June 17, 2024 – Health and general insurance companies are expected to seek clarifications from the Insurance Regulatory and Development Authority of India (IRDAI) regarding the implementation of various provisions in the newly issued master circular on health insurance products.
On May 29, 2024, IRDAI repealed 55 existing circulars and introduced a comprehensive master circular aimed at enhancing policyholder empowerment and promoting inclusive health insurance. Key guidelines in the circular mandate strict timelines for authorizing final discharge and cashless claims within one hour of receiving the discharge note.
Additionally, the circular requires insurers to provide necessary details to the acquiring insurance company within 72 hours when a policy is ported from one insurer to another. While industry officials acknowledge that acquiring claims data for retail health insurance is relatively straightforward, they point out that obtaining similar data for group health policies is challenging.
“Claims data will be easily available for retail health policies. However, that is not the case with group health policies. Therefore, providing all the required information within the specified timeframe is likely to be difficult. Insurance companies will likely discuss the operational aspects of the circular with the regulator,” said an unnamed industry official.
The regulator has stipulated that policyholders are entitled to transfer credits such as the sum insured, no-claim bonus (NCB), specific waiting periods, pre-existing disease waiting periods, and moratorium periods from the existing insurer to the acquiring insurer under the previous policy.
According to industry experts, the regulations protect policyholders’ interests and guard against inadvertent claim denials. Insurers are now required to have their Policy Management Committee (PMC) review claim cases that were not approved on legitimate grounds, ensuring that no unjust denials occur.
For the PMC to function smoothly and efficiently, a structured process and critical parameters must be established for examining each case. The PMC is to include the insurer’s appointed actuary, chief marketing or distribution officer, chief investment officer, chief technology officer, and chief compliance officer, with the option to include other senior management members as necessary.
“The intent behind this regulation is to ensure that denials are handled properly, as there have been instances of denials issued without proper review. The regulator aims for the Claim Review Committee (CRC) to independently evaluate all aspects of each case, separate from the claims team. Insurers need to develop mechanisms to manage the volume of denials promptly,” stated Rajagopal Rudraraju, executive vice-president and national head of accident and health claims at Tata AIG General.
However, another industry official noted that key management personnel (KMP) have multiple responsibilities, making it difficult to address claims daily. This might be manageable for smaller companies, but for larger insurers with higher claim volumes, daily case reviews would be challenging.
According to IRDAI’s website, insurers are required to settle or reject a claim within 30 days of receiving the last necessary document.
The circular also introduces significant provisions for both insurers and consumers, including an option for consumers to choose either an increase in the sum insured without a premium increase or a discount on the renewal premium.
These new directives reflect IRDAI’s commitment to enhancing policyholder protection and streamlining health insurance operations, though insurers may need further guidance to effectively implement these changes.
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