The Insurance Regulatory and Development Authority (IRDA) has issued guidelines for the portability of health insurance policies from 1 July 2011, putting in place a system that offers flexibility on pre-existing diseases and hassle-free portable service to those who change jobs. In an interview with Asia Insurance Review, Mr Antony Jacob, CEO, Apollo Munich Health Insurance Co, speaks about the benefits of portability and the challenges ahead for insurers.
By Jimmy John
The key impact of this much awaited health insurance portability introduction is its clear benefit to customers, says Mr Anthony Jacob. “Insured members will be able to choose between insurance brands during the lifespan of being insured,” he says.
Benefits to Insureds
Another benefit for the insureds is that portability would also allow the policyholders to carry forward the elapsed pre- existing diseases (PED) waiting period along with the bonuses that have accrued for claim-free years, from the previous insurer to the new insurer.
So where an existing policy will cover pre-existing illnesses only after a three-year waiting period, if the insured has already had this policy for two years before deciding to change insurer, he will not need to wait another three years again with the new insurer. The waiting period will not be extended but will continue for only another year as if it were with the previous insurer.
Service standards will also rise as a result. “The move will call for minimum service requirements amongst all insurance players which in turn will have a positive impact on customer service,” Mr Jacob says, adding that new benchmarks in terms of service standards and delivery mechanisms for the insurance players will be put in place.
Benefits to insurers
Portability promises to be beneficial in the long run for the industry as well and the move is expected to bring about a positive change in the insurance industry as a whole.
There would be an increased level of competition among insurers in order to retain their existing customers, which would ensure that there is constant innovation and improvement in the efficiency of standards and services, says Mr Jacob.
Close cooperation between companies
“In addition, there will be a need for greater cooperation and database sharing between the insurers,” he says.
For instance, in cases where consumers who switch from one health insurer to another, insurers would need to know their history of ailments or claims experience and so will need to cooperate to share data.
Database sharing in terms of insured details, medical history, policy-coverage details, claims history, etc, would enable the incumbent insurance company to ensure all underwriting guidelines and checks are met before accepting a risk, he explains.
Underwriting the key
However, like all changes, it would be imperative for all insurance players to be careful of the possible misuse that may arise too, Mr Jacob cautions.
Believing that every company should work as per its underwriting principles when it comes to accepting a proposal, he is of the opinion that ideally all consumers opting for portability should place such requests with the insurance company of their choice at least 45 days prior to the renewal date. “This would enable the incumbent insurance company to ensure all underwriting guidelines are met before accepting a risk,” he says.
However, he stresses that they have always been mindful of the market needs and in the case of portability, they have stayed ahead of the curve. They began to offer portability of benefits with their Easy Health and Maxima policies, where
a customer opting to choose their product, at similar Sum Insured Level, could transfer an indemnity based health policy from any insurer with the accumulated benefits and minimised waiting period.
“Keeping in mind the current changes in the regulations, we would have to work closely with the regulator to understand the implications and applicability of the policy,” he adds.
Premium margins to be under pressure
On the issue of pricing of health insurance products in the current scenario, he notes that “current and past business performance data of health insurance companies/portfolios suggest price hardening requirements.” Market dynamics and medical inflation also brings additional pressure on the pricing which needs to be collectively addressed, he adds.
With portability, there would be increased coverage for pre-existing diseases which may add to the pressure. Though the underwriting principles differ from insurer to insurer, he believes that all these can herald price hardening in the days to come for health insurance plans.
Growth story to continue
The health insurance sector in India is expected to maintain its high growth momentum in 2010-2011 as premium figures of the previous two years have shown that the industry has doubled in size over this period.
Premium collection in 2009-2010 by health insurance companies was Rs7,803 crore (US$1.7 billion) against Rs3,976 crore in 2008-2009. Payment towards claim settlements by insurance companies rose by about 82.5% to Rs7,456 crore in 2009-2010 over 2008-09. The number of policyholders too increased to 6,884,687 in the last fiscal from 4,575,725 in 2008-09.
Company with better services will win
“We need to evaluate the pros and cons of the move but are confident that in the long run, it would be the company with the better services and customer commitment that would stand to gain in the market dynamics,” feels Mr Jacob.
In any case, he assures that Apollo Munich Health Insurance will be ready by 1 July to support this move to portability
By Jimmy John
The key impact of this much awaited health insurance portability introduction is its clear benefit to customers, says Mr Anthony Jacob. “Insured members will be able to choose between insurance brands during the lifespan of being insured,” he says.
Benefits to Insureds
Another benefit for the insureds is that portability would also allow the policyholders to carry forward the elapsed pre- existing diseases (PED) waiting period along with the bonuses that have accrued for claim-free years, from the previous insurer to the new insurer.
So where an existing policy will cover pre-existing illnesses only after a three-year waiting period, if the insured has already had this policy for two years before deciding to change insurer, he will not need to wait another three years again with the new insurer. The waiting period will not be extended but will continue for only another year as if it were with the previous insurer.
Service standards will also rise as a result. “The move will call for minimum service requirements amongst all insurance players which in turn will have a positive impact on customer service,” Mr Jacob says, adding that new benchmarks in terms of service standards and delivery mechanisms for the insurance players will be put in place.
Benefits to insurers
Portability promises to be beneficial in the long run for the industry as well and the move is expected to bring about a positive change in the insurance industry as a whole.
There would be an increased level of competition among insurers in order to retain their existing customers, which would ensure that there is constant innovation and improvement in the efficiency of standards and services, says Mr Jacob.
Close cooperation between companies
“In addition, there will be a need for greater cooperation and database sharing between the insurers,” he says.
For instance, in cases where consumers who switch from one health insurer to another, insurers would need to know their history of ailments or claims experience and so will need to cooperate to share data.
Database sharing in terms of insured details, medical history, policy-coverage details, claims history, etc, would enable the incumbent insurance company to ensure all underwriting guidelines and checks are met before accepting a risk, he explains.
Underwriting the key
However, like all changes, it would be imperative for all insurance players to be careful of the possible misuse that may arise too, Mr Jacob cautions.
Believing that every company should work as per its underwriting principles when it comes to accepting a proposal, he is of the opinion that ideally all consumers opting for portability should place such requests with the insurance company of their choice at least 45 days prior to the renewal date. “This would enable the incumbent insurance company to ensure all underwriting guidelines are met before accepting a risk,” he says.
However, he stresses that they have always been mindful of the market needs and in the case of portability, they have stayed ahead of the curve. They began to offer portability of benefits with their Easy Health and Maxima policies, where
a customer opting to choose their product, at similar Sum Insured Level, could transfer an indemnity based health policy from any insurer with the accumulated benefits and minimised waiting period.
“Keeping in mind the current changes in the regulations, we would have to work closely with the regulator to understand the implications and applicability of the policy,” he adds.
Premium margins to be under pressure
On the issue of pricing of health insurance products in the current scenario, he notes that “current and past business performance data of health insurance companies/portfolios suggest price hardening requirements.” Market dynamics and medical inflation also brings additional pressure on the pricing which needs to be collectively addressed, he adds.
With portability, there would be increased coverage for pre-existing diseases which may add to the pressure. Though the underwriting principles differ from insurer to insurer, he believes that all these can herald price hardening in the days to come for health insurance plans.
Growth story to continue
The health insurance sector in India is expected to maintain its high growth momentum in 2010-2011 as premium figures of the previous two years have shown that the industry has doubled in size over this period.
Premium collection in 2009-2010 by health insurance companies was Rs7,803 crore (US$1.7 billion) against Rs3,976 crore in 2008-2009. Payment towards claim settlements by insurance companies rose by about 82.5% to Rs7,456 crore in 2009-2010 over 2008-09. The number of policyholders too increased to 6,884,687 in the last fiscal from 4,575,725 in 2008-09.
Company with better services will win
“We need to evaluate the pros and cons of the move but are confident that in the long run, it would be the company with the better services and customer commitment that would stand to gain in the market dynamics,” feels Mr Jacob.
In any case, he assures that Apollo Munich Health Insurance will be ready by 1 July to support this move to portability
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