarifications from the insurance regulator on the operationalisation of certain aspects in the new master circular on health insurance products.

The Insurance Regulatory and Development Authority of India (Irdai) repealed 55 circulars and issued a new master circular on May 29, 2024. It was aimed at reinforcing the empowerment of policyholders and bolstering inclusive health insurance.

The circular included several guidelines, including mandating strict timelines on final discharge authorisation and authorisation of cashless claims within one hour of receiving the discharge note.

In the case of porting policies from one insurer to another, the regulator has asked the existing insurers to provide the required details to the acquiring insurance company within 72 hours.

 

According to industry officials, it is easier to acquire claims data for retail health; however, it is not easy to get the same for group health policies.

“Claims data will be easily available for retail health. However, that is not the case with group health policies. Hence, giving all the information in the specified number of days is likely to be difficult. The insurance companies are likely to speak with the regulator on operationalising certain aspects of the circular,” said an insurance industry official who did not wish to be named.

The regulator has said that the policyholder is entitled to transfer the credits, including the sum insured, no claim bonus (NCB), specific waiting periods, waiting period for pre-existing diseases, moratorium period, etc., from the existing insurer to the acquiring insurance company in the previous policy.

The industry is also concerned that claims cannot be repudiated without the approval of the product management committee (PMC) or a three-member sub-group of PMC called the claims review committee (CRC). However, the PMC might find it difficult to meet the strict timelines.

According to an industry expert, the regulations uphold the policyholders' interest and provide them protection from any inadvertent denial of their claim. The PMC of insurers is required to review claim cases that could not get approved on legitimate grounds and collectively evaluate the rationale to rule out any unjust denial.

For the smooth functioning of the PMC and efficient delivery, a stepwise process and critical parameters are required to be framed for examining each such case.

The regulator said the PMC is to be constituted of the appointed actuary, chief marketing or distribution officer, chief investment officer, chief technology officer, and chief compliance officer of the insurer as members.

In addition to the above, the insurers may include other members of its senior management in the PMC as members or as invitees.

“The intent behind this regulation is to ensure that denials are handled properly, as there have been instances where denials are issued without a proper review. The regulator's aim is to have claim denials reviewed by the CRC, which will thoroughly evaluate all aspects of each case independent of the claims team. Insurers need to evolve mechanisms to manage the volume of denials in a timely manner,” said Rajagopal Rudraraju, executive vice-president and national head of accident and health claims, Tata AIG General.

Another industry official noted that the key management personnel (KMP) have other responsibilities as well. Addressing claims on a daily basis will be difficult for them. Maybe it will be easier for the smaller companies, but for larger players with a higher number of claims, going through each case on a daily basis will be difficult.

According to Irdai’s website, an insurer shall settle or reject a claim within 30 days of the receipt of the last ‘necessary’ document.

The circular also highlighted several important provisions for both insurers and consumers. One of the crucial directives for the consumer is the new option to choose between either an increase in the sum insured without an increase in premium or a discount in the renewal premium.