Irdai allows insurers more flexibility on Arogya Sanjeevani sum insured

Insurers can offer sum insured of less than Rs 1 lakh, while the maximum can exceed Rs 5 lakh. Insurers could earlier offer policies only in the Ra 1-5 lakh sum insured range

You can now buy a cover of more than Rs 5 lakh under Arogya Sanjeevani, the standard health insurance policy, with the regulator removing the cap on maximum sum insured.

The Insurance Regulatory and Development Authority of India (Irdai) has also removed the mandate on minimum sum insured of Rs 1 lakh under the policy, allowing customers to buy a basic cover of Rs 50,000.

In January, Irdai had mandated all general and health insurers to offer a standardised health cover with minimum sum insured of Rs 1 lakh and maximum Rs 5 lakh.

“To further facilitate the general public, insurers are hereby allowed to offer minimum sum insured less than Rs 1 lakh and maximum sum insured greater than Rs 5 lakh, subject to the underwriting policy of the insurers. The sum insured options shall be offered in the multiples of Rs 50,000 only,” the insurance regulator said.

Greater demand

Tapan Singhel, Managing Director & CEO at Bajaj Allianz General Insurance, said the move will give customers the flexibility to choose the kind of cover they want and generate demand for the policy.

“This move will allow insurers to offer a wide range of sum insured, starting from Rs 50,000 and not limited to Rs 5 lakh. Moreover, since it’s ‘use and file’, the change will be implemented sooner.”

The cap of Rs 5 lakh was a problem for many customers, said Amit Chhabra, business head — health insurance, Policybazaar.com.

The mandatory 5 per cent co-payment and a cap on room rent are the other issues that customers have highlighted, said Chhabra.

While Arogya Sanjeevani was intended to penetrate the uninsured section of society, the response for the product has not been encouraging so far, say experts.

“The revised sum insured limits will help attract several new customer segments,” said Subrata Mondal, executive vice-president at IFFCO-Tokio General Insurance.

“It is also in line with the intent of making Arogya Sanjeevani policy available to a large section of the population, thereby, increasing insurance penetration in the country. It is seen that since the health care costs are lower in smaller towns, people in these areas can avail of the policy at the lower sum insured limit.”

Maximum cover

In removing the Rs 5 lakh cap, the regulator has left it on insurers to take a call on the maximum sum insured.

Sanjay Datta, chief - underwriting & claims, ICICI Lombard General Insurance, said, “It will depend on the insurance companies (maximum sum insured)... Insurers also have their own products, so we have to see how it complements our own product and where do we position the standard product along with our own policies.”

Arogya Sanjeevani is an indemnity-based health product with common policy wordings across the industry. No add-ons or optional covers are allowed with the product.