Debatable Policy

In the month of September 2020, to promote wellness benefits and preventive outlooks, the Insurance Regulatory and Development Authority of India issued guidelines to insurance players and instructed them to incorporate features that push policyholders to maintain and recuperate their health.

In recent past the consciousness about strong health, wellness and fitness has led to a substantial development in the health insurance sector. Earlier in the year 2016, the IRDAI recognized the necessities of such consumers and launched norms on evolving health insurance products including wellness and preventive benefits. With the development of the sector and a surge of health insurance products offering enticements to policyholders to embrace a fitter lifestyle by way of many ways, the time has ripen for renovation of the governing norms handling such benefits, in order to allow General and Health insurers to design products which equal some of the health insurance offerings available in foreign parts and permit policyholders to additional privilege from fitness exertions and other health centric choices.

Since 2016, the norms under R19 of the IRDAI Health Insurance Regulations 2016 as well as Chapter VII “Guidelines on Wellness Features or Benefits” of the “Guidelines on Product Filing in Health Insurance Business” ruled the provision of wellness and preventive health care topographies provided under health insurance plans. The IRDAI in 2019, informed amendments in regulations of Health insurance and replaced them under R19 of the Health Insurance Regulations. These alterations are intended to strengthen the provisions governing wellness under the Health Insurance Regulations and the Product Filing Guidelines, into a single collection of relevant guidance. Now in 2020, the IRDAI notified the “Guidelines on Wellness and Preventive Benefits” which replace the applicable wellness norms under the Product Filing Guidelines.

New tone – New song

New strategies will definitely push all life, general and health insurers to include wellness and preventive characteristics in the policy framework. Maintaining good health is as important as having health insurance and few insurers at present tender rewards for staying fit and fine.Conventionally health insurance products supposed to focus on therapeutic features, the new parameters will assist insurers to emphasis on preventative components. Moreover, the policyholders get the chance to compare the health insurance products not only on price but also on the wellness supports they propose.

As per the instructions insurers can provide reward points to policyholders for fulfilling the set standards of wellness and preemptive aspects. These features cannot be proffered without being assimilated in the product consistent with the product filing rules. The procedure and the benchmarks expended in framing reward points and the method of endowing them should be unveiled by the insurance companies and they can also provide these features either as optional or as add-on coverage to policyholders.

Insurers have to treat all policyholders of a related or analogous category without any bias while awarding these features and the measured pricing effect of the facets should be revealed to the policyholders unequivocally.The cost of processing the wellness features will have to be factored into the pricing and costs should be divulged in the prospectus issued by the insurance companies.The fixed costs incurred to design the structure to track wellness connected parameters, service givers, merchant associations and so on should be distributed as per the consent of the IRDAI. Insurers have to lucidly describe and divulge the method in which the accretion and redemption of rewards will be allowed in case of family floater plans.

The regulator also mentioned that at the time of renewal insurers can offer markdowns on premium or enhance the sum insured depending upon the wellness scheme conformed by the policyholders although sum insured cannot be linked to the accumulative bonus proposed.Going further, the IRDAI has also specified some benefits that insures can offer and they are redeemable vouchers to obtain health complements, admissions in yoga centers, sports clubs etc. In addition, insurers may also consider covering the cost of treatment of a permissible claim by paying for non-eligible stuffs that are specified in the terms of the base policy namely oxygen cylinders, masks, OPD consultation etc.The regulator has directed insurers not to admit any accountability towards the excellence of services of service providers and it should be communicated to the policyholders. However, the IRDAI has permitted to appoint several service providers.

Even though the applicable validity period of accrued rewards is retained in the Wellness Guidelines, there is a prohibition to carry forward such accrued reward for a period beyond 3 months from expiry. The Wellness Guidelines now relax the straight-out curb on tendering products or services of any third party service providers, which are not in the insurer’s Network.New guidelines do expressly recognize the third party products and services. However, insurers are explicitly barred from broadcasting the trade names or logos of such third party merchandize in their insurance commercials and endorsing such products. In its place, insurers have the choice to mention such third party services in generic terms. Also, the relaxation has been given relating to payments made by insurers to such third party service providers for the provision of their products or services.

To comply with the new rules, insurers need to upgrade their current products instantly because new regulatory framework relating to wellness guidelines is coming into force with immediate effect. However, no particular cutoff date or protracted period for acquiescence has been stated in this regard.

Final take

Inclusion of new norms pertaining to wellness and preventive features in health cover benefit customers selecting a healthy wellness regime thereby definitely augment progress and consumer gratification. The move was very much needed and it will give stimulus to health insurance products. The guidelines which sanction insurers to reward consumers in several ways were much awaited reform. Insurers are now able to give discounts to its customers following wellness principles demarcated in the policy. This strategy will inspire people to lead a healthy lifestyle and also to choose health insurance products.

Due to dreadful coronavirus consumers are demanding for wellness related benefits. According to the survey, approximately 60 per cent people anticipate their health insurance policy to go outside hospitalization to help them to stay healthy. The crisis has brought superior mindfulness among people which led to acceptance of digital health, wellness and preventive healthcare aspects. Overall, with the amplified care being given to general advancement of personal invulnerability and cardiorespiratory fitness, the insertion of comprehensive guidance on wellness and preventive healthcare benefits may prove vital for insurers looking to meet the contemporary market ultimatums. Therefore, new rules are timely move for the insurance entities to suitably reward the customers who lead a healthy life and are in favor of fitness.

On other hand, even if few wellness benefits were offered before the enactment of new guidelines, lack of crystal clear definition of the features and low customer responsiveness did not make the utilization of privileges attractive. New rules may also prompt insurers to launch more products which may create confusion in the selection of the plans.

Since July 2020, large number of insurance companies began offering claims on Covid-linked home quarantine cure. But such claims coming to insurance companies are very less so far regardless of large number of people opting for home quarantine. It is on account of various factors namely low awareness, affordability and so on because many patients do not know that insurance companies are taking care of home quarantine treatments.Medical inflation is high at 14 per cent and costs are skyrocketing and in September 2020 retail inflation was 7.34 per cent.In India 70 crore people are yet to choose a health policy and the health insurance segment is only 0.27 per cent of GDP.

Internationally, many developed countries such as the USA, the UK, Singapore, Hong Kong and Australia tried and tested many such plans in the name of vitality programme. However, they have seen the different levels of success and yet to achieve the desired outcome.

Quality wellness schemes will need huge investment by insurers in gadgets and could necessitate a creation of a huge amount of big data, the separation and application of which will require investment too.This will influence insurers to formulate products at different price which will have different levels of wellness plans.

More importantly, the IRDAI recommendations on outpatient treatment and diagnostics came only this year, some insurers are yet to provide these amenities in their policies.To conclude, policyholders, in spite of many wellness structures design the policy, should ensure reading the policy documents judiciously to comprehend the implication of the wellness aspects on the premiums.