Health Insurance: IRDAI mandates additional costs for insurers on late claim settlements

The Insurance Regulatory Development Authority of India (IRDAI) has made health insurance policies a lot more customer friendly. In its latest circular, IRDAI has said that if the insurer does not settle the claim during discharge within three hours of the request, the additional amount, if any, charged for the additional time the patient is required to stay in the hospital, shall be borne by the insurer from the shareholders’ fund.

The regulator has come out with a slew of measures that include lower cancellation charges for policies and advocating the introduction of products for all types of treatments including OPD (Outpatient treatment), chronic medical conditions and covering modern treatments by using technology advancements by insurers.

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The insured can return a health policy with a tenure of one-year and more in the first year in 30 days if she/he does not find it useful and can decide on the order of making claims in the case of having multiple policies. The insurance coverage should be available in all kinds of hospitals including affordable ones and there should be no denial of coverage in emergency situations, IRDAI stated in its master circular issued on May 29. Most of the changes are applicable with immediate effect unless there is a specific date mentioned for the change.

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Customer friendly steps taken by IRDAI

Insurers have to decide on cashless authorisation within one hour of the receipt of the request. This has to be implemented from July 1, 2024.

The insurer shall grant final authorisation within three hours of the receipt of discharge authorisation request from the hospital. In no case, the policyholder shall be made to wait to be discharged from the hospital.

After 60 months of continuous coverage, an insurer cannot reject a claim for lame reasons. They can only reject claims in case they are able to prove fraud.

IRDAI has also reduced the cancellation charges for health insurance policies. After 30 days of renewal, a customer can cancel the policy with a 7-day notice and get a proportionate premium back unless a claim is made.

“The cancellation charges used to be pretty high earlier. This has now changed," said Mahavir Chopra, founder and CEO of Beshak, an online insurance review platform, in a post on X (formerly Twitter).

The insurer is required to comply with the award of the ‘Insurance Ombudsman’ within 30 days of the receipt of the award. If the insurer fails to honour the ombudsman’s award, a penalty of ₹5000 per day shall be payable to the complainant, IRDAI started.

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“It was reported that ombudsman judgements were not being implemented by many insurers. There was a need for a penalty," Chopra said. Claim rejections cannot be done by a single person and has to be done by a three-member product management committee. “Hope this brings some sanity in the ad hoc, arbit (arbitrary rejections) customers experience," Chopra observed.

While the portability clause remains more or less the same, IRDAI has put timelines to ensure smooth processing of portability requests. “Of course, some of the above requirements are usually shielded by insurers by not making the product available easily or pricing it really high. Hope this is also taken care of someday," Chopra said.

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IRDAI has given a list of modern-day treatments that can be covered. These include uterine artery embolization and HIFU (High Intensity Focused Ultrasound), balloon sinuplasty, deep brain stimulation, oral chemotherapy, immunotherapy- monoclonal antibody given as injection, intra-vitreal injections, robotic surgeries, stereotactic radio surgeries, bronchial thermoplasty, vaporisation of the prostate (Green laser treatment or holmium laser treatment), IONM - (Intra Operative Neuro Monitoring), stem cell therapy, hematopoietic stem cells for bone marrow transplant for haematological conditions to be covered and any other treatment using advanced technology, as per the product design.

Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.

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