Health Insurance Portability – Another consumer friendly step by IRDA

 

Courtesy: Ted Swedenburg from Flickr

It seems ‘portability’ is the buzzword amongst the regulators this year.  After the much awaited mobile number portability allowing users to switch their mobile operator while retaining the number, Insurance Regulatory and Development Authority (IRDA) has instructed insurance companies to allow health insurance portability from 1^st July 2011.  This is continuation of consumer friendly measures initiated by IRDA which started with modifying structure of ULIP policies last year.

From 1^st July 2011, policyholders can change the insurance companies without losing any credit for the period of cover with the previous insurer.  This is most beneficial in case of pre-existing diseases.

Pre-existing diseases, generally, are excluded from the health insurance cover for a certain period of time from the commencement of the policy.  Depending on the health insurance plan, it varies from one year to three years.  In existing scenario, in case the policyholder changes the insurance company say after 4 years, the new policy will again have the above exclusion and any pre-existing diseases will be excluded from cover for one year to three years depending on the plan. 

This works to the detriment of the policyholder and he is force to stay with the same insurance company even though he is not satisfied with their services.  This also acts as anti-competitive. IRDA has now directed the insurance companies to take into consider the period served with previous insurance company and reduce the same to consider coverage of pre-existing diseases.

For example: Suppose Rahul purchased a health insurance policy from ABC Insurance Company last year.  The said policy excluded pre-existing diseases from coverage for first two years.  Now Rahul, not satisfied with the services of ABC Insurance, wants to discontinue this policy and change to XYZ Insurance Company, whose insurance plan also exclude pre-existing diseases from coverage for two years.  As per the new guidelines, XYZ Insurance Company will take into consideration the period of coverage with ABC insurance and reduce the same to define the coverage for pre-existing diseases under the new policy.  Hence the new policy will only be able to exclude pre-existing diseases for further one year.

One important point to note here is this benefit is restricted to the sum assured (including bonus) under the previous policy.  In case one wants higher coverage, then he again needs to fulfill the criteria of pre-existing diseases.

Had such conditions restricted you to change your insurance company in the past?  Will you now be switching to another insurance company?  Do write your comments and suggestions below.

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