Explained: How ‘Use and File’ system will bring latest medical health insurance products faster


The Insurance Regulatory and Development Authority of India (IRDAI) has decided to increase the ‘Use and File’ procedure to all medical health insurance products. The move is anticipated to facilitate faster customer access to health policies.

What’s ‘Use and File’?

Under ‘Use and File’, insurers are permitted to market products without the regulator’s prior approval, thus avoiding a protracted wait. Under the present ‘File and Use’ system, an insurer wishing to introduce a latest product has to first file an application with the IRDAI and use the product on the market out there only after getting all regulatory approvals. “The Product Management Committee of the insurer should ensure compliance to the policy of the board while signing of the brand new products or modification of products,” IRDAI said.

“This reform authorises insurers to launch products modern and customised to buyers, avoiding a protracted waiting duration,” said Sylvester Carvalho, Lead- Product, Riskcovry.

What does it mean?

General and medical health insurance firms launch, modify or revise all categories of products and add-ons or riders within the medical health insurance business through the ‘Use and File’ method. This implies insurance firms can quickly introduce latest schemes with modern features, enabling people to participate and canopy their health expenses. Earlier, firms used to file scheme drafts with the regulator and wait for weeks and months to get clearance.

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The brand new initiative has come at a time when demand for health coverage products has risen significantly within the wake of the pandemic. “The proactive initiative by IRDAI will provide some crucial mechanisms to insurance firms which want to bring out more modern products out there at a faster frequency,” said Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance. Customers have the chance to select from a variety of insurance products that best suit their needs and thus secure themselves against any exigencies, Singhel said.

“This may aid customer centricity and fuel product innovation which should help augment insurance penetration in our country,” said Rakesh Jain, CEO of Reliance General Insurance.

The move offers flexibility to insurers to supply products which will cover the immediate needs of shoppers on account of a changing environment. If there may be a latest disease that emerges, ‘Use and File’ will allow insurers to design a product covering that disease and offer it immediately, relatively then waiting for approval.

What if the regulator raises concerns over such a product later?

If a customer has already taken an insurance policy launched under ‘Use and File’, and the IRDAI later raises concerns about it, then it may possibly result in some rethinking. The client will proceed to get the advantages of the policy for the primary 12 months, and if the insurance company makes amendments according to regulator’s apprehensions, the shopper will still get these advantages. Nonetheless, if the policy is withdrawn because of this of IRDAI’s intervention, the product will not be available for renewal within the second 12 months. In such a case, the insurance company may provide the policyholder with similar options from its existing policies, and the shopper may comply with taking one.

What’s the procedure?

Insurers should file the proposed name of the product, date of approval by the Product Management Committee, they usually should obtain a UIN. “Thereafter, insurers should file the product together with all others with the authority inside 7 days of launch of the product,” the circular said.

Insurers should make sure that the product pricing is viable, self-sustainable and reasonably priced to the targeted market. A revision in the value, if any, must be effected only based on the underlying claims experience (Incurred Claims Ratio, or ICR), and to make the product viable and self-sustainable. Insurers should disclose on their website the rationale for the revision together with the ICR that led to the revision.

Pricing of products or add-ons must be based on generally accepted actuarial principles. The premium rates should appropriately reflect the advantages, terms and conditions of the underlying products or add-ons and mustn’t be discriminatory.

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How is the health cover business doing?

The medical health insurance business is the fastest growing segment within the insurance sector, and accounts for a 33.33% market share in the final insurance industry. Premium income under the medical health insurance category rose by 25.39% to Rs 73,582 crore in the course of the financial 12 months ended March 2022. Standalone health insurers reported a 32.55% growth in premium mobilisation in the course of the fiscal, in line with data from the General Insurance Council.

There have been 26.54 lakh claims for Rs 24,255 crore under the Covid medical health insurance category until April. These claims are reimbursement towards treatment and hospitalisation expenses. Many insurers have seen over 100% claims in the course of the peak of the pandemic.


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