Health insurance customers, who are facing the onslaught of coronavirus pandemic, will now be able to pay the premium on a monthly or quarterly basis with immediate effect instead of the current practice of lump sum payment for the full year in one installment.
The directive of the Insurance and Regulatory Development Authority of India (Irdai) on the monthly payment option is expected to ease the pressure on customers at a time when the country is facing salary cuts and job losses, insurers said. “In view of prevailing conditions owing to COVID-19 outbreak and considering the need for easing the payment of health insurance premiums, all the insurers are allowed to collect health insurance premiums in installments,” Irdai said.
The premium mode proposed to be added may be monthly, quarterly or half yearly and the resulting premium amounts under each frequency are consistent with premium amounts under other premium modes of the underlying product, it said in a circular.
The Rs 50,000 crore health insurance segment is the fastest growing segment in the insurance sector. As of February 2020, insurance companies had collected Rs 46,777 crore as premium from customers in 11 months, according to data collected by the General Insurance Council.
However, according to Irdai, there should be no change in basic premium table and charging structure under the approved individual product to which new premium payment mode is being added. This will be applicable for health insurance policies that are due for renewal up to March, 2021, insurers said.
Amit Chhabra, Health business head, Policybazaar.com, said, “Remember, earlier in 2019, insurance companies were asked to refile products by October 1, 2020 and thereby have the option of monthly payment active. Now post this guideline, the option of monthly payment mode will be followed with immediate effect. Not only will this help consumers in the current scenario of COVID-19 but also increase health insurance penetration in India from a long-term perspective.”
The facility of payment of premiums in installments should be offered in respect of any product or products and the same should be offered to all policyholders without any discrimination and policyholders shall be also notified of the applicable conditions, Irdai said. “Customers can buy covers with adequate sum insured and leverage the monthly payment mode in this case. However, we should keep in mind that the tenure of installment, be it 1 year or forever, will depend on the insurance company and the monthly mode payment would also be subject to the IT preparedness at the insurer’s end,” Chhabra said.
The premium installment facility may be offered either as a permanent feature by duly complying with the norms specified in the guidelines or may be offered as a temporary relief for a period of twelve months (one policy year) in respect of all the health insurance policies that are due for renewal up to March 2021, Irdai said.
Earlier this week, Irdai had said health insurers will have to convey their decision on requests raised for cashless treatment as well as on the final discharge or the amount that will be paid to the hospital within two hours.
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