IRDAI issues new master circular to make health insurance claims process more seamless

Regulator advises insurers to ensure enhanced service standards


Health insurance these days is considered to be extremely necessary, given the rising costs of healthcare. However, choosing a policy can be tricky and many times policyholders have to go through a lot of hassles in getting claims settled. 

The Insurance Regulatory and Development Authority of India (IRDAI) has released a new master circular that aims to make the whole process a lot more simpler and beneficial to the policy holder.

"The master circular emphasizes measures towards providing seamless, faster and hassle-free claims experience to a policy holder procuring health insurance policy and ensuring enhanced service standards across the health insurance sector," the insurance regulator said.

IRDAI says insurance companies must strive to facilitate 100 per cent cashless claim settlement in a time-bound manner. The regulator wants the companies to decide on cashless authorization requests immediately and within one hour. Further, final authorization on discharge from the hospital should be decided within three hours of request from the hospital.

Also, IRDAI says the policy holder will not have to submit any documents in case of claim settlement. Rather, the insurance companies and TPAs (third-party administrators) should collect the required documents from the hospitals, it said.

"No policy and claim of health insurance shall be contestable on any grounds of non-disclosure and/ or misrepresentation except for established fraud, after the completion of the moratorium period, i.e. 60 months of continuous coverage," IRDAI stressed. 

“No claim can be repudiated without the approval of the claims review committee, which is required to take a decision on repudiation of every claim,” it added. In case of death during treatment, the mortal remains will have to be released from the hospital immediately. 

Generally, if a policy holder doesn't make a claim during the policy period, the insurer provides a no-claims bonus in the form of higher sum assured as a reward. IRDAI says the insurer may provide an option to the policy holder to choose such no claims bonus either by increasing the sum assured or discounting the premium amount. Depending on one's needs or medical conditions, customers will have to be provided flexibility to choose products, add ons and riders.

Importantly, according to IRDAI, "A health insurance policy is renewable and shall not be denied on the ground that claim was made in the preceding policy years, except in case of established fraud or non-disclosure or misrepresentation by the insured." 

In case, a policy holder fails to renew the policy, an insurer must provide a grace period of 30 days where premium is paid annually or in half-yearly and quarterly instalments with all the credits accrued under the policy. For policy where premiums are paid monthly, 15 days grace period will be applicable. 

“Further, an insurer shall not resort to fresh underwriting unless there is an increase in sum insured,” it added.

Notably, policy holder will also now be able to get a refund of premium/proportionate premium for unexpired policy period, if he chooses to cancel his/her policy at any time during the policy term, as per IRDAI. The regulator has also now set strict timelines in case a customer wants to port the policy to another insurer.

The insurer will be liable to pay Rs 5,000 per day to the policy holder in case ombudsman awards are not implemented within 30 days. 

Performance of TPAs will also have to be monitored, said IRDAI. "Payments are to be made to the TPAs only upon full discharge of satisfactory service. Clawback of remuneration/charges paid to TPA basis customer feedback, which shall be passed on to the policyholders," it stressed.

If an insurance company withdraws a particular product, the policy holder will have to be given options to migrate to other suitable products or one-time option to renew the product if the renewal falls within 90 days from the date of withdrawal.

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