08-02-2013, 03:34 PM
HEALTH INSURANCE AND REGULATORY ISSUES UNDER IRDA ACT 1999
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INTRODUCTION
Since neither the Insurance Act, 1938, nor the IRDA Act, 1999 contains any reference whatsoever to the health sector or to the health insurance , health is presumably included under “miscellaneous insurance business”. This non-inclusion and apparent lack of initiative as regards health insurance provisions in Indian government policy documents is reflective of the sanguine view of the functioning of the markets in health care provision and the necessity for health insurance in India.
It is probably because of these shortcomings that developing countries like India needs health insurance cover for its large population.
Some of the reasons as to why India might need to go in for more health insurance schemes are as follows:
• It is used to protect the poor from impoverishment due to high medical costs and acts as a safety net for rural and urban enterprises and productive individuals.
• It is used to promote certain behaviour among people e.g. Aarogya Scheme of Andhra Pradesh.
• It generates long-term investible funds for infrastructure building and encourages the saving habit of people.
• It helps in taking away and relieving financial burden from the already strained cash-strapped state public exchequer.
• It serves as an impetus by generating competition and hence leading to provision of better services to consumers.
The Insurance Regulatory and Development Authority
Among the many revolutionary changes that have taken place since the fifty years of independence of India, one of the most noteworthy has been the enactment of the Insurance Regulatory and Development Authority Act, 1999.
This legislation was enacted to provide for the establishment of an Authority to protect the interests of the holders of the insurance policies. It was meant to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938; the Life Insurance Corporation Act, 1956; and the General Insurance Business (Nationalisation) Act, 1972. This enactment marked a definitive point in the move towards the privatization of the insurance sector in India. It envisaged the creation of a regulatory authority (IRDA) that would oversee the sector entities in the Indian insurance sector, including health insurance.
The assigned powers and functions were meant to enable the Authority to perform the role of an effective watchdog and regulator for the insurance sector in India
Operational Requirements
• Once the players’ starts operating in the health insurance market, it shall be the duty of the regulator (IRDA) to establish and evaluate the solvency status of the players by conducting periodic investigations and reviews. The regulator may conduct audits, ask for submissions of annual reports, appoint directors, take over management, or even shut down the operations of the insurance company through a court order in furtherance of it.
• It shall also be the duty of the regulator (IRDA) concerned to ensure that the insurers of health do not undertake additional business that (1) involves speculation and (2) is not directly linked to insurance e.g., banking. This is to prevent insolvency law of one business to creep into the other.
• It is also the duty of the insurers to ensure that “reasonable” restrictions be imposed as regards the nature of investments that can be undertaken by an insurance company in India dealing in health insurance. The following provisions seem to be in conformity with the much desired
Is A Health Insurance Policyholder A Consumer?
For the purpose of the Consumer Protection Act, 1986, the word consumer has been defined separately as “consumer of goods” and “consumer of services” . The insurer agrees to indemnify the policyholder from a contingent loss and the policy cannot be called goods in any sense; but the insurer may be called the provider of service and the policyholder comes under “consumer of services”.
Regulations Pertaining To The Functioning Of Third Party Administrators
The Insurance Regulatory and Development Authority (IRDA) has paved the way for insurance intermediaries such as third party administrators (TPAs) to play a pivotal role in setting up managed healthcare services through the enactment of the IRDA (Third Party Administrators -Health Services) Regulations, 2001.
Since its inception, the TPAs have been playing a pivotal role in the development of the health insurance market. The TPAs, which are independent bodies, have been set up to offer better-specialised services to policyholders and to mitigate some of the negative consequences of private health insurance by providing administrative support services to the insurance companies.
Conclusion
In absence of an explicit legislative framework regulating health insurance in India, there is an urgent need for such an enactment, which would
• Enhance and ensure health status as well being,
• Expand access of health care to one and all irrespective of socio-economic status,
• Reduce impoverishment and
• Achieve the much-desired objectives of quality, efficiency and equity.