Irdai issues guidelines for standardisation of indemnity health products

Customers are also allowed to migrate to other policies of the same company by giving a 30-day notice to the insurer before renewal
The insurance regulator on Thursday issued guidelines on standardising general terms and clauses in indemnity-based health products. These directions were issued to simplify the buying experience for consumers and ensure uniformity across the industry. 

In its attempt to simplify the clauses and wording used in health products, the Insurance Regulatory and Development Authority of India said insurers have to make sure they incorporate the same wording prescribed by the regulator.

These guidelines will be applicable to all new products filed by insurers from October 1 and existing health products have to adhere to the guidelines by April 1, 2021. 
According to the guidelines, for customers who opt for premium payment in instalment, insurers have to offer a grace period, within which insureds can pay the premium. But during the grace period, the insured will be devoid of any coverage till the instalment is paid. If the instalment is not paid within the grace period, the policy will get cancelled. In the event of a claim, the rest of the instalments become due and payable. 

If policyholders misrepresent facts and fail to disclose material facts, insurers can forfeit the premium paid by them and render the policy void. 

As far as insurers are concerned, they have to settle or reject a claim, as the case may be, within 30 days of receiving necessary documents; else they will pay a penal charge of 2 per cent above the bank rate in case of delays in settling claims. 
The bank rate is the repo rate fixed by the RBI at the time the claim has been made. For cases where it warrants investigation, insurers have 30 days to conduct due process and claims have to be settled or rejected, as the case may be, within 45 days.

Further, if a policyholder has multiple indemnity-based health products, he/she can choose the insurer under which he/she wants the claim settled. Moreover, if the amount to be claimed exceeds the sum insured under a single policy, the insured shall have the right to choose the insurer from whom he/she wants to claim the balance amount as well as the insured person with multiple policies shall also have the right to prefer claims under this policy for amounts disallowed under any other policy policies, even if the sum insured is not exhausted. 

Policyholders can cancel their policies any time giving 15-day notice to the insurer and the company has to refund the premium for the unexpired policy period. Customers are also allowed to migrate to other policies of the same company by giving 30-day notice to the insurer before renewal. Similarly, the portability of policies is allowed to other insurers by applying to the insurer at least 45 days before renewal.

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