Draft Guidelines on Standardization of General Clauses in Health Insurance Policy Contracts

Insurance Regulatory and Development Authority

Exposure Draft On Guidelines on Standardization of General Clauses in Health Insurance Policy Contracts

IRDAI

1. OBJECTIVE:

The Objective of these guidelines is to standardize the common general clauses incorporated in indemnity based Health Insurance [excluding Personal Accident (hereinafter called as PA) and Domestic / Overseas Travel] products covering Hospitalization, Domiciliary hospitalization and Day care treatment in order to simplify the wordings of general clauses in the policy contracts and ensure uniformity and greater transparency.

These Guidelines are issued under the provisions of Section 14 (2) (e) and 14(2) (i) of the IRDA Act 1999 read with Regulation 20 and Schedule III of IRDAI (Health Insurance) Regulations, 2016.

2. APPLICABILITY:

These Guidelines are applicable to all General and Health Insurers offering indemnity based Health Insurance (excluding PA and Domestic / Overseas Travel) products (both Individual and Group) covering Hospitalization, Domiciliary Hospitalization and Day care treatment.

The provisions of these guidelines shall be applicable to the products referred above, filed on or after ……….., 2020.  All existing health insurance products that are not in compliance with these guidelines shall not be offered and promoted from …………, 2020 onwards.

3. Other Provisions:

3.1 Where these common general clauses are used, Insurers shall incorporate the same wordings as prescribed in these guidelines.

3.2  Insurer may incorporate other general clauses in the product as per their product design in order to ensure an informed choice to the prospects/insured persons.

4. Definitions: The words used herein and defined in the Insurance Act, 1938, Insurance Regulatory and Development Authority Act, 1999 and Regulations notified thereunder shall have the same meaning as assigned to them respectively.

Standard Common General Clauses:

1. Disclosure of Information

The policy shall be void and all premium paid thereon shall be forfeited to the Company in the event of misrepresentation, mis-description or non-disclosure of any material fact.

(Note: “Material facts” for the purpose of this policy shall mean all important, essential and relevant information sought by the company in the proposal form and other connected documents to enable him to take informed decision in the context of underwriting the risk)

2. Condition Precedent to Admission of Liability

The due observance and fulfillment of the terms and conditions of the policy by the insured person shall be a condition precedent to any liability of the Company to make any payment for claim(s) arising under the Policy.

3. Claim Settlement (provision for Penal Interest)

i. The Company shall settle or reject a claim, as the case may be, within 30 days from the date of receipt of last necessary document.

ii. In the case of delay in the payment of a claim, the Company shall be liable to pay interest from the date of receipt of last necessary document to the date of payment of claim at a rate 2% above the bank rate.

iii. However, where the circumstances of a claim warrant an investigation in the opinion of the Company, it shall initiate and complete such investigation at the earliest, in any case not later than 30 days from the date of receipt of last necessary document. In such cases, the Company shall settle the claim within 45 days from the date of receipt of last necessary document.

iv. In case of delay beyond stipulated 45 days, the Company shall be liable to pay interest at a rate 2% above the bank rate from the date of receipt of last necessary document to the date of payment of claim.

4. Complete Discharge

Any payment to the insured person or his/ her nominees or his/ her legal representative or to the Hospital/Nursing Home or assignee, as the case may be, for any benefit under the policy shall in all cases be a full, valid and an effectual discharge towards payment of claim by the Company to the extent of that amount for the particular claim.

5. Multiple Policies

i. In case of multiple policies taken by an insured person during a period from one or more insurers to indemnify treatment costs, the insured person shall have the right to require a settlement of his/her claim in terms of any of his/her policies. In all such cases the insurer chosen by the policy holder shall be obliged to settle the claim as long as the claim is within the limits of and according to the terms of the chosen Policy.

ii. Insured person having multiple policies shall also have the right to prefer claims under this policy for the amounts disallowed under any other policy / policies even if the sum insured is not exhausted. Then the Insurer(s) shall independently settle the claim subject to the terms and conditions of this Policy.

iii. If the amount to be claimed exceeds the sum insured under a single Policy, the Insured person shall have the right to choose insurer from whom he/she wants to claim the balance amount.

iv. Where an insured person has policies from more than one insurer to cover the same risk on indemnity basis, the insured person shall only be indemnified the hospitalization costs in accordance with the terms and conditions of the chosen Policy.

6. Fraud

If any claim made by the insured person, is in any respect fraudulent, or if any false statement, or declaration is made or used in support thereof, or if any fraudulent means or devices are used by the Insured Person or anyone acting on his/her behalf to obtain any benefit under this policy, all benefits under this policy shall be forfeited.

Any amount already paid against claims which are found fraudulent later under this Policy shall be repaid by all person(s) named in the Policy Schedule, who shall be jointly and severally liable for such repayment.

For the purpose of this clause, the expression “fraud” means any of the following acts committed by the insured person or by his agent, with intent to deceive the insurer or to induce the insurer to issue an insurance policy:

a) the suggestion, as a fact of that which is not true and which the insured person does not believe to be true;

b) the active concealment of a fact by the insured person having knowledge or belief of the fact;

c) any other act fitted to deceive; and

d) any such act or omission as the law specially declares to be fraudulent

The Company shall not repudiate the policy on the ground of Fraud, if the insured person / beneficiary can prove that the misstatement was true to the best of his knowledge and there was no deliberate intention to suppress the fact or that such mis-statement of or suppression of material fact are within the knowledge of the insurer. Onus of disproving is upon the policyholder, if alive, or beneficiaries.

7. Cancellation

i. The insured person may cancel this policy by giving 15 days written notice and in such an event, the Company shall refund premium on short term rates for the unexpired policy period as per the rates detailed below. (Insurer shall specify the percentage of refund subject to product design).

Notwithstanding anything contained herein or otherwise, no refunds of premium shall be made in respect of Cancellation where, any claim has been admitted or has been lodged or any Benefit has been availed by the Insured Person under the Policy.

Note: Insurer may incorporate policy period/period for policy in force before cancellation/ refund % as per their product design.

ii. The Company may cancel the policy at any time on grounds of mis-representation non-disclosure of material facts, fraud by the insured person by giving 15 days written notice. There would be no refund of premium on cancellation on grounds of mis-representation, non-disclosure of material facts or fraud.

8. Migration

The insured person will have the option to migrate the policy to other health insurance products/plans offered by the company policy by applying for migration of the policy 30 days before the premium due date of his/her existing policy as per extant guidelines on Migration. If such person is presently covered and has been continuously covered without any lapses under any health insurance product/plan offered by the company, the proposed insured person will get the accrued continuity benefits in waiting periods as per extant guidelines on migration.

For Detailed Guidelines on migration, kindly refer the link ………

(Note: Insurer to provide link to the extant guidelines on migration.Timelines for applying for migration may be relaxed by the insurer)

9. Portability

The insured person will have the option to port the policy to other insurers by applying to such insurer to port the entire policy along with all the members of the family, if any, at least 45 days before, but not earlier than 60 days from the premium due date of his/her existing policy as per extant guidelines related to portability. If such person is presently covered and has been continuously covered without any lapses under any health insurance policy with an Indian General/Health insurer, the proposed insured person will get the accrued continuity benefits in waiting periods as per extant guidelines on portability.

For Detailed Guidelines on portability, kindly refer the link ………

(Note: Insurer to provide link to the extant guidelines related to portability. Timelines for applying for portability may be relaxed by the insurer)

10. Renewal of Policy

The Policy shall ordinarily be renewable except on grounds of fraud, moral hazard, misrepresentation by the insured person.

i. The Company shall endeavor to give notice for renewal. However, the Company is not bound to give any notice for renewal.

ii Renewal shall not be denied on the ground that the insured had made a claim or claims in the preceding policy years.

iii. Request for renewal along with requisite premium shall be received by the Company before the end of the policy period.

iv. At the end of the policy period, the policy shall terminate and can be renewed within the Grace Period to maintain continuity of benefits without Break in Policy. Coverage is not available during the grace period.

v. If not renewed within Grace Period after due renewal date, the Policy shall terminate.

vi. No loading shall apply on renewals based on individual claims experience.

11. Withdrawal of Policy

i. In the likelihood of this product being withdrawn in future with due approval of IRDAI, the Company will intimate the Insured Person about the same 90 days prior to expiry of the Policy.

ii. Insured Person will have the option to migrate to similar health insurance product available with the Company at the time of renewal with all the accrued continuity benefits such as cumulative bonus, waiver of waiting period etc. provided the Policy has been maintained without a break as per extant regulatory framework.

12. Moratorium Period

After completion of eight continuous years under the Policy no look back to be applied. This period of eight years is called as moratorium period. The moratorium would be applicable for the sums insured of the first Policy and subsequently completion of 8 continuous years would be applicable from date of enhancement of sums insured only on the enhanced limits. After the expiry of Moratorium Period no health insurance claim shall be contestable except for proven fraud and permanent exclusions specified in the Policy contract. The policies would however be subject to all limits, sub limits, co-payments, deductibles as per the Policy contract.

13. Premium Payment in Instalments (Wherever applicable)

If the Insured Person has opted for Payment of Premium on an instalment basis i.e. Half Yearly, Quarterly or Monthly, as mentioned in the Policy Schedule/Certificate of Insurance, the following Conditions shall apply (notwithstanding any terms contrary elsewhere in the Policy)

i. Grace Period of ___ (Insurer to fill as per product design) Days would be given to Pay the instalment premium due for the Policy.

ii. During such grace period, coverage will not be available from the instalment premium payment due date till the date of receipt of premium by Company.

iii. The Benefits provided under – “Waiting Periods”, “Specific Waiting Periods” Sections shall continue in the event of payment of premium within the stipulated grace Period.

iv. No interest will be charged If the instalment premium is not paid on due date.

v. In case of instalment premium due not received within the grace period, the policy will get cancelled and a fresh policy would be issued with fresh waiting periods after obtaining consent from the customer.

14. Possibility of Revision of Terms of the Policy Including the Premium Rates

The Company, with prior approval of IRDAI, may revise or modify the terms of the Policy including the premium rates. The Insured Person shall be notified three months before the changes are effected.

15. Free look period

The Free Look Period shall be applicable at the inception of the Policy and not on renewals or at the time of porting the Policy.

The insured person shall be allowed a period of fifteen days from date of receipt of the Policy document to review the terms and conditions of the Policy, and to return the same if not acceptable.

If the insured has not made any claim during the Free Look Period, the insured shall be entitled to

i. a refund of the premium paid less any expenses incurred by the Company on medical examination of the Insured Person and the stamp duty charges or

ii. where the risk has already commenced and the option of return of the Policy is exercised by the insured, a deduction towards the proportionate risk premium for period of cover or

iii. Where only a part of the insurance coverage has commenced, such proportionate premium commensurate with the insurance coverage during such period;

Note: Insurer may increase the free look period as per their product design.

16. Redressal of Grievance

In case of any grievance the Insured Person may contact the company through

Website:

Toll free:

E-mail:

Fax :

Courier :

Insured person may also approach the grievance cell at any of the company’s branches with the details of grievance

If Insured person is not satisfied with the redressal of  grievance through one of the above methods, insured person may contact the grievance officer at …………. (Address to be provided)

For details of grievance officer, kindly refer the link……….

(Link having details of grievance officer on website to be provided)

If Insured person  is not satisfied with the  redressal of  grievance through above methods, the Insured Person may also approach the office of Insurance Ombudsman of the respective area/region for redressal of grievance.

(Note: Insurer to specify the latest contact details of offices of Insurance Ombudsman)

Grievance may also be lodged at IRDAI Integrated Grievance Management System – https://igms.irda.gov.in/

17. Nomination:

The Policyholder is required at the inception of the Policy to make a nomination for the purpose of payment of claims under the Policy in the event of death of the Policyholder. Any change of nomination shall be communicated to the company in writing and such change shall be effective only when an endorsement on the Policy is made. For Claim settlement under reimbursement, the Company will pay the Policyholder. In the event of death of the Policyholder, the Company will pay the nominee {as named in the Policy Schedule/Policy Certificate/Endorsement (if any)} and in case there is no subsisting nominee, to the legal heirs or legal representatives of the Policyholder whose discharge shall be treated as full and final discharge of its liability under the Policy.

FORMAT FOR SUGGESTIONS ON

Exposure Draft on

Guidelines on Standardization of General Clauses in Health Insurance Policy Contracts