A doctor works near an electronic patient monitor in the emergency room of a hospital. (Photographer: Daniel Acker/Bloomberg News.)

Your Health Insurance May Become Costlier. Here’s Why 

Health insurance could become costlier as insurers factor in the costs of covering genetic disorders.

The Insurance and Regulatory Authority of India on March 20 ordered insurers to not reject claims stemming from genetic disorders for all existing and new policies, according to a circular on its website. That followed last month’s Delhi High Court verdict that barred such exclusions to deny payments.

“When we go for the next price correction, certainly we will have to factor in the cost of that [genetic disorders] treatment also,” said G Srinivasan, chairman and managing director of New India Assurance Company, India’s largest general insurer. “The impact will have to be assessed for each of our policies; based on that we will get back to the regulator and request for price corrections.”

Health is the second biggest category in India’s Rs 1.2-lakh-crore general insurance industry after motor, contributing 27 percent of the total premium.

Insurers pay Rs 101 as claims for every Rs 100 earned in health premium, the highest among all businesses. They excluded genetic disorders from plans without specifying the diseases covered. Among the conditions for which claims were not paid included Down’s syndrome, thalassemia, haemophilia, muscular dystrophy, sickle cell anaemia and amino acid problems.

There are 52 types of genetic diseases or syndromes, among which 51 are known to have an inheritance pattern, according to Indian Genetic Disease Database, a 2010 initiative of Council of Scientific & Industrial Research and Indian Institute of Chemical Biology. Insurers said it’s difficult to price in the risk for related ailments as they could crop up anytime in life. In comparison, implications of congenital defects are known since birth.

Now that insurers can no longer deny such claims, they will look to benchmark the possible costs.

For now, claims will have to be settled case-by-case, said Sanjay Datta, chief-underwriting and claims, at ICICI Lombard Insurance Company. Insurers will have to go by the experience of settlement and then approach the regulator with revised prices, he said.

Other general insurers like HDFC Ergo and Star Health Insurance agreed. “Genetic disorders need to be defined clearly for the sake of industry level uniformity,” an HDFC Ergo spokesperson said in an emailed response to BloombergQuint’s query. “Diseases such as diabetes, hypertension, cardiac conditions and many such others could also be hereditary and were never excluded.”

Another way out could be including genetic disorders as an add-on, which usually come with added costs.

As genetic disorders, similar to chronic diseases, are special risks, they cannot be included as part of the basic policy but can be added on to the cover as rider/s, if required, by the policyholder, a Star Health Insurance official told BloombergQuint requesting anonymity.

The exact impact on the pricing will have to be quantified by actuaries based on the incidences of genetic disorders in the past, said HDFC Ergo. “Additional disclosures will also be required from policyholders.”