TAG: GS 3: ECONOMY
THE CONTEXT: The Insurance Regulatory and Development Authority of India (IRDAI) has made a significant policy shift by abolishing the age cap on purchasing health insurance policies, effective April 1, 2024.
EXPLANATION:
- Previously, individuals were restricted to acquiring new insurance policies only until the age of 65.
- However, this change allows people of any age to purchase new health insurance policies.
- IRDAI’s decision aims to foster a more inclusive healthcare ecosystem in India. By eliminating age restrictions, the regulatory body intends to provide equal access to health insurance across all age groups.
- This move aligns with efforts to enhance healthcare accessibility and affordability for individuals, irrespective of their age.
Product Diversification Mandate
- In addition to lifting the age cap, IRDAI has mandated insurance providers to diversify their product offerings to cater to various demographics.
- Insurers are required to design health insurance products tailored to specific groups, including senior citizens, students, children, maternity, and others as specified by the Competent Authority.
- This directive encourages insurers to develop specialized policies that address the unique healthcare needs of different segments of the population.
Focused Policies for Senior Citizens
- Recognizing the distinct requirements of senior citizens, IRDAI has directed insurers to introduce dedicated policies for this demographic.
- These specialized policies should be accompanied by established channels for handling senior citizens’ claims and grievances.
- This ensures that elderly policyholders receive personalized support and assistance throughout their insurance journey.
Impact on Insurers and Policyholders
- Industry experts view IRDAI’s decision as a positive development, as it expands healthcare coverage opportunities for individuals above the age of 65.
- Insurers can now cover senior citizens based on their Board-approved Underwriting guidelines, subject to affordability for policyholders and viability for insurers.
- Moreover, insurers are prohibited from refusing policies to individuals with severe medical conditions, such as cancer or heart failure, promoting inclusivity in insurance coverage.
Reduction in Waiting Period and Coverage of Pre-existing Conditions
- IRDAI has reduced the health insurance waiting period from 48 months to 36 months, allowing coverage for pre-existing conditions after this timeframe.
- Insurers are obligated to cover all pre-existing conditions after 36 months, regardless of whether policyholders disclosed them initially.
- This regulation prevents insurers from rejecting claims based on pre-existing conditions after the specified waiting period, enhancing policyholders’ financial protection.
Transition to Benefit-based Policies
- In a notable shift, IRDAI has prohibited insurers from introducing indemnity-based health policies and mandated the provision of benefit-based policies.
- Benefit-based policies offer fixed costs upon the occurrence of a covered disease, streamlining the claims process and ensuring clarity for policyholders.
Insurance Regulatory and Development Authority of India (IRDAI):
- It is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) for overall supervision and development of the Insurance sector in India.
- The powers and functions of the Authority are laid down in the IRDAI Act, 1999 and Insurance Act, 1938.
- Its head office is located in Hyderabad and Regional offices at New Delhi and Mumbai. The Regional Office, New Delhi focuses on spreading consumer awareness and handling of Insurance grievances besides providing required support for inspection of Insurance companies and other regulated entities located in the Northern Region.
- This office is functionally responsible for licensing of Surveyors and Loss Assessors. Regional Office at Mumbai handles similar activities, as in Regional Office Delhi, pertaining to Western Region.
- The key objectives of the IRDAI include promotion of competition so as to enhance customer satisfaction through increased consumer choice and fair premiums, while ensuring the financial security of the Insurance market.
- The Insurance Act, 1938 is the principal Act governing the Insurance sector in India.
- It provides the powers to IRDAI to frame regulations which lay down the regulatory framework for supervision of the entities operating in the sector.
- Further, there are certain other Acts which govern specific lines of Insurance business and functions such as Marine Insurance Act, 1963 and Public Liability Insurance Act, 1991.
Composition of IRDAI:
- As per Sec. 4 of IRDAI Act, 1999, the composition of the Authority is:
- a) Chairman;
- b) Five whole-time members;
- c) Four part-time members,
- (appointed by the Government of India)