IRDAI sets norms for add-on, optional covers in health policies


Insurance regulator IRDAI has advised health insurers not to modify existing benefits and add new benefits in existing products that leads to an increase in premium.

Any addition to and upgradation of existing benefits can be made only as an add-on or optional cover with a standalone premium rate, it said in a circular to general insurance and standalone health insurance companies.

According to the circular, on modified guidelines on product filing in health insurance business, “general and health insurers are not allowed to modify the existing benefits, add new benefits in the existing products which leads to imposing an increase in premium.”

However, “addition of new benefits/upgradation of existing benefits may be offered as add-on covers or optional covers with a standalone premium rate to ensure an informed choice to the policyholders,” the regulator said.

On the modified guidelines, Bajaj Allianz General Insurance MD and CEO Tapan Singhel said IRDAI has been working towards simplifying insurance offerings and bringing in transparency to encourage more people to opt for insurance. The modified guidelines are a step in that direction.

The clarification that insurers can add new benefits/upgrade existing benefits as an add-on cover with a standalone premium rate would help customers make an informed choice. It will provide them opportunity to enhance the coverage by opting for add-on covers as per their needs, he said.

The IRDAI has also stipulated a format of policy contract that the insurers have to follow for all policies issued from October 1. The norms on presentation of policy contract is to enable all sections of policyholders to easily understand contents of the contract, General Manager (Health) D.V.S. Ramesh said in the circular.

The insurers are required to present details of all health insurance products in an order with clear heading to draw their attention. The details include policy schedule, preamble, definitions, benefits covered under the policy, exclusions as well as terms and clauses.

Mr. Singhel said the norms on presentation format of policy contract will lead to further simplification and better understanding of the policy by customers since the same format using “plain and simple language” will have to be used by all insurers.

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