IRDAI starts work on standardising general clauses in health insurance policy contracts

The insurance regulator issues draft guidelines, wants comments by January 25

Insurance companies may soon have to offer uniform clauses in indemnity-based health products to simplify customer experience with standardised wordings for provisions such as claim settlement within 30 days the and cancellation of policies with a 15-day notice.

Keen on bringing uniformity in the wording of health insurance policy contracts, the Insurance Regulatory and Development Authority of India (IRDAI) has proposed to standardise some of the general clauses that are commonly used in indemnity-based health products.

“The objective of these guidelines is to standardise the common general clauses incorporated in indemnity-based health insurance (excluding personal accident and domestic/overseas travel) products covering hospitalisation, domiciliary hospitalisation and daycare treatment, in order to simplify the wordings of general clauses in the policy contracts and ensure uniformity and greater transparency,” said the draft guidelines issued by the IRDAI recently.

The insurance company can also include other general clauses based on their product design, it added.

The regulator has sought public comments by January 25.

The draft norms

The draft guidelines have incorporated the IRDAI’s oft-repeated directive to settle or reject claims within 30 days, failing which, the insurance company will have to pay a penal interest of 2 per cent above the bank rate. In case of an investigation, the insurer should settle or reject the claim within 45 days.

In case of multiple policies taken by an insured person, he or she shall have the right to settlement of claim from any of the policies.

The draft norms have also proposed that policyholders can also cancel the policy by giving 15 days written notice, and the insurer should refund premium on short-term rates for the unexpired policy period.

Similarly, for migration to any other policy of the insurance company, the policy holder can apply for it 30 days before the premium due date. The insured person would have the option to port the policy anywhere between 45 days to 60 days of the premium due date.

“The policy shall be void, and all premium paid thereon shall be forfeited to the company in the event of misrepresentation, misdescription or non-disclosure of any material fact,” the draft guidelines have proposed for Disclosure of Information by insurance companies.

According to the draft guidelines, all benefits under the policy will be forfeited in the case of fraudulent claims, and any amount already paid against such claims shall be repaid by all person(s) named in the policy.

This move to standardise general clauses in health insurance policy contracts comes soon after the IRDAI unveiled a standardised health insurance product, named ‘Arogya Sanjeevani Policy’, which will be offered by health and general insurance companies.