Health Insurance Portability: Change your Health Insurer With Caution

[Apollo Munich CEO]

Three years ago, Mumbai-based Ashish Shah bought a family floater
health cover for Rs 5 lakh. This year, he was in for a shock when his
insurer decided to raise the premium from Rs 5,415 to Rs 26,719
despite the fact that he had made no claims.

But Shah did not want to let go of the policy because he had completed
three years, the period after which specific diseases, such as hernia,
cataract, dysfunctional uterine bleeding, are covered. He was also
just one year short of getting a cover for other pre-existing
conditions. What was Shah to do?

He needn't have worried. With health insurance portability likely to
come into effect from 1 July this year, there may be respite for
people like Shah. Portability allows you to carry over the pre-
existing disease (PED) benefits in your previous policy to the new
service provider.

This was one of the biggest deterrents for switching because the
customer had to serve the waiting period all over again and PED claims
were covered only after a waiting period of 2-4 years. However, Irda
has waived this condition, making for a smooth shift to a new insurer
provided the previous policy has been maintained without a break.


When to move

You can look for a new insurer not only because of a sudden jump in
premium but because a job shift has landed you in a place where the
coverage of the existing insurer is inadequate. "People shifting from
one place to another face problems due to lack of policy servicing at
the new location," states Irda. Service standards, network of
hospitals, lack of coverage in areas such as dental treatment,
maternity benefits, etc, could also prompt you to shift.

Portability can be carried out only at the time of renewing a policy,
not at any time during the year. However, it is advisable to approach
the new insurer at least 45-60 days before the renewal date in order
to ensure a smooth transition. Says Sanjay Datta, head of customer
service, ICICI Lombard General Insurance Company: "A smooth sharing of
data between insurance companies is a must to facilitate portability.
For this, the industry wants to move to an IT-based platform for
exchange of information regarding waiting period, existing claims,
etc. The glitch is that all insurance companies don't have data that
is online and in a standardised format."

If you don't start the procedure well in advance, there is a chance
that you could go coverless for a certain period. "To avoid such a
situation, one can look at a short-term extension of the policy.
Besides, a 60-day period is given before a break in cover is
considered," says Arun Mehrotra, head, retail underwriting & product
development, Iffco Tokio General Insurance.

Insurance companies have been advised by Irda to acknowledge all
applications for portability within three working days. Also, the
previous insurer has been advised to share the policyholder's claim
history with their counterparts within seven working days.

Look before you switch

While portability may seem like a welcome development, exercise the
option with caution. So if you are motivated by lower premium to move
to a new insurer, remember to check for all services, including the
coverage of pre-existing diseases. As the waiting period for companies
usually differs, you may have to serve a longer period even if you
have completed the term with your existing insurer.

BK Sinha, managing director of Unison Insurance Brokers, says, "You
should make sure that you are getting continuity benefits since the
year you started the policy with the initial insurer. Any diseases
contracted after you started the first policy should not be treated as
pre-existing."

"As per Irda guidelines, all insurance companies will have the
flexibility to offer a waiver of waiting period as per their terms and
conditions with a maximum of four years for pre-existing disease
coverage," says Antony Jacob, CEO, Apollo Munich Health Insurance.

The exclusions will also differ from one company to another, which is
why you must check all the parameters before you decide to switch. To
help compare, log on to websites such as www.click2insure.in and
www.myinsuranceclub.com.

It is also likely that your premium will increase or decrease
depending on the insurance provider, the policy that you opt for, and
on the risk assessment done by your new insurer. B Subrahmanyam,
vertical head, health insurance, Bharti AXA General Insurance Company,
says, "Policyholders are advised to study the coverage provided by the
new insurer before they take a final decision on portability. At the
moment, there is no standardisation across the industry in terms of
coverage or pricing as each insurer decides on these matters according
to his respective underwriting philosophy."