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December 1, 2020

Are insurers declining health insurance to the Person with Disability?

by CA Shivam Jaiswal in Circular and Notifications

Are insurers declining health insurance to the Person with Disability?

The current COVID-19 pandemic has made the entire world sit up and realise that medical exigencies are unpredictable and can cause a financial upheaval that is tough to handle. In today’s time, the cost of healthcare in the country has risen significantly thanks to the ever-growing demand for medical services. Having a health insurance or Mediclaim comes handy in times of medical emergencies. Many individuals often have to use funds from their savings in case of a medical emergency, which not only impacts their financial health but also jeopardises personal goals such as education and marriage.

With the rising cost of medical expenses, access to good medical facility and hospitalisation costs can be financially strenuous. Therefore, getting a health insurance cover for yourself and your family can provide the added protection you need in times like these. Apart from the obvious benefit of having the financial confidence to take care of your loved ones, a health insurance plan is extremely useful when it comes to beating medical treatment inflation.

Insurers denying policies to differently abled

The COVID-19 pandemic has exposed several faults in the health system. Private healthcare is expensive while public healthcare can be inadequate. Abishek Muthian, a startup coach from Coimbatore, runs a blog on which he uploaded many hours of phone conversations and several emails with call centre and back-office agents of Indian insurance companies. The anxiety over high healthcare costs during the COVID-19 pandemic prompted him to seek out medical insurance. But company after company declined to sell him a policy.

What was the issue faced by Mr Abishek Muthian?

Mr Abishek Muthian, aged 34 suffering from what could be best summarised in simple terms as Bone related diseases or dwarfism, had a major surgery in July 2018 for ailments. He had been very open about his health condition to raise awareness and to support others facing such ailments.

Being an independent professional, he was not covered under any corporate health insurance and so had to apply for a personal health insurance policy. However, he was denied health insurance coverage despite there being guidelines regarding pre-existing diseases.

Role of IRDA in insurance

Regulation of insurance in India is carried on by The Insurance Regulatory and Development Authority of India (IRDA). The role of IRDA is to protect the interest of and secure fair treatment to policyholders, to bring about speedy and orderly growth of the insurance industry and to ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery. To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players, IRDA issues various Circulars, Notifications, Guidelines etc. Some of these guidelines also pertain to pre-existing diseases.

What do you mean by a pre-existing disease?

As part of Guidelines on Standardization, IRDAI has defined Pre-Existing Diseases as any condition, ailment, injury or disease:

  • That is/are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement or
  • For which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement

Are pre-existing diseases covered under a health insurance policy?

  • Offering health insurance coverage to any person who has suffered / suffering from any disease / illness is subject to underwriting policy and product design of an insurer.
  • Insurers design products keeping in view certain factors such as viability and self-sustainability of products and the needs of the intended target market segment.
  • Where a pre-existing disease(s) is disclosed and a health insurance policy is granted, such pre-existing disease(s) shall be covered after a waiting period as specified in the policy, which at the maximum shall not be exceeding 48 months.
  • However, in terms of Chapter IV of the Guidelines on Standardization of Exclusions in Health Insurance Contracts under Sec 1 of IRDAI Master Circular ref IRDAI/HLT/REG/CIR/193/07/2020 dated 22.07.2020, certain existing diseases disclosed by the prospect are allowed to be permanently excluded.

Insurance providers not following IRDA guidelines

  • Insurers denied Mr Abishek Muthian the insurance policy citing his pre-existing illness, even after he pointed out the IRDAI guidelines and raised a complaint with IRDAI’s grievances cell.
  • According to him, the diseases he suffers from are not even permanently excluded according to IRDAI’s guidelines and even if it were the insurers were supposed to exclude it from coverage and provide him with the insurance policy.
  • IRDAI guidelines ask people to honestly declare their ‘pre-existing illness’ and ask that insurance companies not deny people coverage due to this. 
  • In his blog, he documented how Royal Sundaram wrongly listed his disabilities and health parameters.
  • The company did not give him a copy of his medical reports until after repeated complaints.
  • Those reports certified him as healthy, yet the company did not issue him a policy.
  • HDFC Ergo told him they could not insure people who had had accidents.
  • However, Muthian did not have any accidents.
  • The company also automatically rejected his application after he filled up a form online and declared truthfully that he had a disability.
  • ICICI Lombard declined citing his pre-existing “illness”, even as Muthian told them that that is against the government guidelines.
  • All three companies had initially accepted payment from him for a policy but never issued him one, refunding the money after several emails and complaints.

Statistical data pertaining to differently abled in India

  • Some 26.8 million Indians, or 2.2% of the population, live with disabilities, according to Census 2011.
  • These include persons with visual, hearing, speech and locomotive disability, mental retardation, mental illness, multiple disability and any other disabilities. Disability is higher in rural areas (2.3%) than urban (2%) and higher in men than women (2.4% versus 1.9%), according to the National Sample Survey 2018.
  • While IRDA publishes large amounts of data, especially about the amount of money paid and number of claims cleared by insurance companies, it does not divulge how many policies are denied.
  • In 2018-19, 20.68 million health insurance policies were sold and 472 million people were covered by health insurance in India, according to IRDAI data. But no breakdown was given of how many applications insurance companies were received, and how many they rejected.
  • These data become more significant because, in 2019, the IRDAI had asked all insurance companies to make public their “underwriting philosophy” for people with disabilities, mental illness and HIV/AIDS. Many companies, posted articles on their websites saying they provide insurance cover to people with such medical conditions.
  • Insurance company executives informed that the IRDAI had not asked them to capture these data.

A person should not be denied insurance because of their disability or pre-existing illness, IRDAI guidelines state. The guidelines say that if need be, their particular disease can be excluded from coverage with a longer waiting time (up to max 4 years), but the rest of their bodies would still be eligible to be covered by medical insurance. After this waiting period, even the particular disease could be covered by the insurance policy. However, in reality, the experiences of people with disabilities across India show that this had not been the case for them before the pandemic and it was not the case for them now.

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