Healthy Gains

[Apollo Munich CEO]

The Biggest challenge for health insurance portability. which comes
into effect from OCt 1, would to have standardised rates for various
ailments

The much-awaited health insurance portability may finally kick in from
October 1 as the Insurance Regulatory and Development Authority (Irda)
has now come out with a new set of guidelines. A customer who wants to
port his health insurance will have to apply to the insurer at least
45 days before the premium renewal date of the existing policy. The
insurer will not be liable to offer portability if the policyholder
fails to do so in the prescribed time.

Irda had first come out with a set of guidelines on health insurance
portability on February this year and had fixed July 1 for its
implementation. But insurers had sought time as the system to share
and transfer data of the policyholders was not put in place. The
insurance regulator later fixed October 1 as the new date.
Under the new norms, all individual health insurance policies issued
by non-life insurers, including family floater policies, will be
eligible for portability. The individual health insurance
policyholder, which included family cover, will be able to transfer
the credit gained by the pre-existing conditions, provided the
previous policy has been maintained without any break. If the premium
due on a given policy is not paid on or before the premium date or
within 30 days, it will be considered as a break in policy.

The insurance company, on receipt of an application for porting, will
have to give the applicant the portability form, the proposal form and
other details of the various health insurance products that the
company is currently offering. The new insurer will have to write to
the existing insurer to get the details of the past and current
medical history and claim records. All these data will be shared
through the Irda’s web portal and will have to be mandatorily done
within seven days of receipt of the portability form.

“Sharing of data was the major concern of insurance companies as they
thought it will help rivals poach customers. But that is unlikely to
happen now as the portal of sharing the data would be managed by
Irda,” says Shankar Nath, founder of PolicyTi-ger.com, an online
insurance comparison site.

Analysts say the bigger challenge will be to develop standardised
rates for various ailments according to the facilities being offered
by the hospital. In fact, last year, all public sector insurance
companies had withdrawn their cashless facility as the claim-ratio had
peaked and state-insurers suffered huge losses. Analysts also say that
for the insurance portability to work, companies will have to come out
with a new premium structure, which should be similar in nature for
ailments and medical facilities that the hospitals offer. As insurance
is a very price-sensitive issue, portability will have to ensure that
dissatisfied customers get their value for money once they shift to a
new insurer and the insurers will also have to ensure that the
exclusions and policy features do not surprise the customer.

Antony Jacob, CEO, Apollo Munich Health Insurance, says it is
important for the regulator, companies and customers to be clear as to
how the system will work “because we have about 50 companies who are
engaged in health, which includes life, general and specialist health
insurance companies”. He adds: “The products vary in terms of
features, limits, sub-limits and pricing and the regulator will have
to understand how some of the finer processes and features will work
when we flag off portability.”

RK Kaul, chairman and MD, Oriental Insurance, agrees: “As of now,
there is no uniform health insurance policy for all companies. It’s
time that that happens. The industry needs to work together as there
is a lot of disparity between various policies offered by companies.”

Irda has stated that if the waiting period in the new policy is longer
than the earlier one for the same disease or treatment, the additional
waiting period should be clearly explained to the incoming
policyholder in the portability form. In case of group health
insurance policies, the individual members' shall be given credit
based on the number of years of continuous insurance cover,
irrespective of whether the previous policy had any pre-existing
disease exclusion.

The cumulative non-claim bonus acquired from the previous insurer will
be added in the new policy. For instance, if a policy holder has
accumulated a bonus of R50,000 with the insurer and has a sum insured
of R2 lakh, the total sum insured for the customer if he is porting
the policy will be R2.5 lakh. If the new insurer doesn’t have any
product in the R2.5 lakh-bracket, it would offer the policy in the
nearest slab and charge the premium, accordingly.