Arogya Sanjeevani Policy – Standard Individual Health Insurance Product


The insurance regulator i.e IRDAI has provided a New Year gift to the general public by paving the way for introduction of Standard Individual Health Insurance Product which will be known as Arogya Sanjeevani Policy. This product will be issued by all the non-life insurers as well as the Stand Alone Health Insurers (SAHI) from 1st April 2020 onwards.

 

There are many health insurance products with varying coverages offered by the insurance company. Often it creates confusion in the public as the terms and conditions vary amongst products. As health insurance is one of the basic needs of the public, it was necessary to have a standard product which should have common coverage across the industry. With this point of view, Insurance Regulatory and Development Authority of India (IRDAI) released Guidelines on Standard Individual Health Insurance Product on 1st January, 2020 which providing the details of the coverages and exclusions of the afore mentioned product. All the non-life and SAHI are mandatorily required to offer this product with same coverages and exclusions. IRDAI in the guidelines mentioned the below objectives in relation to the introduction of this standard product:

  • Insurance policy to take care of basic health needs of insuring public.
  • To have a standard product with common policy wordings across the industry.
  • To facilitate seamless portability among insurers.

This means every insurance company (general and health) will offer this product with same policy wordings as stipulated in this guideline without any modifications in coverages and exclusions. The insurance companies are free to price the product. However, Insurer can determine the price but the premium for this product shall be PAN India basis and no geographical location/ zone-based pricing is allowed. Let’s understand this with an example. Suppose, a person living in Mumbai buys this product from XYX Insurance company with Sum Insured of INR 5,00,000 and pays some premium say, INR 15,000. Other person residing in town, say Agra buys the product form the same company i.e XYZ Insurance with Sum Insured of INR 5,00,000 and he will also pay INR 15,000. The premium will be same for the same Sum Insured (INR 5,00,000 in the example) from the same insurance company (XYZ Insurance in the example) irrespective of the geographical area.

Unique Features of the Product

  • Obesity treatment covered.
  • All Day Care Treatment/Procedures are covered. Day Care Treatment means treatment or surgery where hospitalization required is less than 24 hours. Generally, there are list of day care procedures in health insurance policy which varies from company to company. Some company provides 140 day care treatments, some provide 200, 400, 500 or more. This product covers all day care treatment.
  • Dental Treatment, Plastic surgery necessitated due to disease or injury are covered. Generally, dental treatment and plastic surgery are covered only if necessitated due to accident/injury, but this product provide coverage due to disease as well.
  • Some of the procedures like Stem cell therapy, Robotics surgeries which are generally excluded from the health insurance products are covered in this product. The coverage for such procedures is restricted to 50% of the Sum Insured. The list of such procedures are mentioned in the Benefict Schedule of this article.

Features of the Product

  • The nomenclature of the Product shall be Arogya Sanjeevani Policy, succeeded by name of the insurance company, (Arogya Sanjeevani Policy, <name of the insurer>. No other name is allowed.
  • No Add-ons or optional covers are allowed to be offered along with the standard product. It shall not be combined with Critical Illness covers or Benefit Based Covers.
  • The product shall be offered on indemnity basis only.
  • Every General and Stand Alone Health Insurer are mandatorily required to offer this standard individual health insurance product.
  • The Policy tenure of the standard product shall be for a period of one year with lifelong renewability.
  • Minimum Sum Insured shall be INR 1 Lakh and Maximum Sum Insured shall be INR 5 Lakhs (in the multiples of 50,000).
  • Pricing: Insurer can determine the price but the premium for this product shall be PAN India basis and no geographical location/ zone based pricing is allowed.
  • The product can be offered on Individual or Family Floater basis.
  • Premium payment can be made on Yearly, Half-yealy, quarterly or monthly basis. ECS(Auto Debit facility) is also allowed.
  • 30 days Grace Period for Yearly premium payment and 15 days Grace Period for other mode of premium payment.
  • Minimum and Maximum entry age is 18 years and 65 years respectively for adults. Dependent children can be covered from the age of 3 months to 25 years.
  • Co-payment: Fixed Co-payment of 5% shall be applicable across all ages for all claims.
  • No Deductibles are permitted in this product.
  • Sub-Limit on Cataract: Cataract expenses shall be covered up to 25% of Sum Insured or INR 40,000 whichever is lower.
  • Dental Treatment, Plastic surgery necessitated due to disease or injury are covered.
  • Cumulative Bonus: 5% of SI for each Claim Free Year max up to 50%.
  • Moratorium Period: After completion of 8 continuous years under the policy, no look back would be applied. This period of eight years is called moratorium period. After the expiry of Moratorium Period, no claim under the policy shall be contestable except for proven fraud and permanent exclusions specified in the policy.
  • The standard product may be offered as Micro Insurance Product subject to the provisions of IRDAI (Micro Insurance) Regulations 2015.

The detail coverage’s are provided in the below benefit schedule.

Benefits Description
Hospitalization Expenses Expenses of Hospitalization for a minimum period of 24 consecutive hours. 24 hours time limit is not applicable if treatment is undergone in a Day Care Centre.

Other Expenses:

·         Dental Treatment, necessitated due to disease or injury

·         Plastic Surgery, necessitated due to disease or injury

·         All Day Care treatments

Sub Limit for room/doctors fee ·         Room, Boarding, Nursing expenses covered up to 2% of Sum Insured subject to maximum of INR 5000 pet day.

·        ICU/ICCU expenses up to 5% of Sum Insured subject to maximum of INR 10,000 per day.

Pre-Hospitalization For 30 Days prior to the date of hospitalization
Post-Hospitalization For 60 Days from the date of discharge from the hospital.
Coverage for Specific Procedures Following procedures will be covered either as in patient or day care treatment in a hospital up to 50% of Sum Insured:

·         Uterine Artery Embolization and HIFU (High Intensity focused ultrasound

·         Balloon Sinuplasty

·         Deep Brain Stimulation

·         Oral Chemotherapy

·         Immunotherapy – Monoclonal Antibody to be given as injection

·         Intra vitreal injections

·         Robotic Surgeries

·         Stereotactic radio surgeries

·         Bronchical Thermoplasty

·         Vaporisation of the prostate (Green Laser treatment or holmium laser treatment)

·         IONM – Intra Operative Neuro Monitoring

·         Stem Cell Therapy: Hematopoietic stem cells for bone marrow transplant for haematological conditions to be covered.

Road Ambulance Road Ambulance expenses up to INR 2000 per hospitalization
AYUSH Treatment Expenses incurred for inpatient Care treatment under Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy systems of medicines shall be covered up to sum insured, during each policy year as specified in the policy schedule.
Cataract Treatment Covered up to 25% of Sum Insured or INR 40,000 whichever is lower, per eye, under one policy year
Pre Existing Diseases (PED) PEDs declared in the Proposal Form shall be covered after Waiting Period of 4 years.
Obesity Cover Treatment of obesity are covered if all the below conditions are met:

1.       Surgery to be conducted is upon the advice of the doctor

2.       The surgery/procedure conducted should be supported by clinical protocols

3.       The members has to be 18 years of age or older and

4.       Body Mass Index (BMI);

a)       Greater than or equal to 40 or

b)      Greater than equal to 35 in conjunction with any of the following severe co-morbidities following failure of less invasive methods of weight loss;

i)                    Obesity related cardiomyopathy

ii)                   Coronary heart disease

iii)                 Severe Sleep Apnea

iv)                 Uncontrolled Type 2 Diabetes

Cumulative Bonus 5% of Basic Sum Insured for each Claim Free Year subject to a maximum of 50% of Sum Insured. In the event of Claim, the Cumulative Bonus shall be reduced at the same rate.
Co-Payment 5% Co-Payment on all claims.

Waiting Period

Waiting Period means that the listed risks will be covered after some duration from the commencement of the policy. The waiting period for the proposed Standard Individual Health Insurance Product are mentioned below:

  • Treatment of any illness within 30 days from the first policy commencement except claims arising due to accident.
  • 24 Months Waiting Period: Following specified disease are covered after 24 months waiting period.
    1.       Benign ENT Disorder 11. Gout and Rheumatism
    2.       Tonsillectomy 12. Hernia of all types
    3.       Adenoidectomy 13. Hydrocele
    4.       Mastoidectomy 14. Non Infective Arthritis
    5.       Tympanoplasty 15. Piles, Fissures and Fistula in anus
    6.       Hysterectomy 16. Pilonidal sinus, Sinusitis and related disorders
    7.       All internal and external benign tumours, cysts, polyps of any kind, including benign breast lumps 17. Prolapse inter Vertebral Disc and Spinal diseases unless arising from accident
    8.       Benign Prostate hypertrophy 18. Calculi in urinary system, Gall Bladder and Bile Duct, excluding malignancy
    9.       Cataract and age related eye ailments 19. Varicose Veins and Varicose Ulcers
    10.    Gastric/Duodenal Ulcer 20. Internal Congenita; Anomalies
  • 48 Months Waiting Period: Treatment for Joint replacement unless arising from accident and Age related osteoarthritis & Osteoporosis are covered after 48 Months waiting period.

Exclusions

Some of the exclusions of the Policy are as follows:

  • Treatment taken outside India.
  • Treatment for correction of eye sight due to refractive error less than 7.5 dioptres.
  • Sterlity and infertility
  • Maternity expenses
  • Expenses incurred on Domiciliary Hospitalization and OPD treatment.

Impact

This product is launched to increase the insurance penetration and insurance density of India and to make health insurance affordable to general public. As the policy wordings are standard and it won’t change form company to company, chance of confusion among the general public is minimal. It will also have competition among insurers in terms of pricing of the product i.e premium charged. Insurance company will have to provide best pricing for the listed coverages. The performance of this product can be assessed only after its launch but it is expected to have positive result in the insurance industry.

I hope this article will be useful for the readers and I have also attached the Guidelines on Standard Individual Health Insurance Product for your reference. 🙂

Guidelines on Standard Individual Health Insurance Product 2020

– Ashish Kumar

Introducing Regulatory Sandbox in Insurance


Insurance sector in India has witnessed many changes and reforms since 2000. Be it, opening the market for private players in 2000, Foreign Direct Investment (FDI) upto 26% in 2000, detariffing in 2007, allowing foreign reinsurers to open their branch offices in 2015, FDI upto 49% in 2015 etc.  These measures did had positive impact in the industry as a whole and one of the coming reform measures which Insurance Regulatory and Development Authority of India (IRDAI) has proposed is of Regulatory Sandbox in Insurance. This post will be discussing about the proposed Regulatory Sandbox.

IRDAI will be coming up with a separate regulation for the regulatory sandbox in insurance and draft of this regulation has been already published and once published in the Gazette of India after necessary changes if required will come into force and will be known as IRDAI (Regulatory Sandbox) Regulations, 2019.  There are two important terms which requires attention to understand what this proposed regulation is all about and what will be its impact in the insurance sector. These two terms are:

  • Regulatory Sanbox: This means an environment used in the financial service sector, which provides testing ground for new business models and applications that may not necessarily be covered fully by or fully compliant with existing regulations. Let’s understand this in simple terms. Insurance is a highly regulated sector and there is much regulatory compliance which needs to be followed in this market. Regulations are there in every step in insurance. What regulatory sandbox says is that it will be providing and environment for testing of new business models which will not require being fully compliant with the existing regulations. Having said that, this means insurance company can come up with new products and business models with relaxation in terms of being fully compliant with the existing regulations.
  • Sanbox Environment: This means a testing environment designed for experimentation for a specific period of time. Regulatory Sandbox provides testing grounds for new business with relaxation from being fully compliant and Sandbox environment gives the testing environment to experiment for specified period of time. Let’s understand this with a simple example. Suppose an insurance company had developed a new product covering those risks which are normally excluded. Product development requires many regulatory clearances but since the company has developed this product with the provisions of Regulatory Sandbox, all the regulations need not to be complied. As the insurance company had developed a new product, they require seeing how the product will perform and for that they need to experiment with the newly developed product which can be accomplished by Sandbox Environment which provides the ground for doing experiment. Regulatory Sandbox gave the opportunity to develop new product with relaxation in being fully complied with the regulations and Sanbox Environment gave the testing platform for the newly developed product.

As it can be inferred from the above discussion, the whole idea of Regulatory Sandbox is to allow insurance industry to come up with the new ideas, innovation, business models etc. with relaxation with existing regulations while keeping the interest of policyholder’s intact. An applicant may apply to the Authority seeking permission for promoting or implementing innovation in insurance in India in any one or more of the following categories:

  1. Insurance Solicitation or Distribution
  2. Insurance Products
  3. Underwriting
  4. Policy and Claims Servicing
  5. Any other category recognised by the Authority.

The application shall be accompanied by a non-refundable processing fee of rupees ten thousand plus applicable taxes. IRDAI will verify the application and once satisfied with the application can grant permission for the period of 6 months. However, extension can be granted if required but not more than for 6 months. This means, the applicant has to complete the task in six months and if granted extension, maximum one year. IRDAI will review the progress at periodical intervals.

On completion of the allocated time period or size of the proposal specified, the Applicant shall submit a report to the Authority within 15 days on how the proposal met the objectives along-with feedback from the policyholders. The applicant shall also submit a plan of action as to how to enable the proposal to be brought under regular regulatory supervision. On examining the report submitted by the applicant, IRDAI may grant permission to the applicant to adopt the proposal under regular regulatory supervision wherein in addition to provisions of Insurance Act, 1938, IRDA Act, 1999 all regulations, guidelines, circulars, etc will be applicable from the date of moving to regular regulatory supervision.

In brief, the introduction of Regulatory Sanbox allows the insurance industry to come up with new innovations in insurance with relaxation of from existing regulations for maximum period of one year. Once the performance of the proposal is up to the mark or meets the objectives as expected it can be converted into the normal regulatory supervision. Since there are provisions for regulatory relaxation and hence, regulatory sandbox can be considered as a good move for the innovation in insurance industry. Not only this, it will also allow to do experiment in untested areas of insurance which will also promote research and innovation in insurance sector in India.

What are your thoughts on this introduction of Regulatory Sandbox in insurance? Do share your views.

– Ashish Kumar

Insurance Terminologies – III


In this 3rd installment of Insurance Terminologies series, let’s look at couple of the jargons which comes across during health insurance purchase or claims.

  • Cumulative Bonus: Cumulative Bonus, as the name suggests, is an increase in the sum insured for the claim free year. This terminology is used in health insurance. This means if the customer has not made any claim for an year, there will be a percentage increase in sum insured which is generally 5% to 10% and can also range from 10% to 50% which varies from insurer to insurer. The maximum bonus given is 50%. One important thing to be noted is that the cumulative bonus is provided on the basic sum insured. For example, if the basic sum insured is INR 100000 and there is no claim made by the customer, the sum insured will be increased by 10% at the time of renewal and hence the new sum insured becomes INR 110000 for the next year. If no claim is reported again in the subsequent year, the cumulative bonus of 10% (10% of 100000=10000) will be provided and the total sum insured will become INR 120000 ( 110000+10000= 120000). As you can see cumulative bonus is calculated on basic sum insured which is INR 100000 in the given example and it is accumulated for every claim free year. The cumulative bonus is added to the sum insured of preceding year which becomes the new sum insured for subsequent year (110000+10000= 120000).
  • Waiting period: Waiting period is the duration for which the coverage is not provided. Health insurance policies have waiting period of 30-60 days. This means any claim made during this period is not payable even though if the loss occurred due to the risks covered in the policy. Any claim made post waiting period is payable provided the loss would have occurred due to the perils covered in the policy. One important point to be noted is that for pre-existing disease, waiting period is 48 months (4 years). Pre-existing diseases are covered after 4 years from the inception of the policy.

Ashish Kumar