Health insurance business in India has, traditionally, been regulated by the framework governing general insurance business as issued by the Insurance Regulatory and Development Authority of India (IRDAI) from time to time. However, due to a series of developments, a need was felt for creating a specific framework for the development and operation of health insurance products. In 2013, the IRDAI issued the IRDA (Health Insurance) Regulations 2013 (Health Regulations 2013) along with the Guidelines on Standardization in Health Insurance of 20th February 2013 (Standardization Guidelines 2013) which set out the procedures and requirements for filing health insurance products and certain follow through operational requirements.
Recently, following a number of representations made by various stakeholders (including Insurers) on a multitude of issues as well as to update the existing framework, the IRDAI, by way of a notification of 18th July 2016, issued the IRDAI (Health Insurance) Regulations 2016 (Health Regulations 2016) replacing the Health Regulations 2013. The IRDAI also replaced the Standardization Guidelines 2013 with the Guidelines on Standardization in Health Insurance of 29th July 2016 (Standardization Guidelines 2016) and the Guidelines on Product Filing in Health Insurance Business of 29th July 2016 (Product Filing Guidelines).
Some of the key features of the Health Regulations 2016 include the following:
- Pilot Products: The Health Regulations 2016 have introduced the concept of "Pilot Products" aimed at encouraging innovation in the design of products for covering risks that have not been offered before. Pilot Products may be offered by General Insurers and Health Insurers for a policy tenure of one year, but not exceeding five years. Further, the sales and publicity material of such products are required to provide certain specific disclosures as set out under the Health Regulations 2016.
- Wellness and Preventive Aspects of Health Insurance Policies: The Health Regulations 2016 have introduced norms aimed at encouraging the inclusion of "Wellness and Preventive" aspects as part of the product design. Insurers may now promote wellness amongst health insurance policyholders by offering them health specific services which are to be provided only by their network providers, such as, outpatient consultations or treatment, pharmaceuticals, and health check-ups. Moreover, Insurers are prohibited from offering discounts on products of third parties either as part of the policy or otherwise.
- Restrictions on Life Insurers offering Health Insurance Policies: Life Insurers are prohibited from offering indemnity based health insurance products either as an individual or a group policies. Consequently, all such existing indemnity based products offered by Life Insurers are now required to be withdrawn in accordance with the prescribed procedure.
- Group Health Insurance Policies: Per the Health Regulations 2016, Insurers can offer group health insurance products for a term of one year except credit linked products where the term can be extended up to the loan period which shall not be more than five years. Moreover, these regulations mandate that the minimum size of the group shall be 7.
Key features of the Standardization Guidelines 2016
The Standardization Guidelines 2016 set out the revised set of standard definitions of terminology and standard nomenclature and procedure for critical illnesses which are required to be used in health insurance policies. These guidelines also prescribe the standards and benchmarks required to be met by network providers or hospitals. In addition, the Standardization Guidelines 2016 also set out the various health insurance returns required to be submitted by Insurers in a periodic manner.
Key features of the Product Filing Guidelines
- The Product Filing Guidelines set out the procedure and the requisite forms for filing various types of health insurance products, such as, new health insurance products, Pilot Products, Health Package Products and Non-Life Package Products under the File & Use Procedure. The provision for submitting a lawyer's certificate while filing such products with the IRDAI has now been omitted.
- The Product Filing Guidelines also mandate setting up of a "Product Management Committee" (PMC) by General Insurers and Health Insurers. The PMC is, among other functions, required to carry out a due diligence process and record its concurrence on various product related risks for all product filings under File & Use before any application for a product is sent to the IRDAI for approval.
- A significant change brought about by
the Product Filing Guidelines is the introduction of the Use &
File procedure for group health insurance products. Per this
procedure, a group product may be launched without the prior
approval of the IRDAI subject to the following stipulations:
- The product must be approved by the PMC;
- The Insurer shall obtain a Unique Identification Number for every insurance product from the IRDAI by duly informing them of the name of the product proposed to be launched; and
- The product shall be filed with the IRDAI within seven days from the date of approval by the PMC in the prescribed form.
- In addition, the Product Filing Guidelines provide detailed guidance on Wellness Features and Benefits that an Insurer may offer in a health insurance product. The Product Filing Guidelines also provide an extensive procedure for the withdrawal of products.
The revised regulatory framework governing health insurance products seeks to bring greater accountability internally within Insurers to the extent that the PMC of an Insurer is required to ensure that the products proposed to be launched in the market are in compliance with applicable laws and regulations. Further, there is an apparent encouragement to bring innovation in the product design and promote wellness through allowing pilot products and wellness features as part of health insurance products.
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