Given the lockdown in many states, the insurance regulator has requested that both life and general insurance companies give policyholders a grace period of 30 days.
For life insurance, Irdai asked insurers to give 30 days' time for premium renewal. And in the case of health insurance, the regulator asked insurers to condone a 30-delay in premium payment without deeming it a break in policy. "Insurers are requested to contact the policyholders well in advance so as not to have a discontinuance in coverage," said Irdai in a circular on Monday.
While for life insurance policyholders this might come as a relief, those with mediclaim policies must still try and get their premium paid before the policy lapses, if they want continued coverage. As the relaxation Irdai is giving will ensure continuity of benefits of the old health policy, but not covered during the break period because of Section 64VB of the Insurance Act. "And even though the brokers association has requested that the Act be amended, that will take time," said an IRDAI official.
Irdai permitting insurers to renew health insurance policies with a 30-day break without losing benefits - is significant -- as earlier even a day's break would result in the insured losing the benefit of no claims track record and risk claims being rejected for being a pre-existing ailment.
Sources also said Irdai has requested the Centre to declare "insurance" as an essential service for all states in India. So far, Maharashtra is the only state that has declared insurance as an essential service.
The regulator also noted the "lock-down in many states would lead to disruption in service from insurance companies. Insurers have been asked to maintain continuity of business operations through possible alternate modes including telephonic and digital contact."
Insurers said the policyholders who would suffer the most are senior citizens -- who are at high risk of contracting Coronavirus and may not be digitally savvy. "It's not just senior citizens, even youngsters prefer to pay via agents or through our corporate offices. To date, we get 75% of our premium payment through physical means," said Dr. Prakash, CEO, Star Health Insurance Co.
"We are aware that senior citizens could be at higher risk of contracting - so we are making alternate arrangements for premium collection," he added.
Apart from individual health policies- even group health policy renewals could face delays, say industry sources. Insurance Brokers Association of India (IBAI) president Sanjay Khedia says, "There will be an administrative delay in enrolling the names of all the employees of corporate groups. Most of the work for group mediclaim involves heavy manual intervention even in the digital age. So it's possible we could see some delays on that front too."
News Source: Times Of India, Url: https://bit.ly/3bCsARf