Why in news?

The Insurance Regulatory and Development Authority of India (Insurance Products) Regulations, 2024, came into force on April 1.

The new norms covering general and health insurance have generated considerable interest, particularly around a presumed change in the upper age limit to avail a new health cover.

What’s in today’s article?

• What do the new regulations address?
• What changes are relevant to senior citizens?
• How significant are the changes?

What do the new regulations address?

• Expanding Insurance Coverage
  • The April 1 notification aims to broaden insurance coverage, aligning with the IRDAI's goal of 'Insurance for All by 2047'.
  • This indicates a push towards ensuring that a wider demographic can access insurance products.
• Aimed at Improving Insurance
  • The recent regulations introduced by the IRDAI are also designed to help insurance companies better meet the changing needs of the market, simplify business operations & protecting the interests of policyholders.
• Emphasis on Good Governance
  • To ensure policyholders are treated fairly, insurance companies are encouraged to follow good governance practices when creating and pricing their products.
  • This helps maintain transparency and fairness in insurance transactions.
• Reduction of the waiting period for specific diseases and treatments
  • Previously, policyholders had to wait for four years, but now they only need to wait three years to get coverage for specific diseases and treatments, except in cases of accidents.
  • Pre-Existing Conditions are health conditions, injuries, or diseases diagnosed by a physician within three years before the policy's start date.
  • As long as the policy is renewed without interruption, these pre-existing conditions will be covered after the waiting period of three years
• Focus on AYUSH Treatment Coverage
  • The new regulations highlight the importance of covering AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homeopathy) treatments in health insurance policies.
  • Insurers are now required to offer policies approved by the Board that treat AYUSH methods equally with other medical treatments.
  • Previously (until March 31, 2024), insurers were encouraged to provide coverage for one or more AYUSH systems, as long as the treatments were administered in authorized hospitals or healthcare facilities, following specified guidelines from the Authority.
• Renewal Assurance
  • The regulator has advised insurance companies against refusing to renew health insurance policies solely because the insured made claims in previous policy years.
  • This guidance applies unless the policy is of a benefit-based nature where termination occurs after the covered benefit is paid out, such as in critical illness policies.

What changes are relevant to senior citizens?

• Previous Regulations on Entry and Exit Age
  • Under the Health Insurance Regulations of 2016, it was stipulated that health insurance policies must allow entry up to the age of 65 years.
  • Despite the regulatory minimum, insurers were not universally hesitant to provide health cover to those above 65 years.
  • Several policies offered by different insurers had maximum entry ages of up to 99 years, demonstrating flexibility in coverage options.
• New regulation skipped mentioning the 65-year age
  • IRDAI has skipped mentioning the 65-year age of entry provision in its latest announcement of rules.
    • This has been interpreted as the IRDAI actually allowing insurers to sell medical policies to those above this age level.
  • This in effect does not mean that IRDAI has expressly ordered that covers be made available to senior citizens.
    • Insurers even now have control over the issuing of policies.
    • So, if an insurer deems someone is too big a risk to issue a policy, they may well refuse to do so.
• Special Focus on Senior Citizens
  • The new regulations also mandate insurers to establish a separate channel dedicated to addressing health insurance claims and grievances specifically for senior citizens.

How significant are the changes?

• This decision to eliminate age restrictions on health insurance policies marks a shift in the nation's insurance landscape.
• This move promises increased accessibility to comprehensive healthcare coverage for individuals of all ages.
• However, concerns arise regarding waiting periods. IRDAI has mandated to cap waiting periods at a maximum of three years from the current four years.
  • This adjustment is expected to prompt most insurers to increase the cost of insurance by 10-15% across the board.