Soon life insurers may be allowed to offer indemnity-based health insurance policies also. A committee has been set up by the Insurance Regulatory and Development Authority of India (IRDAI) to study the feasibility of allowing life insurers to offer indemnity-based health insurance policies. Currently, IRDAI (Health Insurance) Regulations 2016 allow life insurers to offer defined benefit-based health insurance products only.
Indemnity-based health plans are basically those insurance policies where the insured is reimbursed the actual expense incurred during hospitalisation up to the total sum insured under the insurance policy.
According to a IRDAI press release, issued on 25 February 2020, "Insurance Act, 1938 vide Insurance Laws (Amendment) Act 2015 recognised Health Insurance as a separate class of business. Historically Health insurance is recognized as one of the important elements of health care and health insurance premiums have been registering a significant CAGR of around 20% in the preceding 10 years in India. IRDAI (Health Insurance) Regulations 2016 allows Life Insurance Companies to offer Benefit based health insurance products only. Representations have been received from Life Insurance Companies to allow them to offer indemnity products as well."
Santosh Agarwal, Chief Business Officer, Life Insurance, Policybazaar.com said, "As per the new proposed regulations by IRDAI they will consider allowing Life Insurance Companies to offer indemnity-based health insurance products, through which they will be able to bring in the knowledge of long-term pricing to the table for customers. Through the drafted regulations, life insurers may be able to implement the actuarial models and review the price periodically say every few years or so instead of doing it every year. India being one of the least penetrated health insurance markets, this move will help simplify the process for policyholders."
The nine members committee has been asked to submit its recommendations within two months of issue of this order, according to the press release.
The committee has been asked to review the following aspects:
- Feasibility and the business scope for Life insurance companies to offer indemnity-based health insurance products;
- Extant statutory provisions that are applicable in this regard;
- Any other matter as permitted by the chairperson
What are indemnity-based health insurance policies?
Indemnity-based health policies are basically those insurance policies where the insured is reimbursed the actual expense incurred during hospitalisation up to the total sum insured agreed under the policy. This means that the policy pays the money that is spent on the treatment within the limit of the sum insured. Indemnity type health insurance policy can be a regular individual health insurance policy or a family floater policy.
So, generally, when you opt for cashless hospitalisation policy, you have to pay a certain fixed amount at the hospital (the deductible amount) and the rest is paid by the insurer. However, in case if you have not opted for the cashless hospitalisation policy, then you need to submit the necessary medical reports, bills paid and other required documents based on which the insurer reimburses the expenses.