The widened Insurance Net

IRDAI has lifted the age ceiling of 65 years for buying a medical insurance policy, a move that widens the insurance net and provides huge relief to senior Indians.

Key-highlights of the changed policies

• Elimination of age factor: The elimination of age limit by IRDAI aims to broaden the market and offer comprehensive coverage.
• Coverage of all age groups: IRDAI, has asked insurance companies to offer their usual health policies to everyone, including senior citizens, students, and children.
• Enhanced access for high-risk health conditions: The insurers are now also prohibited from refusing to issue policies to individuals with severe medical conditions like cancer, heart or renal failure, and AIDS.
• Fixed compensation: The insurance companies are barred from introducing indemnity-based health policies, which compensate for hospital expenses. Instead, they are only permitted to provide benefit-based policies, offering fixed costs upon the occurrence of a covered disease.
• This change, effective from April 1, makes health insurance more inclusive and accessible to individuals of all ages.
• IRDAI has committed to enable ‘Insurance for All’ by 2047.

1: Dimension-Significance of the move

• Inclusive healthcare ecosystem: The move aims to foster a more inclusive and accessible healthcare ecosystem, ensuring adequate protection against unforeseen medical expenses.
• Diversified offering: While creating a more inclusive healthcare ecosystem, it will encourage insurance provider companies to diversify their product offerings.
• Humane approach: The decision to prohibit from refusing to issue policies to individuals with severe medical conditions will lead to develop more humane and caring healthcare in India.

2: Dimension-Challenges in the sector

• There persists number of challenges such as low awareness, limited understanding, complex process, low affordability, lack of trust, delay in claim settlements.
• Economic Survey, 2022–23, highlights that ‘most life insurance products sold in India are savings-linked with a small protection component. Hence, Indian households remain exposed to a significant risk in the event of the premature death of the primary breadwinner.
• Mis-selling of products without analysing the customer’s needs and poor claim settlement experience, which are the leading categories of grievances reported by policyholders, are also the main challenges of the insurance industry.

3: Dimension- Required Measures

• Innovative products: Insurers need to innovate product offerings and help the IRDAI achieve its vision ‘Insurance for all’ by 2047.
• Technology: There is need to embrace a digital-first approach to sell insurance through omni-channel, multilingual platforms to achieve sustainable business growth.
• Addressing fundamental issues: Insurers need to address the fundamental issues of the industry –awareness, affordability, accessibility and trust –and transform their business model to address the increasing customer needs.
• Simplicity and transparency: Industry practitioners should embed maintaining product simplicity and transparency in communication across all touchpoints, and superior claim settlement experience.
• Strategic collaboration between insurers, governments, intermediaries and regulators will be the way forward to realise the full potential of the insurance ecosystem and drive businesses towards achieving a sustainable growth of the industry.