The Hindu Business Line
Health cover policyholders may soon be able to receive claim amount in instalments
You may soon be able to opt for receiving personal accident and benefit-based health cover policy claims in instalments.
In a first-of-its-kind proposal, a working group constituted by the Insurance Regulatory and Development Authority of India (IRDAI), has suggested that a policyholder may be provided the option to receive the amount in lump sum or in equated instalments.
Not a default mode
However, this will not be a default mode, but should be implemented only if a customer opts for it. “A policyholder shall have the flexibility to choose the option of settlement option of the claims at all stages of the policy contract – at the time of buying the policy, during renewal, and during the policy terms or at the time of claims,” the committee said in its recommendations. The periodicity of instalments could be monthly, quarterly, bi-annual, and annual. The claim payment period could be up to a maximum of five years, and instalments should be spread over the payment period.
On the pricing front, the
According to IRDAI, this will not be a default mode, but should be implemented only if a customer opts for it
panel suggested that the premium should be the same for both options of lump sum settlement of claim as well as instalments. Linkage of interest rate for payment of claims in instalments will not be permitted. “Pricing aspects should be incorporated by the appointed actuary at the final stage while deciding the terms and conditions to be offered to the policyholdInsurers will have to put in robust processes to ensure a seamless experience for customers
ers,” the report said. The regulator is likely to come up with the final guidelines on the matter over the next one
month, according to sources. The objective of such a facility is to offer income to policyholders for a reasonable
of time. The option may also enable policyholders of benefit-based health insurance policies get a stream of income over a predetermined period of time after triggering of the claim, according to Suresh Mathur, Executive Director, Health, IRDAI.
There are diverse views on the efficacy of the facility. While the idea looks good on the face of it, it may not click well with customers.
“In personal accidents and some categories of health cover, the objective of policyholders is generally not income generation.
“They may like to get claim immediately in this segment, and don’t expect great numbers opting for it,” said a top executive with a private genperiod eral insurance company.
According to Shanai Ghosh, Head-Marketing and Commercial Business, Strategy, Edelweiss General Insurance, the settlement option proposed in the draft guideline introduces flexibility in the product structure for the customer, which is good.
‘Needs robust processes’
“It needs to be implemented in a simple and transparent manner for the impact to be realised. Insurers will have to put in robust processes and systems to ensure a seamless experience for the customers,” he added.