Health insurance is critical for your physical as well as financial well-being. However, the lack of clarity in insurance-policy documents often causes pain and mental stress to consumers.
With standardisation norms set to come into effect from July 1, the health insurance industry will be taking a significant step towards making life simpler for those seeking to purchase coverage.
In the new regime, terms and definitions in policies and procedures will be standardised across the industry. While this will apply to group health policies from the first day of July, it will become mandatory for individual health insurance products from October 1.
Among other things, the new norms prescribed by the Insurance Regulatory and Development Authority have defined 46 commonly used health insurance terms, 11 critical illness procedures, set a list of permanent exclusions for indemnity plans, streamlined the claims processes and mandated a standard agreement between third-party administrators (TPAs), insurers and hospitals.
The regulator has also stipulated that every insurance company must provide customers with a set of claim forms along with the policy terms and conditions. A customer information sheet has also been prescribed to enable customers to better comprehend the information given to them.
Money Today March 2011 issue
The biggest beneficiary of the new standards will be the consumer who will no longer have to flail helplessly, trying to decipher the myriad offerings from different providers, each with its own interpretation of the terms and procedures in its policy documents.
There will be greater transparency right from the time a policy is purchased until the settlement of a claim. This assumes greater importance in an era where portability of health insurance policies has already been permitted, making it easier to move from one insurer to another.
On the industry's front, standardisation will eventually lead to fewer disputes with consumers because differences over the interpretation of terms have led to most conflicts at the time of settlement. While there might be some initial hiccups during the transition, standardisation will also benefit other stakeholders in the sector, including insurance providers, hospitals and TPAs, which act as intermediaries between the insurer, the hospital and the insured.
The best thing is that nothing in the new norms prevents insurers from competing among themselves and giving more to the insured, whether in terms of pricing or policy features. In our cover story, we explain the various changes that are coming about and what they mean to you as a consumer.
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SARBAJEET K SEN