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31 July 2012
In April 2012 the National Insurance and Bonding Commission amended Section 5.1.24 of the Unified Insurance Ruling related to medical expense insurance.
The amendment provides clearer guidelines for insurers to follow in regard to their medical expense insurance products. It expressly requires insurers to draft policies with clarity and legal certainty for the insured.
According to this amendment, payment from insurers for coverage over the duration of the insurance policy will be limited to one of the following, whichever comes first:
An important change in this amendment includes the prohibition of insurers from limiting the agreed coverage in any manner if the insured has purchased other insurance to cover the same risk.
One of the most significant provisions of the amendment is the obligation for insurers to provide a specific amount of coverage (expressed either in a monetary amount of any currency or in any other manner); consequently, unlimited medical expense insurance will no longer be an option in medical insurance products. The maximum amount of coverage to be offered must be technically sustainable at the moment of registration of the corresponding products before the commission.
Subsequently, the amendment mandates that individual medical expense products be designed for the specific age of the insured, so that the insured's frequency value and average cost may be updated each year. The amendment also includes an obligation to include a warning on the policy cover page regarding the impact of the annual increases that the premium will incur when the insured reaches old age.
In addition, individual policies must state that if the insured changes coverage plans with the same insurer, the acquired benefits for the seniority premium will not be affected as long as the new coverage plan includes them.
With respect to waiting periods, the amendment states that the purpose of waiting periods is to make a risk selection properly and eliminate pre-existing cases; insurance policies thus may not establish waiting periods for cases such as accidents or medical emergencies as long as these circumstances occur while the policy is in effect.
The amendment also expressly allows automatic renewal, although the renewal may be cancelled if either the insurer or the insured clearly notifies the other party of its intention to cancel at least 20 business days before the policy expiration date. Likewise, policies may establish a provision that guarantees renewal of the insured's coverage at its election. If the insurance policy is renewed, it must offer similar conditions to the previously agreed policy; in such case the limitation of coverage may not be changed to the insured's disadvantage.
Lastly, insurers are required to modify and register their medical expense insurance products to comply with the provisions of this amendment within 180 calendar days of April 12 2012.
On the whole, these guidelines will allow insureds to be better informed of the operational capacity and scope of medical expense insurance policies and help them to make the best insurance choices according to their personal needs and financial means.
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Carlos Ramos Miranda