Earlier this year, when Sangeeta Mahale, 37, an accounts officer, tried to get a reimbursement for her husband’s hospitalisation, after several months of relentless correspondence she got a reimbursement for 10 out of 13 days spent in hospital.
The experience left her annoyed and she discontinued the policy soon after.
However, now with the Insurance Regulatory and Development Authority (IRDA) allowing health insurance portability from October 2, it will be possible to shift one’s insurer, without letting go of benefits such as no claim bonus and waiting period on pre-existing diseases.
“I sent all the documents and after that I had to answer queries on why he was hospitalised for 13 days,” Mahale said adding she now has only a government cover.
“When you take a policy, you are not prepared for this kind of delays. And you are helpless, as you need the reimbursements to come through.”
Now, any customer can change their insurance company by giving an application 45 days in advance of their next premium payment. “Flexibility is a good move and will help customers. However, we have to see how smoothly it can be done, with regard to issues such as no claim bonus and waiting period for pre-existing diseases,” said Abhishek Gupta, financial planner.
While analysts said it would lead to better competition and better service, it may not be easy to transfer policies because of difference in company strategies.
“Portability will give better choice to customers and will also lead to innovation in the industry," said Sanjay Datta, head, Customer Service, ICICI Lombard GIC Ltd. “Premium will be charged according to the new company the consumer is porting to depending on the insured’s risk profile.”
“I have my doubts as no-claim bonus transfer is a major concern,” said Jagdish Katira, an insurance consultant. “Different companies have different policies on no claim bonus as well as waiting period for existing illnesses.” No claim bonus means if you do not claim anything on your policy for certain period a bonus amount is added to your cover, without addition to premium.
The waiting period for most pre-existing conditions is four years. For instance, if a person wants to shift after a year itself, the waiting period for the pre-existing ailment will be three years with the new insurer. This move may help senior citizens unhappy with their existing policies, as getting a new policy after 65 years of age is nearly impossible.
“Customer data including coverage against pre-existing diseases, his current health status and his past claims history is critical information which the new insurer would need before it chooses to underwrite the case,” said Gaurav Garg, MD & CEO, Tata AIG General Insurance Company Ltd. “Also, retention of existing policies could be a challenge and new initiatives will have to be taken to ensure that the persistency rate of the existing portfolio does not drop.”
While competition in mobile portability resulted in more services at cheaper rates, it may not be the case with regard to health insurance, because of already existing losses and tedious fine print of each insurer. As for once-bitten-twice-shy people like Mahale, it will take more than just new initiatives to woo her to the insurance network.