Rejection of applications for health covers are on the rise with insurers turning down any applicant having a pre-existing condition or even disabilities.
The rejections follow the stand taken by the Insurance Regulatory and Development Authority of India (IRDAI) that even exclusions named in the policy would be covered once the policy has been in force for four years.
This issue is being taken up with IRDAI, sources said.
In 2011, the regulator came up with guidelines that claims can’t be rejected on the grounds that the condition was pre-existing after the policy has been in force for four years.
Some insurers interpreted this to mean the condition applied to only those ailments not detected while taking the policy.
For known ailments, they issued the policy excluding the ailments. However, the regulator has told firms that even if the pre-existing condition was stated to be excluded in the initial policy, it will be covered after the fourth year.
While the regulator can compel insurers to honour claims arising out of pre-existing conditions, companies are free to reject proposals that don’t meet their criteria.
Many firms are using this to reject proposals where the insured is already suffering from a disease.
“Insurance is a business that runs on probability.
In the case of a known pre-existing condition, claims are not probable-they are almost certain,” said the chief of a private health insurance company.
According to him, the result of this interpretation is that companies are not accepting many proposals.
Until recently if there was a heart patient, the insurer would accept the proposal excluding heart ailments.
This would provide some succour to the proposer as there are a number of ailments that he could suffer from other than the heart.
The rising number of cases has prompted associations representing the differently abled to file a public interest litigation as they are finding it almost impossible to get covers.
The government on its part has sought information on the nature of insurance cover that can be made available to those with disabilities and the number of people with disabilities and the cost of treatment.
According to the industry this data is not available.
“If there is an individual with controlled diabetes or controlled hypertension, we may accept the proposal.
But if it is uncontrolled we will not accept it,” said Shree Raj Deshpande, head of health insurance at Future Generali.
He added that similarly in the case of someone afflicted with cancer, companies would be likely to reject the proposal even if they were willing to accept it withCancer exclusion.
“Companies have the freedom to specify that they will not accept proposals where the individual is suffering from a chronic ailment,” a chief executive added.
“Had we been given the authority to exclude specified ailments from the policy, life would have been a lot simpler,” he said.
Insurers say that to cover existing illnesses, there are covers more in the nature of disease management. Also, group insurance policies provided by employers do not exclude pre-existing conditions. Insurers are willing to accept pre-existing conditions in group policies as the premium is reset every year at the time of policy renewal.