In Covid times, the IRDAI guidelines on health and wellness and the rewards that insurers will now give to consumers for staying fit are welcome. Many also offer claims linked to home quarantine cure.
By Shivanand Pandit
In September 2020, the Insurance Regulatory and Development Authority of India (IRDAI) issued guidelines to insurance players to incorporate features that push policyholders to maintain and recuperate their health. In the recent past, the consciousness about strong health, wellness and fitness has led to a substantial development in the health insurance sector. And now with Covid-19, this awareness is at an all time high.
Guidelines which sanction insurers to reward consumers in several ways were much awaited. Insurers are now able to give discounts to customers following wellness principles demarcated in the policy. This strategy will inspire people to lead a healthy lifestyle and choose health insurance products.
Earlier in 2016, IRDAI recognised the necessity of such consumers and launched norms on evolving health insurance products, including wellness and preventive benefits. With the development of the sector and a surge of health insurance products offering enticements to policyholders to embrace a fitter lifestyle, the time has come for renovation of the norms handling such benefits. This will allow general and health insurers to design products which equal those available abroad and permit policyholders additional privileges from fitness and other health centric choices.
Due to coronavirus, consumers are now demanding wellness related benefits. According to a survey, approximately 60 percent of people anticipate their health insurance policy to go outside hospitalisation to help them stay healthy. The Covid-19 crisis has brought superior mindfulness among people.
Earlier, even if a few wellness benefits were offered, lack of clear definition of the features and low customer responsiveness made the utilisation of the privileges unattractive. The new rules now initiated may also prompt insurers to launch more products which may create confusion in the selection of the plans.
Since July 2020, a large number of insurance companies began offering claims on Covid linked home quarantine cure. But such claims are few, regardless of the large number of people opting for home quarantine. This is due to low awareness and affordability as many patients don’t know that these companies are also taking care of home quarantine treatments.
Medical inflation is high at 14 percent and costs are skyrocketing. In September 2020, retail inflation was 7.34 percent. In India, 70 crore people are yet to choose a health policy and the health insurance segment is only 0.27 percent of the GDP.
Since 2016, the norms under R19 of the IRDAI Health Insurance Regulations 2016 as well as Chapter VII of the “Guidelines on Product Filing in Health Insurance Business” emphasised wellness and preventive healthcare under health insurance plans. In 2019, there were amendments in regulations of health insurance which were intended to strengthen the provisions governing wellness into a single collection of guidance. Now in 2020, the IRDAI notified the “Guidelines on Wellness and Preventive Benefits”.
New strategies will definitely push all life, general and health insurers to include wellness and preventive characteristics in their policy framework. Maintaining good health is as important as having health insurance and few insurers give rewards for staying fit and fine. Conventionally, health insurance products focus on therapeutic features but the new parameters will now assist insurers to lay emphasis on preventative components. Moreover, policyholders will get a chance to compare health insurance products not only by price, but also on the wellness supports they propose.
The procedure and benchmarks expended in framing reward points and the method of endowing them should be unveiled by the insurance companies. They can also provide these features either as optional or as add on coverage to policyholders. Insurers have to treat all policyholders of a related or analogous category without any bias while awarding these features and their pricing should be revealed to the policyholders unequivocally. The fixed costs incurred to design the structure to track wellness connected parameters, service givers, merchant associations and so on should be distributed as per the consent of the IRDAI.
The regulator also mentioned that at the time of renewal, insurers can offer markdowns on premium or enhance the sum insured depending upon the wellness scheme conformed by the policyholders, although the sum insured cannot be linked to the accumulative bonus proposed. Going further, the IRDAI also specified some benefits that insurers can offer such as redeemable vouchers to obtain health complements, admissions in yoga centres, sports clubs, etc. In addition, insurers may also consider covering the cost of treatment of a claim by paying for non-eligible stuff such as oxygen cylinders, masks, OPD consultation, etc.
However, there is a prohibition to carry forward such accrued rewards for a period beyond three months from expiry. Also, insurers are explicitly barred from broadcasting the trade names or logos of third party merchandise in their insurance commercials and endorsing such products. Instead, insurers have the choice to mention such third party services in generic terms. Also, relaxation has been given to payments made by insurers to such third party service providers for the provision of their products or services.
To comply with the new rules, insurers need to upgrade their current products instantly because the new framework relating to wellness comes into force with immediate effect. However, no particular cut-off date has been stated.
Internationally, many developed countries such as the US, the UK, Singapore, Hong Kong and Australia tried and tested many such plans in the name of vitality programmes. However, they have seen different levels of success and are yet to achieve the desired outcome.
Quality wellness schemes will need huge investment by insurers with regard to gadgets and could necessitate the creation of a huge amount of data. This will force insurers to formulate products at different prices.
More importantly, the IRDAI recommendations on outpatient treatment and diagnostics came only this year and some insurers are yet to provide these amenities in their policies. Policy holders, in spite of many wellness structures, should ensure that they read the policy documents judiciously to understand the full implication of the wellness aspects on the premiums.
—The writer is a tax specialist and financial adviser based in Goa