The increasing awareness and growing popularity of health, fitness and wellness focussed lifestyles has led to a significant uptake in the Indian health insurance market in recent past. In early 2016, the IRDAI acknowledged such consumer needs and introduced norms on developing health insurance products which would also include wellness and preventive benefits.
With the progression of the sector and an increase of health insurance products offering incentives to policyholders to adopt a healthier lifestyle (by way of discounts on successive premiums and redeemable vouchers), the time appeared suitable for updation of the regulatory norms guiding such benefits, in order to permit General and Health Insurers to develop products which match some of the health insurance offerings available overseas and allow policyholders to further benefit from fitness efforts and other health centric decisions.
Since early 2016, the norms under R19 of the IRDAI (Health Insurance) Regulations 2016 ("Health Insurance Regulations") as well as Chapter VII "Guidelines on Wellness Features/Benefits" of the "Guidelines on Product Filing in Health Insurance Business" of 29 July 2016 ("Product Filing Guidelines") governed the provision of wellness and preventive health care features offered under health insurance policies. However, the recently notified IRDAI (Health Insurance) (Amendment) Regulations 2019 substituted the norms under R19 of the Health Insurance Regulations, with a requirement to offer such features in accordance with the guidelines "as may be specified by the Authority from time to time."
Pursuant to this revision, the IRDAI issued the "Draft Guidelines on Wellness and Preventive Features/Benefits" of 7 November 2019 ("Exposure Draft") which proposed to consolidate the provisions governing wellness under the Health Insurance Regulations and the Product Filing Guidelines, into a single set of applicable guidance.
Earlier this month, the IRDAI notified the "Guidelines on Wellness and Preventive Benefits" of 4 September 2020 ("Wellness Guidelines"), which now supersede the applicable wellness norms under the Product Filing Guidelines.
Wellness Guidelines: New Regulatory Framework
The objective behind issuance of the Wellness Guidelines continues to be to encourage policyholders to improve and maintain their health and lifestyle, by rewarding policyholders who meet the conditions and criteria set out under their health insurance policy, in the manner recognized under the Wellness Guidelines.
The Wellness Guidelines appear to significantly broaden the scope of wellness and preventive features that were permitted to be offered under the Product Filing Guidelines. Some of the key changes are set out below:
(a) Product Filing: In addition to requiring Insurers to incorporate the details of wellness and preventive features as part of the product construct, the Wellness Guidelines additionally require filing with the IRDAI in advance of the "applicable methodology and criteria to be used" for arriving at the reward points and awarding the same. Such wellness and preventive features may be either in-built into the policy, or be offered as an optional/add-on cover.
(b) Redeemable Vouchers: As a significant change from the erstwhile stipulation under the Product Filing Guidelines which expressly prohibited the "use of protein supplements and other such consumable health boosters" as a wellness feature, the Wellness Guidelines (in line with the proposed norms under the Exposure Draft) now expressly allow policyholders to redeem vouchers towards obtaining "health supplements". Further, the Wellness Guidelines also allow policyholders to redeem vouchers to avail various "memberships" at sports clubs, yoga centers, gymnasiums and fitness centers for participating in fitness based activities.
(c) Sum Insured and Discounts: In addition to offering discounts on the insurance premium, Insurers are now expressly permitted to provide an increase in sum insured at the time of renewal, as a part of the policy's wellness features, provided that such increase is independent of any cumulative bonus offered under the insurance product.
(d) Choice of Rewards: The Wellness Guidelines also clarifies that where the policy offers more than one type of wellness reward, policyholders shall be at liberty to choose from the same, as per their own needs.
(e) Validity of Reward Points: The requirement to clearly state whether the accrued rewards may be "carried forward" upon renewal, as well as the applicable validity period (of such rewards already accrued), is retained in the Wellness Guidelines. However, upon expiry of the policy, the Wellness Guidelines prohibit carrying such accrued rewards forward for a period exceeding 3 months from expiry.
(f) Choice of Service Providers: The Wellness Guidelines advise Insurers to endeavour to engage multiple service providers for providing wellness benefits/services, and for such list to be constantly expanded. Further, where multiple service providers are engaged, the policyholders shall have the absolute option to choose the service provider of their choice for availing such benefits/services.
(g) Third Party services/products: The Wellness Guidelines now ease the blanket restriction (as previously imposed under the Product Filing Guidelines) on offering products/services of any third party service providers, which are not the Insurer's Network Providers. Third party products and services are now expressly recognized under the Wellness Guidelines, however, Insurers are expressly prohibited from (i) publishing the tradenames or logos of such third party merchandize in their insurance advertisements, and (ii) "promoting" such products. Instead, Insurers have the option to refer to such third party services in "generic terms".
(h) Consideration: Another relaxation under the Wellness Guidelines is in relation to payments being made by Insurers to such third party service providers for the provision of their products/services. Insurers are now allowed to pay the "monetized value of the rewards points redeemed by the policyholders". However, Insurers are still expressly prohibited from receiving any consideration for offering such third party products/services under their wellness benefits.
(i) Public Disclosure: The Wellness Guidelines now require Insurers to disclose their administrative and operational costs for provision of the wellness features/benefits, if factored within the pricing of the underlying product, in the prospectus or the sales literature. The Exposure Draft required such disclosure to be made in the insurance advertisement.
With the Wellness Guidelines coming into force with immediate effect, Insurers are required to update their existing products for compliance with these new norms. However, no specific deadline or extended period for compliance has been specified in this regard.
The Wellness Guidelines introduced by the IRDAI emphasize and further the industry's recent drive to encourage policyholders to inculcate preventive and wellness routines in their lifestyles and lead a healthier life.
Such wellness covers are designed to incentivise policyholders to consciously monitor their health, and receive additional benefits from their health insurance plans. With the increased attention being given to general improvement of personal immunity and cardiorespiratory fitness, particularly in the current pandemic times, the introduction of detailed guidance on wellness and preventive healthcare benefits may prove crucial for Insurers looking to meet the existing market demands.
1. For a detailed update on the Exposure Draft released by the IRDAI in 2019, please refer to our article titled "Wellness Benefits In Health Insurance: Proposed Guidelines"; Mondaq, 6 December 2019; https://www.mondaq.com/india/insurance-laws-and-products/872544/wellness-benefits-in-health-insurance-proposed-guidelines.
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