We have made it through the highs and lows of 2021 and are now embarking upon a new year. After the COVID-19 onset brought the world to a standstill, the rules and regulations have been constantly undergoing a change to befit a pandemic-infested world.
The past COVID waves have given rise to many uncertainties, and the insurance industry works in tandem with these regulations to help combat those uncertainties. These developments have also defined the direction of growth for the insurance industry in a big way. IRDAI has taken cognizance of the challenges that COVID-19 has brought upon the industry and has redefined the guidelines to make them more pro-customer.
While the year 2020 saw some really significant changes dominating the industry, 2021 too followed suit, especially in the health insurance segment. Apart from focusing on the overall welfare and protection of the insured, these regulations also factored in the technological and digital advancement in the policies.
Here’s a quick round-up of all you need to know about the developments that changed the course of the insurance industry in 2021.
IRDAI encourages non-life insurers to offer domiciliary treatment coverage
Domiciliary or homecare treatment has understandably become a large part of insurance planning after COVID struck the world. The need has been further accelerated by the severe shortage of beds we saw during the second wave. Domiciliary treatment occurs when the patient is treated at home while their condition requires them to be hospitalised as per a medical practitioner. This could be due to a shortage of beds or due to the patient’s co-morbid condition.
The insurance regulatory body has incorporated the need for domiciliary treatment coverage in the latest guideline. The regulatory body promotes non-life insurers to offer homecare or domiciliary treatment as an add-on cover afresh or to their existing policies. The cover can be added to the existing policy by charging an additional premium for the residual period of time.
Coverage of Telemedicine
COVID brought along an era of social distancing and limited mobility in order to minimize the risk of exposure. This hailed Telemedicine or online consultation as a trusted alternative to hospital visits, at least for the first line of defense. Telemedicine didn’t just help COVID patients for initial diagnosis but also people with other diseases. The IRDAI took a positive stride in this direction by covering Telemedicine charges along with OPD coverage in a health insurance policy.
Extended deadline for paperless health insurance policy processing and issuance
Keeping in view the ongoing COVID situation, the digital push seems to be strong this year too. The IRDAI has allowed health and general insurance companies to continue issuing health policies in electronic form without insisting on a physically signed proposal form till March 31, 2022. The insurance regulator had allowed the insurers to get policyholders’ consent digitally last year in September. Initially, the exemption for a hard copy of the signature was valid till March 31, 2021. Further, in the wake of the second COVID wave, IRDAI extended it till September 30, 2021.
With the new Omicron variant raising concerns of a third wave, this extension will prove to be a huge boon if lockdown restrictions are imposed again. Through the digital initiative was launched primarily to provide consumers with an alternate option to purchase the policy during the pandemic, now there is a strong need and demand for this to be a permanent option.
Standard insurance products in place with most common features
IRDAI has factored in the need for standard insurance products with some uniform features that cater to a diverse range of needs of different consumers. Travel insurance and personal accident products are also part of this guideline.
COVID has emphasized the need for travel insurance like never before and so, the IRDAI has issued guidelines for a standard domestic travel insurance product. Known as Bharat Yatra Suraksha, this product had to be offered by general and health insurers from July 1 onwards. The product offers five plans that offer both benefit and indemnity based coverage. There will be a single premium payment which will be collected in advance. It offers coverage of hospitalisation due to accidents in the range of Rs 1 -10 lakh sum insured and coverage of accidental death in the range of Rs 1 lakh to 1 crore. Optional riders can also be attached to the policy. When offered as a family cover, the chosen sum insured shall apply to each family member separately.
Similarly, health and general insurers had been asked to offer Personal Accident product from April 1 onwards. It has mandatory features like benefit equal to 100% of sum insured to be paid out in case death by accident or in case of permanent total disablement within 12 months. There are guidelines pertaining to sum insured percentage to be paid out in case of partial disablement. There are optional covers that can be added to this for temporary total disablement, hospitalization expenses and education grant.
Apart from this, there are other standard products offered in the retail category, like Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha for insurance for insurance of home and commercial spaces against various perils.
Rules for general insurers on product design and pricing
The IRDAI has come up with draft guidelines that aim to provide a framework to be followed by the insurers regarding product design and pricing. The regulator has said that when it comes to product development, the products should be designed to secure the policyholders’ interest and affordability. At the same time, it should also take care of the evolving needs with risk coverage accordingly. The regulator has classified general insurance products into retail and commercial on the basis of who buys the product and/or on the basis of the sum insured.
Feasibility is a key factor that should be considered while pricing the product, as per the regulatory body. It says that the insurers should factor in risk exposure, claims experience, expenses, reinsurance, solvency requirements, and a reasonable amount of surplus. Even add-ons should be priced in a way that the product and the add-ons are viable.
The regulator has said, the large risks should be insured by the insurers at the same rate as that by the reinsurers. But the insurer can charge an additional premium over the rates secured from the international market that is commensurate with the additional risk coverage offered by it. Also, the purchase of add-ons as a standalone product or a separate insurance contract, independent of any purchase of another product is not permitted. And, the aggregate premium of all add ons plus premium under optional covers built into the base product should not exceed one hundred per cent of the premium for the base product. “The Authority may fix lower than one hundred per cent of base product premium in specific products”, IRDAI said.
IRDAI allows more health products under the use-and-file procedure
The IRDAI has allowed general and health insurance companies to launch four more categories of individual products, add-ons and riders of health policies to be filed under the use-and-file procedure. These four new categories are – personal accident insurance, overseas travel insurance, domestic travel insurance and benefit-based health insurance products.
Under the use-and-file norms, insurers are permitted to market certain products without IRDAI’s prior approval under certain conditions. “In respect of the personal accident, domestic and overseas travel products ‘use-and-file’ is allowed only if the coverage offered both under base covers and add-on covers or riders is contingent upon an accident and/or travel as relevant,” IRDAI said in a release. These new norms will apply to products filed from 1 April 2021 onwards.