Indian Insurance Regulatory and Development Authority (IRDA) is mulling a proposal to allow insurance companies to offer five-years health insurance policies, in a bid to help customers by making renewal process easy.
General and standalone health insurance organizations have been demanding from IRDA to give permission to deliver longer-term products, so that they can also thwart increasing operational costs, reports the Hindu Business Line.
As per the prevailing health insurance regulations, general insurance firms are allowed to provide renewals only up to three years, although most policies require every year renewal.
A senior official of the IRDA was quoted by the news portal as saying that a sub-group has been set up to work on the proposal.
"We are working on the underwriting and pricing parameters for it," the official added.
A long-term policy is beneficial for both insurance firms as well as customers, as policy renewal will be easy for customers, while insurance firm will incur less expenses on customer acquisition, printing and issuing of policies. Chances of lapsing a policy will also be nil.
Since long-term policies deliver better value for customers, because insurers propose to price them lower by factoring in the no-claims discount into the premiums.