Health insurance portability has finally become a reality.You can switch from one insurer to another without losing out on accumulated benefits.The Insurance Regulatory and Development Authority (Irda) has also put into place rules to make the process smooth for the customer.For instance,if an insurance company does not respond within the specified time,it will be assumed that the proposal has been accepted.This clause will make the portability process very quick and efficient, says Mahavir Chopra,head,e-business,Medimanage.
Also,the Irda guidelines allow a switch from a group mediclaim to individual or family floater policies,and allow the policyholder to retain the waiting period credit.Since many families depend solely on their employers group policies,such transfers will help them buy polices on their own without having to wait for four years before pre-existing diseases are covered.
Will it really help
While Irdas diktats are welcome,portability should not be regarded as panacea for all the grievances of policyholders.Portability of a health insurance policy is attractive only on paper, says consumer activist Jehangir Gai.As long as a policy is profitable,every insurance company is good to the insured (when there is no claim,there cannot be any dispute).
He points out that only after a claim arises do insurance companies get worried about repeated subsequent claims.It is then that the company starts nitpicking and the customer considers migrating to another insurance company.
The catch is that portability is not a matter of right.It is up to the new company to accept or reject a proposal.Which insurance company will want to take on the liability of an onerous policy asks Gai.There are other issues,too.Many feel that insurance companies will outrightly reject the proposals of senior citizens,who are seen as a high-risk category,thus defeating the purpose of portability.
Besides,for those who have accumulated a no-claim bonus,portability could turn out to be a loss-making proposition.As per the Irda circular,the no-claim bonus can be carried forward to the new policy,but the premium charged will be for the enhanced sum assured.This means that the policyholder will have to pay a higher premium if he wants the same insurance cover under the new policy.
Arvind Laddha,managing director & CEO of Vantage Insurance Brokers,points out another aspect that could go against the policyholders.When the customer migrates from a group to an individual cover,he will get credit only for the period for which he has been insured with the current group insurer.This seems like a
compromise for the insured,especially if he has had no claims with the previous insurer, he says.Policyholders should also remember that they can migrate only to the individual policy offered by
the same insurer.After a year of continuing with that policy,they will be free to move to any other insurance company.
Not all black and white
In certain cases,there is confusion over the definition of pre-existing illnesses.If a policyholder has undergone treatment for a disease and his insurer has settled the claim,will the new company,to which he decides to migrate,deny cover for the disease for which a claim has been made This is a grey area that needs clarity.If the new insurer does not offer a cover without a waiting period for ailments suffered during the tenure of the old policy,then senior citizens and others with chronic ailments will not be able to enjoy portability in the true spirit, says Chopra.
If the new insurer is aware of the fact that the policyholder was suffering from a pre-existing condition and decides to accept the proposal in practical terms,it will be difficult to reject a claim on the grounds of pre-existing diseases, says Subrahmanyam B,head,health insurance vertical,Bharti-Axa General Insurance.
However,Gai says the new insurer will have to extend the cover to these illnesses too.If a disease is listed as pre-existing in the current policy,the new insurer will also treat it as pre-existing.
The waiting period for preexisting diseases is across insurers.Therefore,if the new company accepts the risk,pre-existing diseases would be covered, says Antony Jacob,CEO,Apollo Munich.It seems health insurance policyholders will have to wait for some more time before they have complete freedom of choice.Till then,they should make the most of the benefits offered by portability.
Whats good about portability
It allows policyholders to switch to another company and carry forward the waiting period credit for pre-existing diseases.If the new insurer does not respond to the portability application within the stipulated time,the proposal is considered to have been accepted.Even the policyholders who are covered under employers'group mediclaim can transfer the waiting period credit and move to individual or family floater health policies.
An insurance company can reject a proposal for a switch.Those in risky groups,especially senior citizens,may not be accepted by any insurance company.Insurers are free to levy premium as per their underwriting norms.Hence,those in high-risk categories should not expect a reasonable premium while porting.Customers with an accumulated no-claim bonus could be at a disadvantage as the new insurers will levy the premium applicable to the enhanced sum assured.While migrating from a group cover,the customer will have to first switch to an individual cover of the same insurer.Only after a year can he move to an insurer of his choice.The guidelines are confined to PED cover credit.They are silent on how other features,such as exclusions and loading clauses,should be factored in.
Grey areas that require clarity
Insurers should clear the migration proposal within a specified time,but there is confusion over the prescribed time limit.Some say this period is 15 days,others believe it is 35-40 days.Also,its unclear if the new insurer should immediately cover the diseases contracted during the existing policys term.
What you should know
Submit the migration proposal 45 days before the renewal of your existing policy.Porting will be possible only if the policies are maintained without a break.