The Insurance Regulatory and Development Authority of India
(Irdai), in a recent circular, notified insurers to make provisions for the treatment of mental illnesses, with immediate effect. The notification says that the rules have to be followed, according to the Mental Healthcare Act, 2017.
It has further clarified that the treatment of mental illnesses should be on the same basis as the treatment of physical illnesses. According to the World Health Organization, depression will be a leading cause of morbidity in the world by 2020. It is estimated that about 150 million people in India currently suffer from some form of mental disorder.
Mental illnesses can be of various kinds, like mood disorders, obsessive-compulsive disorder, stress-related conditions, behavioural disorders due to substance abuse, etc. “All the existing indemnity policies cover different forms of physical ailments. They cover pre- and post-hospitalisation treatment and offer wellness benefits. But with this move, policyholders will be able to avail insurance cover for mental illnesses, which will increase the ambit of coverage in the same policy that they have,” says Ashish Mehrotra, managing director & chief executive officer (CEO), Max Bupa health insurance.
Most health insurance policies currently treat mental illnesses as exclusion. A few health insurers cover certain mental illnesses under OPD
(outpatient department) coverage. For instance, Max Bupa offers inbuilt OPD
under its GoActive cover, which can be availed for psychiatric consultations on a cashless basis. According to insurance brokers, the current products in the market covering certain mental illnesses under OPD
are more in the nature of wellness benefits.
Insurers will have to make changes to their current policies. Says Shreeraj Deshpande, head of health insurance, Future Generali India Insurance: “Insurers may come out with specific products covering mental illnesses or revise their existing products to include coverage for treatment of mental illnesses.”
One issue insurers will face in re-pricing their products is lack of data. “This is a new area that insurers will enter. The data will have to be analysed from available sources to work out the premiums for covering mental illness treatment on only hospitalisation basis, and on hospitalisation plus OPD
basis,” says Deshpande.
Only covering hospitalisation will not suffice. Patients suffering from mental ailments need OPD
treatment, like psychiatric counselling, as well. “Insurance companies should come out with group as well as retail policies that include OPD
cover. They should not limit themselves to hospitalisation cover only,” says Prawal Kalita, director-benefit solutions, JLT Independent Insurance Brokers.
Hospitalisation is a less frequent event in case of mental illnesses. “Though it is too early to predict, we expect that premiums of hospitalisation-only policies will increase to the tune of 5-10 per cent for covering mental illnesses,” says Rahul Agarwal, CEO, Ideal Insurance.
Adds Kapil Mehta, co-founder and managing director, Secure Now Insurance Broker: “Under mental illnesses, more claims are likely to arise in the OPD
segment. If a policy already has the OPD
component, then the re-pricing is not likely to be very high. But if an OPD
component is introduced, then the pricing will go up more significantly. A policy that gives OPD
cover is priced higher than a non-OPD
policy by 0.6-0.8 times.” In other words, a policy that introduces an OPD
cover of Rs 10,000 will cost Rs 6,000-8,000 more.
As for exclusions, experts say that insurers may find it difficult to cover some mental ailments, while excluding others. “Only things like drug overdose during treatment are likely to be excluded,” says Kalita.