IRDAI issues orders to insurers to not modify benefits in existing health care plans to increase premium

The Insurance Regulatory and Development Authority of India (Irdai) has directed health insurance providers not to make any changes to existing health policies that may lead to a rise in premium for policyholders. The directions are also applicable for personal accident and travel insurance cover.

Health insurers will not be able to make changes to existing benefits or add any new ones to pre-existing plans that may cause premiums to increase for the policyholder, IRDAI said.

“General and health insurers are not allowed to modify the existing benefits, add new benefits in the existing products which leads to imposing an increase in premium. However, it is clarified insurers are permitted to effect minor modifications as stipulated in the consolidated guideline on product filing in the health insurance business. Addition of new benefits/up-gradation of existing benefits may be offered as add-on covers or optional covers with a standalone premium rate to ensure an informed choice to the policyholders,” noted the IRDAI circular.

This means, the insurers now will not be allowed to make minor changes or modifications to the existing health policies. The modifications in offered products and services will only be made available to the customers as an add-on and will be optional for the customers to buy.

Further, the regulator has asked appointed actuaries to review the financial viability of every health insurance product at the end of a financial year. IRDAI has also directed the insurers to ensure that policy wordings are simple so that policyholders can understand them easily.

The new rules will safeguard policyholders from unwanted surprises at the time of renewal of policy and will lead to more transparency.