Insurance companies are grappling with the design, pricing and operational modalities of offering health cover for mental illness, disabilities and HIV after the IRDAI’s February 27 circular.

As it is effective immediately, the urgency of the circular has left some gaps in terms of the operational metrics of the cover owing to the lack of precedence and sufficient information surrounding these medical issues, industry players said.

“We are discussing with the regulator and amongst ourselves to understand the products better, seek clarity and then take it forward. Once we understand the requirement from the market as well as the regulatory perspective, we can build something that caters to the exact needs of the customers,” said Sanjay Datta, Chief – Underwriting, Reinsurance and Claims at ICICI Lombard General.

Challenges involved

With the objective of making health insurance cover available for certain vulnerable sections of society, the IRDAI circular mandated general and health insurers to offer a health cover for persons with disabilities, persons afflicted with HIV/AIDS, and those with mental illness. It also asked them to put in place a board- approved underwriting policy that ensures that no policy cover excludes such people.

While some insurers have started integrating these covers as part of their regular products as riders or add-ons, others are saying that developing suitable products catered to these sections of the population could require some more time and work.

“The circular would encourage providers to evaluate and develop an appropriate product for the vulnerable section of the society,” said Sharad Mathur, MD and CEO of Universal Sompo General Insurance.

“We are evaluating to construct a suitable cover for this special segment,” he said, adding that lack of proper data for the purpose of pricing is a challenge.

Fresh directive

In 2022, IRDAI had asked insurance companies to cover mental illness under their health insurance policies by October 31, 2022. This was followed by a November 2022 directive asking insurers for plans to introduce cover for mental health. However, lack of progress on this front likely prompted the regulator to issue a fresh directive mandating such coverage, industry players said.

“The failure of insurance companies to comply with the earlier directive highlights the challenges faced by India’s insurance sector in addressing the issue of low coverage for mental illness,” said Rakesh Goyal, Director at Probus Insurance Broker, adding that this step is likely to nudge insurers into taking concrete steps towards offering comprehensive coverage and addressing the growing demand for such products.