Business Desk, ETV Bharat: In order to guide customers to buy the right insurance product, India’s insurance regulator is planning to colour code health insurance policies in order to indicate the level of complexity of the products.
Earlier this week, the Insurance Regulatory and Development Authority of India (Irdai) released an exposure draft proposing that every individual health insurance product offered by general and health insurance companies carry a colour code – green, orange and red – to make it simple for retail customers to understand the policy.
Here’s a detailed look at how this colour coding system would work and what would be its benefits:
Which policies would carry a colour code?
All individual health insurance policies sold to retail customers by both general and health insurance companies will carry a colour code.
Notably, the system would not be applicable to group health products as the regulator believes that such products are chosen by institutions (like private companies for their employees) who are well equipped and well informed when it comes to analysing the insurance products.
What are these colours and what do they signify?
There will be three colour codes: green, orange and red.
IRDAI said that the colour ‘green’ will signify that the product offered is a simple one, easy to understand and comprehend.
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‘Orange’ colour will signify that the product offered is moderately complex.
‘Red’ will signify that the product offered is complex and needs to be understood properly.
Where can customers check the colour codes?
The colour code will be indicated in the health insurance products and will also be disclosed on the websites of insurers.
Also, every insurance advertisement which promotes a health insurance product shall also mention the colour code of that particular product.
On what parameters will codes be allotted to policies?
Irdai has listed seven parameters on the basis of which insurance products will be given a score between 0 and 6. A product will be assigned ‘green’ if it attains a score of 2 or less. An ‘orange’ product will have a score of more than 2 but less than or equal to 4, and a ‘red’ product will carry a score greater than 4 and less than or equal to 6.
The seven parameters are -- number of optional covers offered, percentage of co-pay, number of months of waiting period, number of treatment procedures/ diseases under sub-limits, deductibles, number of permanent exclusions, and simplicity of terms and conditions.
When will the guidelines be implemented?
IRDAI has currently issued an exposure draft on the colour coding system and is seeking comments from all stakeholders on the matter that need to be submitted by 15 October. After taking into account all the feedback, IRDAI will release final guidelines along with the proposed date of implementation.
