If you are not happy with the services or features provided by your health insurer, you can now port your policy to another insurer.
The Insurance Regulatory and Development Authority had earlier announced that portability would be made available from July this year, but due to lack of data regarding health records and coordination roadblocks, the decision was postponed till October. Here is what is portable and how.
Also See | How to Switch Your Policy to Another Insurer (PDF)
According to the guidelines, only health insurance policies offered by non-life companies are portable. Typically, non-life companies offer indemnity policies—basic health insurance policy that covers hospitalization expenses—and the regulator intends to bring portability to this format of health insurance.
Though the health insurance universe (of non-life companies) also consists of defined benefit policies—that give a lump sum benefit against a predefined medical condition—portability may not apply to these. Says Damien Marmion, CEO, Max Bupa Health Insurance Co. Ltd: “Portability is meant for indemnity policies because the benefits are recurring. Defined benefit plans give a one-time benefit and vary from one another.”
You can also port your group insurance policy to an individual policy. A group insurance policy is typically provided by your employer. Instead of covering individuals, the insurance company covers a group.
What can you port?
In individual policies: Portability of a health policy is limited to time-bound exclusions or waiting period for pre-existing conditions. Waiting period is basically the time till which you do not get a cover.
Typically, a regular health insurance policy has three kinds of waiting periods. The first is the 30-day waiting period at the time of buying a policy, which means that any hospitalization expenses on account of an ailment will not be covered in the first 30 days; usually insurers cover accidents leading to hospitalization. The second is the waiting period on a pre-existing disease. Pre-existing diseases are those ailments that are present at the time of buying a health insurance policy. Typically, insurers don’t cover these pre-existing diseases for up to four years. The third kind of waiting period pertains to the waiting period on certain specified ailments. For instance, hernia is a common ailment and is excluded in the first two years of the policy. So even if it is not a pre-existing condition and a policyholder develops it after buying the policy, it will not be covered for two years.
For instance, if you have a pre-existing condition and you have spent three years with insurer A and now wish to port your policy to insurer B, who has a waiting period of four years on pre-existing diseases, you will need to wait for a year more with the new insurer. In case insurer B had three years, you wouldn’t have to wait at all.
However, do check the new insurer’s definition of a pre-existing disease. If you have made a claim on your health insurance policy on account of an ailment, the new insurer may consider that ailment as a pre-existing disease and, therefore, not include it in the initial years since you would be a fresh customer for the insurer. Different insurers would have different conditions.
Says Marmion: “While for the original insurer, this will not be a pre-existing disease at the time of renewing the policy, the new insurer will consider this as a pre-existing disease. We offer to underwrite such pre-existing diseases by loading the policy.”
Adds Subrahmanyam B., vice-president and head (health vertical), Bharti AXA General Insurance Co. Ltd: “The interpretation of pre-existing diseases in such a case may vary since the guidelines are not clear on this front. For us, if we choose to accept the proposal of the insured, then we will not consider such ailments as pre-existing diseases.”
You can also port the bonus accrued on your policy on account of no-claim years. Typically, insurers offer you a bonus of 5% of the sum insured for every no-claim year. In other words, your sum insured goes up by 5% while you continue to pay premiums for the basic sum insured. However, once you port no-claim bonus, you would need to pay the premium on the entire sum insured to the new insurer and not just on the basic sum insured (that you can do with the existing insurer).
Says Sanjay Datta, head (customer service), health and motor, ICICI General Insurance Co. Ltd: “Portability is with respect to the waiting period and not with respect to the price of the features of a policy. The customer will have to accept the pricing or the features of the new insurer.”
In group policies: The number of years of continuous coverage from your group insurance policy will be used to offset the waiting period, when you port it to an individual health policy. For instance, if you have been covered under a group cover for two years and then decide to port your policy to an individual health policy having a waiting period clause on pre-existing diseases of four years, the new policy will waive off two years of the waiting period. Initially, you can port from a group insurance cover to an individual cover provided by the same insurer. However, after a year, you can change your insurer, too.
When can insurers refuse portability?
You need to port at least 45 days before the renewal date of your policy, failing which the new insurer may refuse portability. Typically, health insurance policies are annual contracts and are renewed every year.
An insurer can refuse to port if you don’t fit the bill as per their underwriting norms, wherein it will assess your medical history, among other factors. Says Subrahmanyam: “Proposals for portability will have to undergo the underwriting processes of the new company. Depending upon the underwriting an insurer can deny or accept the proposal. An insurer can also load the policy. However, the insurer will have to conform to its guidelines on loading a policy.”
The insurer will have to accept or reject your proposal within 15 days of completing all the formalities. If the insurer fails to meet the deadline it will have to compulsorily accept your application.
What should you do?
Health insurance portability is a significant move towards ensuring better service standards by insurance companies. If you are stuck with an insurer, which is not proactive on claim settlement or the features of your health insurance policy are not favourable, you could consider porting your policy.
But weigh the pros and cons. Portability is limited to waiting periods and the enhanced sum insured for years when you made no claims. Existing ailments that your current insurer covers may be considered a pre-existing condition by the new insurer and you may need to shell out extra.