Even before you fully digested mobile number portability, here comes more freedom and choice for you. From 1 July, your health insurance policy is portable. This means you need not stick to your existing insurer and can shop around for cheaper plans and better service. The insurance regulator, Insurance Regulatory and Development Authority (Irda), flagged off health insurance portability in India on Thursday, allowing you to switch between insurers and still carry forward the benefits of your old insurance.
Portability of benefits
At present, changing insurer means buying a new policy. So waiting periods on pre-exiting or specified ailments is applicable for the new policy as well. For instance, say, you bought a policy from insurer X two years back but now want to move to insurer Y. Insurer Y will treat you as a fresh customer and not let you carry forward two years from the policy of insurer X. So for treatment of specified medical condition such as cataract for which the waiting period is two years, you will have to wait for two years again with insurer Y.
Once portability is available, you will be able to switch to insurer Y without losing out on the waiting period. So in the above example, you can use your health insurance policy from insurer Y immediately for cataract. “The idea is to be more in line with several countries in the world,” says J. Hari Narayan, chairman, Irda. “Customers should have the choice to move across insurers without any loss of credits they have accumulated on waiting period and bonus on the health cover.”
All insurers will have to acknowledge a request to port the health insurance policy within three working days and make data on claim details available to the counterpart within seven working days.
Waiting period: Primarily waiting period on pre-existing diseases is portable. To illustrate, say, a specific disease has a waiting period of two years in policy X and three years in policy Y. In this case, policy Y can exclude the disease for only one year if the policyholder has already waited for two years in the previous policy.
Sum insured: For the same example above, say, you had Rs 2 lakh as sum insured in policy X and you opt for Rs 5 lakh in policy Y. Here you will get a claim benefit of up to Rs 2 lakh after a waiting period of a year for pre-existing diseases. Full claim benefit, i.e Rs 5 lakh, on these diseases will be available only after two-year waiting period. However, for other diseases, full claim benefit will be available immediately.
The sum insured carried forward will also include the no-claim bonus that the previous insurer would have given you.
Graphic: Uttam Sharma/Mint
Initial waiting period:The one-time initial waiting period of around 30 days, which most insurers have, will also get waived off in case a customer decides to port policy. “The credits in this case can be carried forward too,” says Neeraj Basur, chief financial officer, Max Bupa Health Insurance Co. Ltd. “So now if an individual wants to port his health insurance policy we will waive off the initial waiting period. In that sense this initial waiting period will be a one-time exercise.”
The regulator has also specified that a delay in porting on the part of insurers will not be considered as a break in the policy and the new insurer will have to give portability benefits instead of treating the customer as a new.
You can only port credits on waiting period on pre-existing ailments and not features. While buying a new policy, the features of the new policy will apply. So, for instance, if insurer X didn’t not have sub limits on the rooms rents and the new insurer Y has, you will have to accept the sub limits in the new policy.
However, any waiting period on similar features of the policy is likely to get portable as well. For instance if insurer X gives you maternity benefits after four years while insurer Y covers you only after two years then you can move to Y and enjoy benefits immediately if you have already waited for two years in the previous policy. Adds Basur: “Portability will be possible on similar features and so even maternity benefits will be portable across insurers who offer that benefit. However we are still waiting for further clarity on this.”
What it means for you
Portability of benefits is applicable on all health insurance policies. However, insurers are still not clear if portability can happen between policies offered by life and non-life companies or indemnity policy—that pay for your hospitalization expenses and benefit policies—that give you a lump sum benefit against a pre-specified condition. Says Antony Jacob, chief executive officer, Apollo Munich Health Insurance Co. Ltd: “It is difficult to port credits from a benefit policy because both indemnity and benefit policies are different and with completely different underwriting requirements. We are waiting for further clarification on this.”
Even for group covers, portability will not make much sense. Says Pradeep Pandey, vice-president-health, Aegon Religare Life Insurance Co. Ltd: “Group covers typically have no waiting period and hence portability across group insurance policies doesn’t make much sense. Also since group insurance policies don’t underwrite the individual but the organization as a whole, it will be difficult to port credits from group insurance policies to individual policies.”
The announcement of porting credits is a departure from the earlier proposal of having a common portable policy across insurers. The common portable policy was supposed to have common features, benefits and premiums and the only point of distinction was service standards of the insurer. Adds Hari Narayan: “We want to try this out first before we come out with a distinct portable product since we feel this portability makes more sense and is of more use.”
Increased competition to get customers will be an immediate fallout but will premiums decrease? Answers Amarnath Ananthanarayanan, chief executive officer, Bharti AXA General Insurance Co. Ltd: “Health insurance is a bleeding portfolio given the rise in claims, demand for higher level of health cover and medical inflation. It will be difficult to reduce the price except in cases where premiums have shot up drastically and are out of line.” Better customer service and product variation are definitely on the cards.
Expect greater competition among insurers. Better service and product variation may be the positives from this move