Make sure the insurer is offering same terms & conditions and not shifting you to another product

PS Chohan, an octogenarian, was in for a shock when he received a renewal notice from his health insurance company of two decades. “The insurer had earlier approved a cataract surgery claim of . 42,044, but it has imposed a sub-limit of . 24,000 under some new rules,” he says. The company cited a market survey conducted by its third-party administrator (TPA) to justify the downward revision. Certain other terms and conditions of the old policy, too, were modified.

Seventy-two-year-old Lata Rao, who has had a health cover of . 1.5 lakh since 2005, faced a similar predicament in 2009, when she started undergoing treatment for cancer. After releasing the entire claimed amount for the first two years, the insurer started deducting 25% from the approved amount from third year onwards, citing the co-payment clause in the policy. Simultaneously, the premium was also hiked by nearly 200%. “In effect, for a sum insured of . 1,50,000, the company charged . 68,164 as premium, in addition to co-payment,” points out her husband IS Rao. The experiences of Chohan and Rao are narrated only to show the ugly practice of tweaking of the terms and conditions by insurance companies at the time of renewals. The practice is against the Insurance Regulatory and Development Authority (Irda’s) diktat prohibiting companies from arbitrarily altering the terms of a policy. Also, the companies are required to intimate the revisions to all policyholders at least three months prior to the renewals, besides seeking Irda’s approval for the changes.

PAY ATTENTION TO DETAILS

“Due to Irda’s diktat, it is not easy for the companies to revise their terms at will. If companies feel the need to change the clauses that are unfavourable to them, they simply launch new products and attempt to get the existing policyholders to migrate to the new one,” says Arvind Laddha, CEO of Vantage Insurance Brokers and Risk Advisors. That is why it is important to read the wordings carefully to ascertain whether you are giving your assent to the same product or a completely different one. Remember, as per Irda’s directives, insurers cannot force you to switch to another product. “You should not blindly agree to the changes in the list of hospitals where cashless claims can be made, particularly if there is a contraction in the network of such hospitals,” says Laddha. Many insurers ask the insured to bear a part of the cost if they decide to undergo treatment in a non-network hospital. “While the insurer can change the premium amount if there is a change in the age slab of the customer, no other changes can be made in the policy conditions. Policyholders can also oppose any exclusion, which did not form part of the policy at inception, introduced at the time of renewal,” adds Divya Gandhi, head, general insurance and principal officer, Emkay Insurance Brokers.

INTRODUCTION OF RESTRICTIONS Typically, at renewal, insurers seek to introduce co-payment clauses, sub-limits for certain diseases or on room rents and doctors’ fees into the contract. Some also exclude ailments if there was a related claim. “All such changes which are imposed subsequently or are not in accordance with the original terms and conditions of the policy are illegal and can be opposed. However,insurance companies usually ignore any opposition and the insured is compelled to assert his rights by filing a consumer complaint and obtaining appropriate orders,” says consumer activist Jehangir Gai. If your insurer has adopted such a high-handed approach, you can write to the insurance ombudsman or approach the consumer court.

DENIAL OF RENEWALS

Imagine paying premiums for years, only to see your renewal being turned down when you need it the most – during your silver years. After receiving several complaints from senior citizens, Irda barred companies from rejecting renewals except on the grounds of fraud, moral hazard or misrepresentation. Significantly, renewal cannot be denied simply because you had made a claim in the previous year.

LOADING ON PREMIUMS

It’s a major cause of consternation for most policyholders. Hike in premiums following a huge claim is often used as a tool to discourage renewal the policy. Known as claim loading, this practice remains rampant though several voices have termed it unfair. If your original contract had clearly explained its working in detail, you may not be able to contest the hike, unless it is in violation of the declared claim loading structure. This apart, premiums can go up due to medical inflation, advancing age or resetting of the premium for an entire group/portfolio by the insurer. “In case of most insurers’ premium structure, either the premiums increase every year or premium slabs are prescribed for different age groups; say, . 4,200 for the age band of 30-35 years and . 6,700 for the 36-40 category. So, when a 35-year-old policyholder turns 36, his premium will jump by . 2,500, but this cannot be termed loading,” says Gandhi. Therefore, the key is to determine the cause of premium revision, which again, the insurer is duty-bound to divulge at the time of renewal, before taking a call on opposing the changes.