India: Health Insurance Regulations & Guidelines: The

Recent Overhaul
Last Updated: 6 September 2016
Article by Celia Jenkins, Damini Ghosh and Priya Misra
Tuli & Co

Health insurance business in India has, traditionally, been regulated by the framework
governing general insurance business as issued by the Insurance Regulatory and
Development Authority of India (IRDAI) from time to time. However, due to a series of
developments, a need was felt for creating a specific framework for the development
and operation of health insurance products. In 2013, the IRDAI issued the IRDA (Health
Insurance) Regulations 2013 (Health Regulations 2013) along with the Guidelines on
Standardization in Health Insurance of 20th February 2013 (Standardization Guidelines
2013) which set out the procedures and requirements for filing health insurance
products and certain follow through operational requirements.

Recently, following a number of representations made by various stakeholders

(including Insurers) on a multitude of issues as well as to update the existing framework,
the IRDAI, by way of a notification of 18th July 2016, issued the IRDAI (Health
Insurance) Regulations 2016 (Health Regulations 2016) replacing the Health
Regulations 2013. The IRDAI also replaced the Standardization Guidelines 2013 with
the Guidelines on Standardization in Health Insurance of 29th July 2016
(Standardization Guidelines 2016) and the Guidelines on Product Filing in Health
Insurance Business of 29th July 2016 (Product Filing Guidelines).

Some of the key features of the Health Regulations 2016 include the following:

 Pilot Products: The Health Regulations 2016 have introduced the concept of
"Pilot Products" aimed at encouraging innovation in the design of products for
covering risks that have not been offered before. Pilot Products may be offered
by General Insurers and Health Insurers for a policy tenure of one year, but not
exceeding five years. Further, the sales and publicity material of such products
are required to provide certain specific disclosures as set out under the Health
Regulations 2016.
 Wellness and Preventive Aspects of Health Insurance Policies: The Health
Regulations 2016 have introduced norms aimed at encouraging the inclusion of
"Wellness and Preventive" aspects as part of the product design. Insurers may
now promote wellness amongst health insurance policyholders by offering them
health specific services which are to be provided only by their network providers,
such as, outpatient consultations or treatment, pharmaceuticals, and health
check-ups. Moreover, Insurers are prohibited from offering discounts on products
of third parties either as part of the policy or otherwise.
  Restrictions on Life Insurers offering Health Insurance Policies: Life
Insurers are prohibited from offering indemnity based health insurance products
either as an individual or a group policies. Consequently, all such existing
indemnity based products offered by Life Insurers are now required to be
withdrawn in accordance with the prescribed procedure.
 Group Health Insurance Policies: Per the Health Regulations 2016, Insurers
can offer group health insurance products for a term of one year except credit
linked products where the term can be extended up to the loan period which shall
not be more than five years. Moreover, these regulations mandate that the
minimum size of the group shall be 7.

Key features of the Standardization Guidelines 2016

The Standardization Guidelines 2016 set out the revised set of standard definitions of
terminology and standard nomenclature and procedure for critical illnesses which are
required to be used in health insurance policies. These guidelines also prescribe the
standards and benchmarks required to be met by network providers or hospitals. In
addition, the Standardization Guidelines 2016 also set out the various health insurance
returns required to be submitted by Insurers in a periodic manner.

The thing is that believe what your heart says, not what others say.