Irdai moots radical changes in health insurance

Says there could be higher solvency requirement for group health segment

Insurance Regulatory and Development Authority of India (Irdai) is planning massive changes in health insurance, which include more incentives for healthy policy holders and a level playing field for life and non-life insurers, among others.

In its draft norms on health insurance shared with companies, Irdai has said there could be higher solvency requirement for group health segment. This means, those operating heavily in this space would have to allocate higher funds for this space.

Last year, too, Irdai had said in its guidelines on pricing of risk that industry-wise loss cost should be considered for pricing a product. The regulator had said there should be an appropriate board-approved policy and that this would be closely monitored. At present, 150 per cent is the solvency margin required to be maintained by insurers at all times. This is expected to go up to 200 per cent for group health, while existing limits may remain for retail health.

Besides, healthy policyholders are proposed to be incentivised with better rates once their health and fitness are monitored on a regular basis. Current norms do not allow pricing to be based on fitness levels since there has been apprehension about the availability of adequate data on the same.

Apart from wellness incentives, insurers will also be able to reward customers who maintain a good level of fitness with better insurance rates. Insurance companies already offer health- and wellness-based discounts to individuals including spa coupons, gym membership discounts, among others, to inculcate healthy behaviour among customers.

Industry officials said for those customers who exhibited better behaviour with respect to more physical activity and taking care of their fitness would be incentivised, if allowed by the regulator.

With respect to products, both life insurers and non-life insurers could be given an equal footing, although industry sources said standalone health insurers would still continue to offer niche products for that space.

Going forward, long-term critical illness plans could also become more specialised with more ailments being aided and more long-term products being brought to the fold.

Although these norms are at a draft stage, Irdai will finalise it in the next few months after which it will be implemented.