Health Insurance: IRDAI Modifies the Definition of Pre-Existing Diseases

IRDAI (Insurance Regulatory and Development Authority of India) has changed the definition of pre-existing diseases. As per the change, any disease diagnosed within three months from the date of purchase of policy will be considered as a pre-existing disease.

The modification was a part of the guidelines on standardisation of health insurance as released by the IRDAI on 27th September 2019 and the changes will be witnessed in the products filed after 1st October 2019. However, for the existing deals, the fresh guidelines will be effective from 1st October 2020.

What is a pre-existing disease?

A pre-existing disease (PED) in health insurance is a condition, injury, or an ailment that already existed or for which the patient has already received medical advice within 48 months prior to the issuance of the first health insurance policy. These diseases are generally not included under the policy coverage for a specific waiting period initially. The maximum waiting period for such diseases is 4 years.

What is the modification?

As per the IRDAI circular, a clause has been added to the existing definition of pre-existing diseases that says, "A condition for which any symptoms and or signs if presented and have resulted within three months of the issuance of the policy in a diagnostic illness or medical condition will be treated as PED."

Hence, as per the guidelines issued on 27th September 2019, if a disease/symptom is diagnosed within 3 months from the date of issue of the policy, then it will be considered as PED.

What if you don’t inform your insurer about a PED?

The Head-Retail Underwriting of Bajaj Allianz General Insurance, Gurdeep Singh Batra informed that if someone does not inform the insurer at the time of purchasing a policy about any pre-existing disease then it will be considered as misinterpretation/non-disclosure/non-declaration if the same is diagnosed within 3 months from the date of purchase of policy. The insurer in this case, henceforth, is not liable to pay for the expenses incurred considering it as the violation of “disclosure of information norm”.

Also, depending on the intensity of violation of the norm, the insurers are advised to look for following options at their discretion too:

If the non-disclosure is falling under permanent exclusions under Chapter IV, then the insurer, after seeking consent from the insured can continue policy by permanently excluding the disease

If the non-disclosure falls under ‘other than the permanent exclusion’ under Chapter IV, then the insurer can add a waiting period of not more than 4 years for the disease and continue the policy after seeking consent from the insured

The experts are of the view that the modification guidelines on standardisation of health insurance policies are definitely going to prove beneficial for both the insured as well as the insurers. The standardisation will help the insured to get coverage for their pre-existing diseases and will also save the insurer from fraudulent early claims.