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A Health Checkup for Health Insurance

IRDA’s pro-customer draft of new guidelines for health insurance addresses problems that should have been fixed a long time ago

After the ULIP clean-up of 2010 and along with the traditional policy clean-up that’s work-in-progress, the Insurance Regulatory and Development Authority (IRDA) has also initiated a clean-up of the health insurance sector. The regulator has released a draft of its new guidelines for the health insurance business.

Normally, just a few people who are involved in the industry and perhaps the media read such documents. However, I suggest that you should make an exception this time. At just 44 pages (20 of which are annexures), it is an easily readable document. Whether you have any comments to send to IRDA or not, just reading the draft will do you good as a health insurance customer.

The draft itself is a thoroughly pro-customer document. It systematically plugs the various loopholes through which a range of customer-hostile practices slip through today.

For example, a big set of changes relate to fixing how health insurers treat the elderly. Currently, customers complain that insurers avoid covering those in their fifties and above and even if they do, they drop them after a few years. The new draft says that seniors up to 65 years old must be able to enrol and if they keep renewing without a break then there’s no age of exit—they can stay insured as long as they want.

Another change addresses other problem with renewals. Customers who are sick at the time of renewal are said to be denied renewal, thereby negating the very concept of insurance. IRDA’s draft cracks down on this practice too. In fact, reading through the documents, one is stuck by the obviousness of most of the measures. Even though the rules are laudable, they do raise the question of why are these being proposed about a decade late. It’s been known for years that insurers mistreat senior citizens, why wait till 2012 to fix the problem?