Health insurance portability has created quite a stir amongst customers, insurance companies, brokers, third party administrators (TPA) and everyone even remotely connected with insurance. Once the portability kicks in, the existing health insurance policyholders will be able to freely switch their health insurance cover from one company to another.
As per the circular released by IRDA, portability will be effective from 1st July 2011. However there is a lot of skepticism within the industry and a lot of issues that need to be addressed. Moneylife Foundation organized a Round Table Conference inviting the industry veterans to share their thoughts on Health insurance portability.
Dr. Amarnath Ananthanarayanan, CEO and MD of Bharti AXA General Insurance said, “People in India are underinsured and there are no good government-backed programs. Portability will only affect the existing policyholders who will move from one company to another and will not help to increase the insurance penetration.”
According to M Ramadoss, Chairman and MD of New India Assurance Company Ltd, one of India’s leading public sector non-life insurance company, it is very difficult to sell insurance to Indian customers as they are very demanding. Customers in India look for minimum premium along with maximum benefits.
“The portability guidelines by IRDA state that the insurance companies will have to act upon a policyholder’s request within 7 days. By and large, insurance companies have the last 3-years Claims data but for data prior to that these insurers would have to depend on the TPA’s,” he added.
“Portability option gives a small window of opportunity to policyholders if they realize that the insurer’s services are not up to the mark. Why restrict portability only to health insurance. It should extend to life insurance plans as well” said Dr. P Nandagopal, CEO and MD of IndiaFirst Life Insurance.
To make health insurance portability a successful initiative, there is a strong need for a centralized database pool from all the insurers sharing the claims data of customers. This will lead to a smooth, fast and hassle-free switching process.
As per Dr. Ananthanarayanan portability is a step in the right direction and once the teething problems are over, both the customers and insurers will benefit from this. Companies that have a better ability to assess the associated risks and can price their products competitively by using proper analytical tools will emerge as winners.
The current circular of IRDA on Health insurance portability mandates the portability of Sum Assured and Pre-existing Diseases only. So if a policyholder moves from Company A to Company B, then Company B will have to mandatorily offer him / her a policy with the same Sum Assured but they have the freedom to charge premium of their choice. There are several other areas which need clarification like Sub-limits, Exclusions, Loading Premium, Co-payment, Maximum Renewable Age, etc. Portability of Sum Assured and Pre-existing Diseases is the first step towards health insurance portability which is aimed to benefit the customers. As time progresses, there will be more clarity on all aspects that will empower customers to make an informed decision instead of frivolously switching from one insurer to another.
