Unlike mobile number portability (MNP) where the subscriber loses nothing upon switching the operator, the Insurance Regulatory and Development Authority's (IRDA) move to usher porting into the health insurance sector from July 1 would not carry a similar benefit.
In fact, policy holders switching their insurers within a year would lose, rather than gain.
"The earlier you switch, the bigger is the loss. You tend to gain only if you port your health insurance during the renewal of your health insurance policy. You can expect greater benefits then. But if you port your policy within a year, the insured person tends to lose badly," said Amarnath Ananthanarayanan, chief executive officer (CEO), Bharti AXA General Insurance.
According to an industry expert the policy holders may have to pay around 60 per cent more premium to the new insurer if the health insurance scheme is ported within a year.
"The IRDA's move to offer porting in health insurance should have offered the benefit of porting irrespective of the time period. Instead of the oneyear lock-in period consumers should have been allowed access to switch the insurance company whenever they like without any extra charge," said an insurance industry official.
Generally, most health insurance policy holders change their insurer after a year.
Porting in health insurance sector is current adopted in many developed countries, where policy holders have the freedom to switch to any other insurer at any time during the tenure of the policy, which is generally a year.
The upcoming portability facility will allow policy holders to switch to another insurance company with the same conditions.
Currently, IRDA allows portability of motor insurance policies.
IRDA's decision comes after it received several representations from consumer associations and policyholders to enable portability of health insurance policies.
Currently, a policy holder who wishes to change the insurer has to buy a new policy. Also, the waiting period on pre-existing or any ailments disclosed by the policy holder would be applicable for the new policy as well.
Once portability is introduced in the health insurance sector, a policy holder will be able to switch to another insurer without losing out on the waiting period. Also, the sum insured is carried forward and would include the no-claim bonus that the former insurer would offer the policy holder.
But the flip side is that one can only port credits for the waiting period on pre-existing ailments and not features. While buying a new policy the features of the new policy will apply and the policy holders will have to accept the limits in the new policy.
However, any waiting period on similar features of the policy is likely to get ported as well.
The industry also sees technical glitches coming in the way of the July 1 deadline for porting to be introduced in the health insurance sector. As per the IRDA guidelines, in case of a switch the old health insurance company will have to share the details of the policy within seven days. However, industry experts believe that there can be logistical issues here as all health insurance companies do not have centralised data processing facilities.
Courtesy: Mail Today
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