IRDAI Modified the Guidelines on Product Filing in Health Insurance Business

On 16.03.2021, the Insurance Regulatory and Development Authority of India (IRDAI), by way of Circular Ref No IRDAI/HLT/REG/CIR/049/03/2021, has notified modification in the Guidelines on Product Filing in Health Insurance Business. The said circular was notified to all the CEOs (Chief Executive Officers) of all the General and Standalone Health Insurance Companies.

Further, it shall be noted that the circular issued was in reference to Chapter III of the Consolidated Guidelines on Product filing in Health Insurance Business, Ref No IRDAI/HLT/REG/CIR/194/07/2020 dated 22.7.2020. These guidelines were issued to specify the File and Use, together with the File Procedure in regard to various categories of the individual Products, Add-ons and Riders of the Health Insurance Business.

Moreover, these guidelines are issued under the ambit of powers vested with section 34(1) of the Insurance Act1938 and under the powers conferred in Regulation 2 (i) (o) of the IRDAI (Health Insurance) Regulations 2016.

In this learning blog, the key point of consideration will be the notion of IRDAI, together with the Modified Guidelines on Product Filing in Health Insurance Business.

Concept of IRDAI

The Insurance sector of India is a huge marketplace with various major players operating. So, it becomes significant to have an authority that oversees and monitor the sector. And this is where the IRDAI (Insurance Regulatory and Development Authority of India) comes intothe picture.

Further, the IRDA Act acts as the governing law for IRDAI, and section 14 of the said act contains the scope and ambit of powers of the Insurance Regulatory & Development Authority of India to regulate and administer the insurance and reinsurance industry of India.

Also, it shall be noted that this authority not only has the power to grant the license to Insurance Broker, Insurance Company, Insurance Web Aggregator, Third Party Administrator License etc., but is responsible for the dispersion of knowledge, awareness, and consciousness about the benefits of insurance products to the general public as well.

Moreover, IRDAI is responsible for making the general public aware of the advantages and enlightening them regarding the other facets as to why insurance is a huge boost to the sector.

Additional Guidelines on Product Filing in Health Insurance Business

In addition to the guidelines prescribed at Clause (C) of Chapter III of the guidelines that the general & health insurers must adhere to, the following norms while effecting such modification of existing products has been issued, which are as follows:

• The General and Health Insurers are not permitted to modify the prevailing benefit, or add new benefits in the prevailing products, which results in levying an increase in premium. However, it shall be noted that theinsurers are permitted to carry out minor modifications as prescribed at Clause (G) of Chapter III of the consolidated guidelines on product filing in the health insurance business, Ref No IRDAI/HLT/REG/CIR/194/07/2020, dated 22.7.2020. Also, additional new benefits or up-gradation of the existing benefits may be offered by the insurers as an add-on or optional covers, but with a standalone premium rate to confirm an informed choice to the policy holders;
• Appointed Actuary must review the financial viability and feasibility of every health insurance product at the end of every fiscal year that, too, in accordance with the provisions stipulated under Regulation 6 of the IRDAI (Health Insurance) Regulations 2016. Also, the report of such review needs to be furnished to their Board by way of PMC, together with the analysis of both favourable and unfavourable experience of each product as well as the suggested corrective action, to confirmthe sustainability of the product and to safeguard the interests of the policyholders of the said underlying product;
• Further, it shall be noted that a status report needs to be submitted by the 30th September of every fiscal year to the authority, together with the Board’s suggestions, proposals, and the corrective actions to be undertaken in the format prescribed in Annexure A of this circular. Also, the status report for the Financial Year 2020 to 2021 should be submitted by 30.09.2021;

Norms concerning the Presentation of Policy Contract

In addition to the provisions stipulated in Clause 4 (viii) of Chapter II of the Guidelines, wherein it is, among other things, specified that the wordings of policy must be simple andin plain language.

The same was done to allow all the policyholders to easily understand and comprehend the contents of the policy contract.Also, all general and health insurers need to arrange the policy contracts of all the health insurance products in the listed order with a clear heading so as to draw the consciousness of policyholders.

Moreover, the said format must be adopted in respect of all the policies issued from 01.10.2021 onwards:

• Policy Schedule;
• Preamble;
• Definition (to be bifurcated into the following sections with clear demarcation and sub titles as under)

1. Standard Definitions (means definitions whose wordings are prescribed by IRDAI);
2. Specific Definitions (means definitions other than those specified under c(i) above);

• Benefits covered under the policy;
• Exclusions (to be bifurcated into the following sections with a clear demarcation and sub titles as under)

1. Standard Exclusions (means definitions whose wordings are prescribed by IRDAI);
2. Specific Exclusions (means definitions other than those specified under e (i) above);

• General Terms & Clauses (to be bifurcated into the following sections with a clear demarcation and sub titles as under)

1. Standard General Terms and Clauses (means definitions whose wordings are prescribed by IRDAI);
2. Specific General Terms and Clauses (means definitions other than those specified under f (i) above);

• Other Terms and Conditions (Explanation: Customizing the policy contracts with the already existing product in order to abide by the above specified format is not termed as a modification.);
• The wordings and terms of all the standard exclusions, standard definitions, and standard terms and clauses used in the policy contract must adhere to the wordings as stipulated by the Authority;

Conclusion

In a nutshell, the Insurance Regulatory and Development Authority of India, on 16.03.2021, by way of Circular Ref No IRDAI/ HLT/ REG/ CIR/ 049/ 03/ 2021, has issued modification in the Guidelines on Product Filing in Health Insurance Business. The said circular was passed in reference to Chapter III of the Consolidated Guidelines on Product filing in Health Insurance Business, Ref No IRDAI/ HLT/ REG/ CIR/ 194/ 07/ 2020 dated 22.7.2020.

Also, Read: Difference between Insurance Brokers and Agents – An Overview

Copy of Official IRDAI Circular

Copy-of-Official-IRDAI-Circular