Insurers barred from changing health plans

The insurance regulator on Monday barred health insurers from modifying existing benefits or adding new benefits to existing health plans if it would lead to higher premiums, in a move to protect policyholders from any abrupt rise in premium due to such changes.

The Insurance Regulatory and Development Authority of India (Irdai) announced the new rule in a circular on product filing in health insurance on various categories of individual products, and add-ons (riders).

“General and health insurers are not allowed to modify the existing benefits, (or) add new benefits in the existing products which leads to imposing an increase in premium. However, it is clarified insurers are permitted to effect minor modifications as stipulated in the guideline on product filing in the health insurance business. 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.”

Mahavir Chopra, founder of Beshak.org, an independent consumer awareness platform for individual insurance buyers, said, “This means insurers cannot add additional benefits in an existing product to hike premiums of health insurance products. They will have to offer additional benefits only as optional add-ons which a customer can voluntarily opt into.”

An insurer cannot modify or revise a product within one year from the date of its clearance by the regulator. The appointed actuary will have to review the financial viability of every health insurance product and submit a status report by September 30 of every financial year.

Naval Goel, founder and chief executive officer of PolicyX.com, an online insurance aggregator, said that the new guideline aims to safeguard the interest of policyholders and rights in terms of accessing new features. Earlier, insurance companies have steeply increased annual premiums, creating an unexpected burden on policyholders at the time of renewals. However, this notification will give freedom to the policyholders to choose the additional benefits as per their needs. Hence, this comes across as a positive development for the new and existing customers.

“However, this guideline will restrict insurance companies from levying additional charges which also means there will be a limited introduction of new features in the existing policy. Also, some key features might be added as add-ons instead of base features in the policy,” Goel said.