Now, health insurance portability
Come July, India's 10 million health insurance policyholders will be
able to switch insurers, as easily as mobile phone owners can switch
operators.
What will change…
The Insurance Regulatory and Development Authority, or IRDA, is busy ushering in health insurance portability. Its guidelines will allow policyholders to switch insurers without compromising on many key terms and conditions in the policy such as the minimum sum insured, pre-existing disease cover and no-claim bonus. Insurers normally reimburse claims on preexisting ailments only if a customer stays with them for a minimum period of two to four years, known as the waiting period. Under IRDA's forthcoming ruling, policyholders switching loyalties to another company can adjust their previous policy's waiting period with the new one.
… Its benefits…
The decision will come as welcome relief to customers who are not satisfied with the service standards of their insurance companies. Portability will also help people relocating to another part of the country where their insurance company may not have a presence. The move is likely to increase competition in the sector and force players to focus on service quality and product innovation.
… And its inherent limitations
Portability does not mean that all the benefits and entire coverage from one health care plan will be carried over to another plan. While switching insurers, the customers will have to abide by some new rules. "While the switching facility will be given by insurers, the premium rates and policy features will differ between them," says Antony Jacob, CEO, Apollo M u n i c h H e a l t h Insurance. For instance, Apollo Munich policies have no sub-limits for categories such as room rents, doctors' fees and diagnostics. But its customers will automatically lose this benefit if they switch to another insurer's policy that has sub-limits.
Portability, then, will not result in a huge churn in the industry immediately, say experts. "It will take some time for people to understand which product is best for them," says Jacob.
Global experience
Portability is common in many developed countries such as the US, Germany, Italy and Canada. In the US, it became a federal law in 1996 and has been a huge success.
The Insurance Regulatory and Development Authority, or IRDA, is busy ushering in health insurance portability. Its guidelines will allow policyholders to switch insurers without compromising on many key terms and conditions in the policy such as the minimum sum insured, pre-existing disease cover and no-claim bonus. Insurers normally reimburse claims on preexisting ailments only if a customer stays with them for a minimum period of two to four years, known as the waiting period. Under IRDA's forthcoming ruling, policyholders switching loyalties to another company can adjust their previous policy's waiting period with the new one.
… Its benefits…
The decision will come as welcome relief to customers who are not satisfied with the service standards of their insurance companies. Portability will also help people relocating to another part of the country where their insurance company may not have a presence. The move is likely to increase competition in the sector and force players to focus on service quality and product innovation.
… And its inherent limitations
Portability does not mean that all the benefits and entire coverage from one health care plan will be carried over to another plan. While switching insurers, the customers will have to abide by some new rules. "While the switching facility will be given by insurers, the premium rates and policy features will differ between them," says Antony Jacob, CEO, Apollo M u n i c h H e a l t h Insurance. For instance, Apollo Munich policies have no sub-limits for categories such as room rents, doctors' fees and diagnostics. But its customers will automatically lose this benefit if they switch to another insurer's policy that has sub-limits.
Portability, then, will not result in a huge churn in the industry immediately, say experts. "It will take some time for people to understand which product is best for them," says Jacob.
Global experience
Portability is common in many developed countries such as the US, Germany, Italy and Canada. In the US, it became a federal law in 1996 and has been a huge success.
