Major changes have happened in the insurance sector. While some bring cheer to the retail sector, few favour with the corporates.
Till 2006, the insurance sector was governed by a tariff that specified about the policy, wordings, terms, conditions, as well as the rates to be charged for different types of businesses. In 2006, the pricing portion of tariff was freed. Companies were permitted to fix their own rates for different types of businesses through a systematic and scientific manner after proper risk appraisal of the insured property. But there was reckless cutting of rates due to intense competition. At times, the premium was just 1 per cent of the erstwhile tariffs.
But now, with the new announcement, policy wordings can also be adopted. On the face of it, this is a good move. The presumption is that both parties would discuss, agree and frame contracts suitable to their needs. This should result in less disputes at the time of claim.
A major beneficiary of this would be insurance brokers. Earlier, most of the corporate’s used to have an in-house team which directly negotiated with insurance companies. Post 2000, many companies appointed brokers to handle their portfolio and negotiate with insurers on the price. Since, the wordings were somewhat standardised their role was limited. Now with wordings also being de-tariffed and the insureds not having expertise themselves, dependence on brokers would increase.
Cashless facility at all hospitals
In the existing system, an agreement between the insurance company and hospital was essential for extending cashless facilities. In all other cases, the insured would have to pay from their pocket and get it reimbursed. Now it has been made compulsory for insurers to offer cashless facilities in any hospital, whether empaneled or not. As of now, this new system is available only for planned surgeries and procedures where the companies have advance notification and not for sudden requirements.
Ayush
Ayush stands for ayurveda, yoga, unani, siddha and homeopathy. The insurance industry so far has not considered them at par with allopathy. IRDAI has now directed insurance companies to treat Ayush in line with other treatments and also provide an option for the policyholders to choose treatment of their choice. Insurance companies have also been directed to formulate procedures for enrolling Aayush hospitals/daycare centres for cashless facility.
Barring Age limits
There was a condition that upto sixty-five years of age, medical insurance cannot be denied. Now, that cap has been removed. Companies have been asked to develop new products for different age groups and demographies. Medical insurance in India is still at a nascent stage and to some extent, driven by government schemes. The concept of having an insurance policy for medical expenses has itself gained steam only in recent times, aided by medical inflation and also covid. It would be interesting to see how insurers work on this.
Currently, no claim can be rejected on grounds of pre-existing illness if the policy has run for four years. This has now been reduced to three years. This is a welcome move. A disease which has not exhibited itself for three years, which by itself is a long period, should not be used for rejecting a claim throughout a person’s life. Retail insureds stand to benefit by this. In many group policies, insurance companies often waive this condition due to business considerations.
No Claim rejection beyond 5 years
Insurers could and often would reject claims stating misrepresentation at the time of taking the insurance. Now, if a policy has run for five years, no claim can be rejected on the ground that information was not given or even misrepresentation, except if there is fraud established. This is good, because at times the questions asked in the proposal form are ambiguous, or at times the intermediaries who procure the policy for the insurer, misguide the insured on the meaning of the policy and on how to reply to the question. But would insurers try to classify such things as fraud is something only time will tell.
SC on hospital charges
The supreme court in March ’24, directed the central government to fix hospital treatment charges for patients within six weeks. The SC felt that there was great difference in treatment costs between private and government healthcare institutions. The SC urged the government to implement 14-year-old rules that establish standard rates for treatments in consultation with states. If a resolution is not found, the court warned of considering the petitioner’s plea to enforce CGHS prescribed standardised rates.
Policy Issuance in electronic form mandatory
In a major step, from 02 April 2024, it is mandatory to issue insurance policies only in an electronic form. As per the new rules, insurers must issue policies in de-materialised form, and this will now be facilitated by four insurance repositories – CAMS, Karvy, NSDL and central insurance repository of India. Policyholders are expected to open demat accounts with one or other repositories.
Performance through 2023-24
The industry has shown double-digit growth, albeit less than the 16.3 per cent growth of last year. The main drivers were health and motor constituting about 68 per cent of the premium. There has been a fall in crop insurance which has resulted in the fall in the overall growth rate. The market shares of the three major blocks were – PSUs at 31.18 per cent (down by about 1.18 per cent), private insurers at 53.53 per cent (up 2.17 per cent) and health insurers at 11.43 per cent (up by 1.21 per cent). The specialised insurer, Agricultural Insurance Company has lost ground.
At Rs 2.89 lakh crore, the total industry premium has fallen slightly short of the Rs 3 trillion mark which would have been a psychological milestone.
