In a bid to offer better coverage to policyholders, the Insurance Regulatory and Development Authority of India (Irdai) has brought in a set of regulations ever since the covid-19 pandemic hit the country. Further, to bring some respite to the uninsured population, the regulator has sent draft guidelines to all general and health insurance companies mandating them to offer standard indemnity and fixed-benefit plans for covid-19.
Amid all this, the regulator has now allowed both life and general insurers to offer short-term health policies that specifically cover the disease.
In a circular published on Tuesday, the regular said short-term policies covering covid-19 is the need of the hour. In line with this, life, general and standalone health insurers can sell health products with a minimum term of three months and a maximum of 11 months.
“Currently, there are a few companies offering covid-specific products on a group basis. Also, all health insurance plans already cover the need for hospitalization. But given the situation, it is understandable why the regulator may think it is relevant to get companies to offer covid-specific protection," said Manik Nangia, chief operating officer, Bharti Enterprises-Financial Services.
Insurers will have to offer these products with a waiting period of 15 days only as against the 30 days waiting period in regular health plans.
Health insurance rules such as lifelong renewability, migration and portability shall not be applicable to the short-term covid-19 products. The products on offer can either be on an indemnity basis or on a fixed-benefit basis. Life insurers, however, can offer these products on a fixed-benefit basis only.
“We believe the intention is to have as many carriers write the new risk and that’s a wise thing to do in the short term," said Nangia.
Abhishek Bondia, managing director and principal officer, SecureNow.in said life insurers offering fixed benefit plans, which they understand much better, will allow policyholders to opt for covid-19 plans as a supplementary plan to their existing regular health indemnity product.
In its circular, the regulator has said optional covers that enhance the health insurance coverage are permitted to be offered with these short-term products. But in another sentence, it has said no add-ons are allowed.
“We are not very sure about what that means. I think optional covers could mean something like the hospital cash cover, which the regulator has asked us to offer with the standard covid-19 indemnity product. But optional cover and add-ons are similar in nature. We’ll are seeking clarification on this," said Anand Roy, managing director of Star Health and Allied Insurance Co Ltd.
Pricing for the product has been left to insurers’ discretion and some insurers are of the view that these products could be the short-term variants of the two standard covid-19 products that the insurer has mandated insurers to offer from July 15.
Final guidelines on the two products are still awaited. “The regulator has not mandated pricing in any format. That is the only way this can work. We must understand that the situation is unprecedented and there isn’t enough credible data on infection spread, which makes it very difficult to ascertain the frequency of occurrence and the potential severity of the claims," said Nangia.
The short-term products can also be sold in the form of group insurance and Nangia said group policies when bought by an employer or an association of people can turn out to be slightly cheaper.
According to insurers, the regulator is trying to persuade more and more people to buy health insurance because the cost of treatment for covid-19 can burn a hole in the pocket if one is not covered under insurance.
However, all the back and forth and introduction of more products specific to the pandemic could lead to confusion and may not really encourage people to buy a comprehensive health insurance policy, which is necessary given that other than covid-19, conditions such as tuberculosis, hypertension, and diabetes too are on the rise in the country.
“If a family or an individual can afford it, we recommend going for a comprehensive health insurance plan. The current situation is such that not many people may be able to afford, so the regulator is trying to make as many options available to ensure people have some amount of coverage," said Roy.
Insurers also said that once the pandemic settles down, they’ll have to work on ensuring that people who bought a covid-19 product are encouraged to buy a regular health insurance policy because a single disease-specific plan doesn’t really help in case you meet with an accident or require hospitalization due to other conditions.
Click here to read the Mint ePaperLivemint.com is now on Telegram. Join Livemint channel in your Telegram and stay updated
