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Deducing IRDAI’s Landmark Decision on Mental Illness

Adhil Shetty

In a landmark decision made on August 16, the Insurance Regulatory and Development Authority of India (IRDAI) directed all insurance companies to make a provision to cover mental illness within the framework of their insurance policies.

Currently, health insurance plans in India either choose not to cover, or exclude mental illness, psychosomatic dysfunction, or problems connected to psychiatric conditions.

As per various studies and reports, millions of Indians suffer from mental health issues. As per a World Health Organisation (WHO) report in February 2017, 4.5% of India’s population – or 56 million people – have depression, and another 38 million Indians suffer from anxiety disorders. In India, persons with mental illnesses are also socially stigmatised. It doesn’t help that the number of psychiatrists.

As per the WHO, nearly 800,000 people commit suicide each year globally, out of which a staggering 135,000 are Indians. Worryingly, India presents 37% of all women suicides globally.

Often, these problems can be alleviated through easier availability of mental health treatments. Therefore, the IRDAI ruling has ramifications of the positive kind for all policy holders, and any expansion in the coverage of an insurance plan is always welcome.

The Mental Healthcare Act

This stand by the IRDAI comes on the heels of the Mental Healthcare Act, 2017. In force since May 29,  2018, Sec 21 (4) of the Act stipulates that every insurer should make a provision in medical insurance plans to treat ‘mental’ illnesses on par with ‘physical’ illnesses. By extension, all Insurance companies are required to comply with immediate effect.

The Path Forward

Although the groundwork around identifying mental health has been laid in years gone by, several aspects of their classification will have to be tweaked to fit the operations of insurance companies. A uniform classification system will first have to be explored, complete with the scope and treatment for the various mental illnesses there may be. It will also be prudent to expand the number of mental health professionals in India – while this IRDAI notice may ensure that this naturally occurs over time, efforts should be taken at speeding this process up.

Implications on Insurance Plans

While it is reasonable to expect an increase in the premium of basic insurance plans because of this policy, it will also depend on the response of the market and the types of plans new policy holders are likely to opt for. Moreover, evidence from certain overseas markets suggest that any increase is meagre if at all. A standardized product put out by one insurer or the other will no doubt make it a more accessible product and reduce instances of mis-selling.

Overall, this is certainly a welcome step – bringing physical and mental illnesses on an equal footing will help improve awareness around mental health and enhance the potential for coverage for prospective citizens. After all, it is for the good that there is a rise in conversations around mental health – bringing attention to those who potentially need assistance. With a smooth implementation, insurance companies will become collaborators in the country’s stake on mental health, to the benefit of all over the long term.

The writer is CEO, BankBazaar., India’s premier online marketplace to compare and apply for the best personal finance products including health insurance, car insurance, life insurance and two wheeler insurance.