Welcome changes in insurance regulations

The Insurance Regulatory and Development Authority of India (IRDA) has done well to introduce some changes in its regulatory scheme which will make it more inclusive and useful to policy-holders. The new regulations require insurance companies to make two important changes in their products. One is to ensure that the insurers offer health insurance products to all age groups.

Till now, the maximum entry age was fixed at 65 years. The new rule would extend it further. The other provision reduces the maximum waiting period that insurers may impose on claims relating to pre-existing diseases from 48 months to 36 months. Shortening the waiting period will be useful to many policyholders because most of the health problems that they face are likely to be related to pre-existing conditions. Many persons who suffer from severe ailments like cancer, heart or renal failure and AIDS will benefit from the new provision. 

Bringing more people under the cover of health insurance is important in a country where the demography is changing and healthcare costs are high. This is also in accordance with international practices. Senior citizens, especially those above 65 years, need health insurance protection the most, but they are barred from buying new policies.

Many wouldn’t have bought policies before 65 as health insurance has come to be recognised as a need only recently. The number of those above 65 will steadily increase in the coming years and therefore it is essential to bring them under the cover of health insurance. The new provision becomes particularly useful because the public healthcare system is inadequate and the private healthcare facilities are costly and unaffordable for many. The traditional social security system that depended on family support is weakening and therefore elderly persons need new ways of protection. 

The provision about pre-existing diseases will also be useful because that is one ground on which health insurance companies deny benefits to many. The companies often reject claims on the basis of policyholders’ failure to make full disclosures at the time of buying the policy. This is an area that gives a lot of loopholes for insurers to deny claims.

These need to be set right when rules are framed to make the new provision available to policyholders. Similarly, it must be ensured that policies are not made costly for those above 65 years. That will deny the benefit of the provision to those who most need it. The country’s health insurance system is known for lack of transparency, fine-print and jargon problems and generally being difficult to those who make claims. The new regulations should rectify these issues.