Insurance: Could your health insurance premium suddenly increase? Know this one thing before renewing your insurance...

Recently, some insurance companies have begun incorporating a clause into health insurance policies that has remained largely hidden from public view. It's called the Material Change clause. This clause states that if there's a new change in your health, such as a new illness or treatment, you must inform your insurer.

Now, you might wonder what's wrong with this? The insurer can increase your premium or change the policy terms based on this information. This means that disclosing a condition like diabetes or blood pressure before renewal could directly impact your pocketbook.

This clause wasn't there before.
Until now, a clause like Material Change has been used in car, home, or property insurance, where new information is required every year during policy renewal. However, health insurance is a long-term policy. Once you've provided information, there's no need for a repeat medical examination or declaration unless you're increasing the sum insured.

This condition violates the rules.
According to the rules of the insurance regulator IRDAI (Insurance Regulatory and Development Authority of India), no insurance company can increase premiums, change policy terms, cancel policies, or require a second medical examination based on changes in your health. Therefore, if an insurer attempts to do so, it is violating IRDAI rules.

New Trick of Insurers
Some insurance companies have quietly included this Material Change section. Some simply ask for information but do not disclose what they will do once they receive it. Some companies clearly state that they may make changes to the policy based on this information, such as reducing coverage, increasing premiums, or excluding certain treatments from the policy. However, they do not outright refuse policy renewal as this could jeopardize their license.

Abusing the 'Use and File' system?
Since 2022, insurance companies have been granted a system called Use and File, which allows them to launch insurance products without prior approval from IRDAI. This allows them to include rules that could be detrimental to customers without much questioning.

What should policyholders do?
If your renewal notice mentions 'Material Change,' don't panic. Seek immediate clarification from the insurance company. If you don't receive a satisfactory response, file a complaint with the insurance company, submit a complaint on IRDAI's Bima Bharosa Portal, or file a complaint with the Insurance Ombudsman's office. Insurance experts advise avoiding providing unnecessary information unless the company specifically asks for a health update.

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