Health cover portability to be allowed from July 1, but it may not be simple.
Hyderabad-based Nagesh Y has a tough time with his health insurance company to get his claims approved. “My father is hospitalised frequently. And, getting the claim becomes a nightmare,” he says.
When the policy came up for renewal two years back, Nagesh decided to change the insurer. But his father, who was awaiting a surgery for hernia, was asked to wait for two years to claim for it. And, a helpless Nagesh decided against shifting.
If you change your insurance provider, you are treated like a new customer. Norms for a new policy are applied; for instance, a higher premium would be applicable depending on your age. Also, if you had acquired a disease during the earlier policy, it is seen as a pre-existing one, and you would have to complete the stipulated waiting period before the policy comes into force. For example, since Nagesh’s father’s was an emergency case, he would have had to bear the cost of the surgery if he had shifted insurers.
But things could change now. The Insurance Regulatory and Development Authority (Irda) has given its approval to the much-awaited health insurance portability, which will start from July 1 onwards. “It is essential to protect policyholders against discontinuity and consequential loss of pre-existing disease cover. The portability will ensure the policyholder is not tied to one insurer for the pre-existing disease cover,” notes the Irda release of February 10.
Once portability comes into effect, you will be able to switch from one insurance company to another, without a waiting period.
What is portable?
According to Irda, credit from the period elapsed, excluding pre-existing diseases, will be carried forward to the new insurer. The new insurer shall provide cover, at least up to the sum assured in the previous insurance policy. And, the porting request will be completed according to the prescribed timeline, which is within three working days, and make claim details data available to its counterpart within seven working days.
How will the process of shifting work?
“Only similar kind of products can be switched. For instance, if you get a room rent benefit of Rs 3,000 on hospitalisation with your current policy, you cannot opt for a policy offering more or less than this,” says R Kannan, member-actuary, Irda.
According to Sanjay Datta, head-health, ICICI Lombard, there are no operational guidelines available on the same. “But a policyholder should not be made to wait for longer than he already has with his earlier policy,” he says.
Waiting period
Typically, when you buy a health cover, you cannot make any claim in the initial period of up to three months. Health insurance portability will waive the waiting period. “The waiting period on renewed policies will also be removed,” says S L Mohan, general secretary, General Insurance Council. Most importantly, the waiting period on pre-existing diseases will be done away with.
Product type and sum assured
You can carry forward only the amount promised as sum assured in your older policy. “If you opt for our products (at the same sum insured), you can transfer the indemnity policy from any insurer with the accumulated benefits,” says Antony Jacob, CEO, Apollo Munich Health Insurance.
Since no two companies have identical products, it would be difficult to switch insurers and many caveats may be introduced for switches between dissimilar plans, says Mohan. “I feel there should be a common product to make the shifting process smooth,” he adds. The regulator also agrees. “We are working on the common portable policy, it is in the pipeline,” says Kannan.
Extra cover
For an additional sum assured from the new insurer, you will be a new customer for the extra cover. For instance, if you have Rs 2 lakh cover with your present insurer and you want Rs 5 lakh cover from the new company, the extra Rs 3 lakh health cover will be treated as a fresh policy, and all norms of a new policy will be applicable, says Datta. On the Rs 2 lakh cover, you will be able to make claims as soon as you switch, and no exclusions (by way of diseases and time cap) will apply.
No-claim bonus
There are some negatives, too. In an existing policy, a policyholder can accumulate a no-claim bonus. It can come in the form of increased cover for every claim-free year. Under portability, however, you would not be able to carry forward the accumulated bonus.
Exclusions and policy features “Policyholders may be in for surprises in terms of more or sometimes even less number of exclusions with the new policy,” says a health insurance head. He suggests policyholders should take advantage of the free-looking period and compare policies before switching over.
