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.

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