After mobile number portability, it is time for medical insurance portability. Soon medical insurance holders will have the flexibility to switchover to another company, thanks to the guidelines for portability of health insurance policies issued by the Insurance Regulatory and Development Authority (IRDA) recently. The move is expected to increase the quality of services and encourage healthy competition among health insurance firms.
Currently, the key issue that prevents policyholders from switching insurance companies is preexisting disease (PED) cover. In most cases, claims arising out of such pre-existing illnesses are reimbursed only after a waiting period of 3-4 years. A pre-existing disease is defined as any ailment or condition that the policyholder was suffering from, within 48 months prior to purchase of the policy. The period during which the insurer will exclude coverage to such illnesses is referred to as the waiting period. Policyholders who switched to another company were treated as new customers, and required to go through the waiting period all over again.
To address this, IRDA has approved guidelines on the portability of health insurance policies. The portability facility would be applicable to all existing and new health insurance contracts with effect from July 1, 2011. To effect quick portability, IRDA is making available the claim history of policies to health insurance companies. All insurers issuing health insurance policies will allow for credit gained by the insured for pre-existing conditions in terms of waiting period when he switches from one insurer to another or from one plan to another, provided the previous policy has been maintained without break. If the policy results into discontinuance because of any delay by the insurer in accepting the proposal, the insurer will not treat the policy as discontinuance and will allow portability.
With the portability of health insurance, you will get 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 noclaim bonus, under the previous policy. If you want to increase the sum assured, you 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 has directed that the credit in terms of waiting period will be restricted to the sum insured (including bonus) under the existing policy. No procedure has been laid out by IRDA and so the policyholder will have to apply through the usual process. Customers have to attach proof of previous continuous coverage. The insurer will have to acknowledge the receipt of your application for portability within three working days. Likewise, the insurance companies have to communicate their decision within 15 days. If the policy lapses due to delay in processing the switching request, the insurer will have to accept the policy.
According to IRDA, those wishing to switch will be assured of health cover equal to at least the sum insured in the previous policy. The policyholder should initiate action to approach another insurer, to take advantage of portability, well before the renewal date to avoid any break in the policy coverage due to delays in acceptance of the proposal by the new insurer.
However, IRDA has not specified the premium to be paid when a policyholder moves to a different health insurer.
