In what could bring relief to all health insurance policyholders, the Insurance Regulatory and Development Authority (Irda) is contemplating making health insurance products flexible.
The proposed change would give policyholders the flexibility to switch their insurers, with the benefits of pre-existing diseases covered from the first year of shifting to a new company. At present, pre-existing diseases are covered only after the completion of four years of a policy.
According to a senior Irda official, insurance companies may be asked to carry pre-existing diseases after a policyholder completes four years of health cover.
“The clock should not start again. It is unfair for policyholders. If you are insured by any insurer, it should be valid for the entire period,” said the official.
Another initiative would be for senior citizens who have been covered under a group mediclaim by their employers but did not have an individual health cover. For example, if a person has a group mediclaim policy till his retirement, he will automatically be covered by an insurer when he buys a health policy.
“There should be portability in products. When there is such flexibility, insurance companies are always on their toes. This will force insurers to review their claim management and there will always be a pressure to perform better,” said Optima Insurance Broker Managing Director and CEO Rahul Agarwal.
“As long as there is a common standard product, it will be good. Each product is different and administration mechanics are also different. It will not be easy to write such a product. The industry will have to sit together to sort out the difficulties,” said ICICI Lombard head of health insurance, Sanjay Datta.
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The non-life insurance industry is working on a portable health insurance product where the cover size is limited to Rs 1 lakh. Under this, policyholders of up to 65 years can migrate from one insurer to another mediclaim policy provider.
“The step may be in the interest of consumers and they will benefit from it but the loss ratio for insurance companies will go up,” said Bajaj Allianz General Insurance head of underwriting, T R Ramalingum.
While the loss ratio for retail health was 80-82 per cent last year, group mediclaim was bleeding with 125-130 per cent.
Last year, the industry collected Rs 8,000 crore from health insurance including both group and retail portfolio. This is around 25 per cent of the premium collected by all non-life insurers in 2009-10. Of this, retail health was around Rs 3,500 crore.
Insurance experts anticipate the health insurance to grow by 30-35 per cent during this financial year.