General insurance cos to ready standard definitions

MUMBAI: The general insurance industry is working on a standard definition of ‘pre-existing’ disease and ‘excluded diseases’ to reduce mis-selling and future disputes in health insurance.

Speaking at a CII seminar on health insurance, KN Bhandari, chief executive of the General Insurance Council—an association of non-life insurers — said a large number of disputes between insurers and policyholders in general insurance pertained to health insurance and most of these disputes were on account of claims being rejected on the grounds of their being pre-existing conditions or on account of an excluded risk.

Insurance companies have arbitrarily used the ‘pre-existing’ condition. For instance, in one case, a policyholder’s claim for an eye operation was rejected because he had declared that he was suffering from myopia earlier. The insurer rejected the claim on the grounds that there was a pre-existing condition. Such whimsical rejections are expected to come down with a standard definition of a pre-existing condition.

In another move, the General Insurance Council is also working on standard wordings for terms and conditions of life insurance policies. These standard terms and conditions are a pre-requisite for the regulator granting complete freedom to the general insurance industry to design own policies. The standard terms and conditions will form the building blocks for the design of policies in a liberalised environment.

Insurers are expected to pick from the clauses and design innovative products. Standard clauses will also ensure that there is no mis-selling.

The general insurance council has also made a strong plea to the government to abolish service tax on health insurance. The council has told the government that removal of service tax will go a long way in increasing the affordability of health insurance and increase coverage.