Mental Health, Genetic Disorders To Be Part Of Basic Insurance Plans, Says IRDAI Chief

Insurance for mental health and genetic disorders will be standardised and introduced as part of basic mediclaim policies, according to head of India's insurance regulatory authority.

The regulator will look at the report submitted by a committee that seeks to reduce and standardise exclusions in health insurance and then decide, said Subhash Chandra Khuntia, chairman of the Insurance Regulatory and Development Authority of India. “Certain exclusions should not be permitted because they are not desirable, and then accordingly the industry can regulate itself.”

The IRDAI on March 19 mandated insurance for genetic disorders after a Delhi High Court order called such exclusions illegal. It, however, put the circular on hold after the Supreme Court granted a stay on the high court's order.

The insurance regulator on Aug. 16 issued another circular making it compulsory for general insurers to cover mental health disorders with immediate effect.

Covering genetic disorders and mental health ailments would increase premium if added to basic plans as opposed to add-on covers, according to V Jagannathan, chairman and managing director at Star Health and Allied Insurance Company.

Agreed G Srinivasan, former chairman and managing director at New India Assurance Company. “Insurance covers unknown risks but if open-ended insurance is provided for known genetic disorders then there is a risk of adverse selection, as those detected with such conditions will buy more insurance,” he said.

Sanjay Datta, chief, underwriting and claims at ICICI Lombard General Insurance Company, said the extent to which the premium would rise will depend on the uptake of basic health covers by those suffering from mental and genetic disorders and the experience on the costs for treatment of such conditions.

The IRDAI chief, however, said insurers should develop standardised products so that mis-selling can come down and people are able to opt for basic products. “If you have to do fixed deposit in a bank, you don't have the problem of looking at the terms and conditions because you know all banks will have similar terms and conditions,” Khuntia said. “Can we come up with some simple insurance products like motor third-party insurance, which is standardised and everybody knows what is involved?”