After recently dialling back reforms in surrender charges for life insurance plans, it is good to see the Insurance Regulatory and Development Authority of India (IRDA) take the side of the consumer in its recent regulations governing health insurance. IRDA’s new Insurance Products Regulations 2024 require insurers to make two key changes to their health insurance products. One, the maximum waiting period that insurers may impose on claims relating to pre-existing diseases (PED) will now be 36 months instead of 48 months. As most of the health complications that insurance buyers face are likely to be related to PED, the shorter this waiting period the better. Two, IRDA has asked insurers to ensure that they offer health insurance products to ‘cater to all age groups’. This replaces an earlier provision that health policies must provide for an entry age of ‘at least 65 years.’ IRDA’s intent seems to be to make sure that senior citizens are not denied health insurance at a life stage when they need it the most.

Health insurance will indeed be a far more useful product for consumers, if insurers decide to comply with these regulations in spirit. The question though, is if they will. Take PED for instance. Health insurers often reject hospitalisation claims based on the policyholder’s failure to make full disclosures on PED at the time of purchase. But there are grey areas as to how far back the buyer needs to go on her medical history and the granular details which she must disclose. To iron out these wrinkles, it would help if IRDA stepped in to define timelines and materiality tests with respect to PED disclosures by consumers.

IRDA asking health insurers to offer products for senior citizens is a much-needed intervention too. But then, as the earlier provision only specified a minimum entry age, nothing stopped insurers from designing health insurance products for senior citizens even before this tweak. Health insurers in India seem averse to offering senior polices because these products will need more customised underwriting and careful pricing of risk when compared to the generic products sold to younger customers. Insurers may now take the easy way out by setting the premiums on senior policies at unattractively high levels to discourage buyers.

But if it is keen to expand health insurance coverage to seniors, IRDA must thrash out other solutions. Rather than fix sky-high premiums on senior citizen plans, insurers must be nudged to explore group insurance products that cover a diverse pool of seniors, so that underwriting risks are balanced out. Seniors can also be offered health covers with deductibles or co-payment clauses. Such plans can help insurers restrict their liabilities, even as the policy buyer has clarity about what her out-of-pocket expenses will be. Even so, senior health covers are likely to be an expensive proposition. Policymakers need to explore other alternatives for the less-affluent senior population.