Life insurers given time till October 18 to withdraw existing indemnity plans; Irdai had banned these products.
Life insurance companies are filing new benefit-based health insurance plans with the regulator as they have been barred from selling indemnity plans.
The Insurance Regulatory and Development Authority of India (Irdai) has given time till October 18 for these products to be withdrawn from the market.
This means there will be an immediate dearth of such products in the market. Indemnity plans constitute 90-95 per cent of the health portfolio of life insurers and refer to those policies where customers can claim a reimbursement after visiting a doctor or incurring medical expenses.
According to regulatory officials, life insurers are in the midst of withdrawing existing plans and getting new products approved.
“We are lining up multiple products and riders with Irdai so that we have at least a few health plans on offer when the existing ones are withdrawn,” said the head of products at a mid-size life insurance company.
According to information from the Life Insurance Council, there are 12 health products in-force. Over and above, there are about 45 riders that are in-force in the life insurance segment. Of these, the majority are indemnity products, which will have to be withdrawn.
While several products are still awaiting approval, companies started launching benefit-based products.
For instance, Exide Life Insurance has launched Exide Life Sanjeevani, which is a fixed benefit health plan. This offers comprehensive coverage against all prevalent heart and cancer-related conditions.
In its health insurance regulations in July 2016, Irdai had said a life insurer could not offer indemnity-based products in individual or group segments.
Insurers will have to give a prospective date of closure for indemnity-based products not later than three months from the date of notification of the regulation. For existing policyholders, the policy shall continue until the expiry of the term.
Further, Irdai said no single premium health insurance product could be offered under the unit-linked platform.
Earlier, life insurers used to offer mediclaim policies, while non-life and stand-alone health insurers offered specialised policies.
