By Rahul Agarwal
Founder, 121 policy
Health insurance portability has created quite a stir amongst customers, insurance companies, brokers, third party administrators (TPA) and everyone even remotely connected with insurance. Once the portability kicks in, the existing health insurance policyholders will be able to freely switch their health insurance cover from one company to another.
What Is Portability?
Portability allows a consumer to migrate from one health insurer to another. As per a circular released by the Insurance Regulatory and Development Authority (IRDA), portability will be effective from 1st July 2011.
The IRDA states, “The Authority has examined various issues involved in the portability of health insurance plan and has issued necessary orders for effecting portability which will be implemented from July 01, 2011. The accepting insurer shall provide cover, at least up to the sum assured in the previous insurance policy “.
· With the portability of health insurance, the insured gets full credit for the period of cover as well as the no-claim bonus with the previous insurer. The credit in terms of waiting period will be limited to the sum assured, including no-claim bonus, under the previous policy
· The new facility will also help those policy holders who stick to one insurer throughout life for fear of losing the cover for Pre Existing Diseases (PED).
· Health insurance policy portability will help people shifting from one part of the country to another. In want of such facility they were put to disadvantage due to lack of their insurers’ offices at new locations.
· In case of change of jobs, policy holders will not lose health insurance cover as changing the insurer won’t be a problem anymore.
· For an increased sum assured, the policy holder will have to pay a higher premium. Portability will ensure that the policyholder is not tied to one single insurer throughout his life for fear of losing the cover of pre-existing diseases, or other continuity benefits like no-claim bonuses and free medical check-ups.
IRDA adds, “It is essential to protect the policyholders against discontinuity and consequential loss of PED cover by making the health insurance plans portable across the insurance companies”.
In general, health insurance policies have specific exclusions for PED for a specified period of cover during the initial year, and policy holders do not get this cover in the event of changing insurance firm. It was considered "detrimental to competition".
So How Does It Work
· The process of application should start at least 45 days before the expiration of the existing policy.
· A fresh application should be made to the new company and the proposal form must cite personal and health details of family members.
· It is likely that the proposal form will come with a section to activate portability. All information regarding previous coverage would be laid down here. Policyholders will also be required to give some proof in support of previous continuous coverage.
· To calculate risk factor, general underwriting process will be done by the company. If the company will give its approval then it will offer relief from waiting periods as the client will have already gone through some time in his/her past policy to the extent of the previous sum insured.
For e.g. Mr A has been continuously renewing his health policy for the last 6 years with XYZ company and now wants to port to a new company which has 6 years waiting period for the list of ailments. The new company will waive such waiting period for this customer through 6 years credit from the present policy.
· As in mobile portability, health insurance portability al