Panel suggests a new disclaimer for use in insurers' ads

Wants greater transparency to enable policy holders to understand boundaries of coverage in their policies

An expert committee has suggested changing the wordings of disclaimer in advertisements of insurance companies.

The Insurance Regulatory and Development Authority of India (IRDAI) mandates that all insurance companies issue a disclaimer --Insurance is a subject matter of solicitation-- in all their advertisements.

"This needs to be reworded. The committee recommends the following: 'Before buying, know the conditions and exclusions, to make a well-informed decision'," said the report of the Expert Committee on Health Insurance.

The report has also recommended that there should be greater transparency and clarity to enable policy holders to understand the boundaries of coverage in their policies.

"This will help reduce the asymmetry of information that exists among all the parties concerned-- customer, provider, payer etc. Prominent display of what is payable/not payable, what is covered/not covered etc is necessary at every customer touch point written, digital," it added.

Further, it said principle of 'Utmost Good Faith' is valid for both the insurer and the insured. And greater disclosures are required on part of service providers, including insurers and third party administrators (TPAs) during the currency of policy as well as when servicing claims.

On fraud management, it has recommended that insurers and TPAs should have systems in place to identify, monitor, control and deal with fraud, including hospital abuse, by various agencies including health care providers.

"Regulator should direct insurers and TPAs to put systems and internal processes in place for detection of fraud and its mitigation. Insurers and TPAs should delineate and disseminate information on fraudulent cases.

"A central repository of data for the purpose needs to be created. In due course of time, an institutional mechanism such as a Health Insurance Fraud Bureau (HIFB) should be in place for continuous fraud control," as per the report.

The report has also suggested an industry-level collaborative effort to minimise subjective and varied interpretation of policy terms and conditions, which is the root cause of disputes between insurers and policy holders.

"A uniform and consistent interpretation of policy terms and conditions (coverage and exclusions) would go a long way in increasing customer confidence," said the report.