Insurance Sector in India

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Context:

• The Insurance Regulatory and Development Authority of India (IRDAI) has lifted the age cap on purchasing health insurance policies, effective from April 1, 2024.

READ ALL ABOUT INSURANCE SECTOR IN INDIA: https://www.iasgyan.in/daily-current-affairs/lic-and-insurance-sector-in-india

Previous Restriction

• Until April 1, 2024, individuals in India were restricted to purchasing new health insurance policies only until the age of 65.

Recent Changes

• Effective from April 1, 2024, individuals of any age can now purchase new health insurance policies, as the Insurance Regulatory and Development Authority of India (IRDAI) lifted the age cap.

IRDAI Notification

• IRDAI directed insurers to offer health insurance products catering to all age groups.
• Insurers may design products for senior citizens, students, children, maternity, and other specified groups.

Inclusive Healthcare Ecosystem

• The move aims to create a more inclusive healthcare ecosystem in India.
• Encourages insurers to diversify their product offerings.

Tailored Policies for Specific Demographics

• Insurers directed to introduce tailored policies for senior citizens.
• Establish dedicated channels for handling claims and grievances of specific demographics. 

Industry Expert Opinion

• An industry expert views the change as a welcome one, opening avenues for people above 65 to seek health cover.
• Coverage subject to offer and acceptance between the insured and insurer based on affordability for senior citizens and viability for insurers.

Prohibition on Refusing Policies for Severe Medical Conditions

• Insurers prohibited from refusing policies to individuals with severe medical conditions like cancer, heart or renal failure, and AIDS.

Reduction in Waiting Period

• IRDAI reduced the health insurance waiting period from 48 months to 36 months.
• Pre-existing conditions should be covered after 36 months, regardless of initial disclosure.

Prohibition on Indemnity-Based Policies

• 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.

READ ALL ABOUT INSURANCE SECTOR IN INDIA: https://www.iasgyan.in/daily-current-affairs/lic-and-insurance-sector-in-india

PRACTICE QUESTION Q. Critically evaluate the role of insurance in India's economic development. Discuss how the insurance sector contributes to financial inclusion, risk mitigation, and overall economic growth. Highlight any challenges faced by the sector and suggest reforms to further enhance its role in India's economy.