Health Insurance Portability-Customers Edge

Abstract

Insurance has been the area where more complaints arise about the insurance company. It is been often observed that insured is not satisfied with his current insurance company thus he often fell need to switch from it, keeping this thing in mind  Insurance Regulatory and Development Authority (IRDA) announced the health insurance portability. This study tried to explain what are the benefits a customer (herein after referred as “insured”) will get from health insurance portability?  What will a insured will loose?, further this study focus on the process of health insurance portability and challenges during the process with reference to things to kept in mind while getting policy porting out of any company.

Introduction

Insurance is promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Every man in his life is doomed to face accidents thus arises a need for the recovery or prevention against such accidental loss thus arise for health insurance. Health insurance is insurance against the risk of incurring medical expenses among individual. Often insured feel that the insurance company does not provide the desired services thus they feel need for switching the company. With this perspective government of Insurance Regulatory and Development Authority (IRDA) gave go ahead to health insurance portability on 1st July 2011. All the policies issued by health insurance companies and general insurance fall under this and portability are allowed for individual as well as family policies. The concept of insurance portability may be defined as one whereby an insured can change his service provider if he or she is not satisfied, due to some reason or the other, with the products and services being offered by the present insurer. The best benefit of this facility is that the insurer can opt for a similar product and keep his previous details like coverage and other benefits that were previously part of the plan. If you wish to break free from your existing insurer and reach out to a policy that a new insurer is providing you then you may easily switch over to it without undergoing the formalities of a fresh policy issuance like waiting period and other formalities. The benefits Sum Assured and waiting period for pre-existing diseases will be switched over to the new insurer automatically thus making your moving on to a new policy more easy and convenient

Objectives

  1. To outline the major advantages and disadvantages of health insurance portability
  2. To examine the process of portability and challenges in it.

Insurance Portability in India – Present Scenario

So far, insurance portability in India is only applicable for the health policies. Following are some benefits that are transferred in these scenarios:

  • Waiting periods
  • Time bound exclusions
  • Waiting periods for already existing ailments

The facility of portability is now allowed in case of all family floater policies and individual plans being issued by all the health insurance and general insurance companies.

Advantages of Health Insurance Portability

The major benefit of insurance portability is that all the insurers will try to do their best to retain as well as attract customers. This means that overall quality of services can be expected to be better than before. The companies can also be expected to improve their claims settlement procedures. The companies are also supposed to come up with better products than before so that they can keep the customers and also draw new ones. The premiums are also expected to be lower or at least competitive. Also when switching from the existing insurer to a new one insured become entitled to sum assured and cumulative bonus also forms a part of health insurance portability and will be entitled to the same. There is portability available for waiting period of pre-existing diseases. This means that while you switch yourself to a new insurer, the time that you have spent with the old insurer would be taken into consideration. It is a customer centric initiative that is easy and convenient especially for those who are having tough time with their existing insurer. It enables you to move towards better health insurance plans and products as per your changing requirements and needs. You are no more bound to stick to your existing user. It has come as a boon for all who fall under the head of group insurance policy of any organization. One can freely change his job and switch his existing policy that is under the banner of his current organization without much hassle and without losing on to the accrued benefits. All on the above nothing extra will be charged when you opt for portability.

Disadvantages of Health Insurance Portability

The major problem of insurance portability is that the features tend to vary with respect to companies. In several companies there is a cooling off period of a year, which may prove too much for the insured. Moreover, the only time when this benefit can be availed is during renewal meaning there by during the year if one want to change his policy he has to wait till the policy is due for renewal. If someone wants to change their group med-claim policies, as per laws they will have to avail the services of the same company. It is only after a year that they will be able to change over to another company. You can opt for health insurance portability only when your policy is due for renewal. Different health insurance companies have different polices and features so insured need to opt for the new insurer very carefully.

A new company may charge loading on premiums if the insured already has a critical medical condition. If someone changes over to an individual policy from a group policy they may not be provided similar benefits. One such benefit is maternity assistance. It is important for insured to do some research while choosing the new insurer as there are some companies which do not provide cumulative bonus or claim bonus while switching to policy which may pose a loss to you. Application of portability may be rejected by the new insurer keeping in view the insured medical history and claim. The insurers reserve this right. In case of the top up medical insurance policies there is no clarity provided. The policyholders might also lose out on no claim bonus if they change their insurer. This is because every company does not provide cumulative bonus or no claim bonus. Insured can only switch over to similar or same type of polices like basic reimbursement to basic reimbursement when he opt for portability.

Process of Insurance Portability

In order to avail the portability feature the insured should make an application to the new company a minimum of 45 days prior to the date when his or her policy is renewed with the present company.

The insured needs to fill up the portability form and the proposal form of the new company. Once this is done, the new company will get the claim benefits and medical details of the insured from the present insurer within a 7 day period.

The new company holds the right to not agree to a policyholder’s proposal on the basis of their claim benefits and medical history. However, if the proposal is not rejected within 15 days then it can be said to have been accepted.

Documents required for Insurance Portability

The following papers are needed in order to successfully complete an insurance transfer:

  • Copy of the previous year’s policy schedule that has been issued by the earlier insurer or the renewal notice
  • If the existing policy has some claims then the copies of discharge summary, follow up, and investigation reports have to be provided
  • Self-declaration by customer regarding the absence of claims
  • If the insured has a previous medical history then the copies of his or her consultation papers, treatment, prescription, reports, and investigation need to be provided
  • Questions about the details of the present and earlier insurance plans are mentioned in the proposal forms and they have to be filled on a regulatory basis

The proposers should however keep in mind that the documents normally vary from one insurer to another.

Insurance Portability – Things to Remember

The first thing to be remembered while availing this facility is to be patient and watch the proceedings to have a full understanding of how things happen than it is important for the insured to consider the following points before opting for health insurance portability

  • Service that is offered and how the product will benefit you. Is it worth taking a call?
  • Check out for limits, sub-limits or restrictions that may come handy on the claims that you make based on age, disease or hospital when insured opt for portability.
  • Look out for the age limits or age cut-offs. Always go in for policies having the maximum age limit.
  • If insured have cashless claims and reimbursement options in hand then he should give preference to cashless claims.
  • Check out the network of hospitals that the new company covers. Insured would surely want his nearest hospital to be covered as that is the most approachable place in case of emergencies.
  • It may be so that while insured opt for a new insurer the premium may change due to health conditions or age factor, so make sure to get this information in advance.
  • Insured should not forget that while switching from one insurer to the other he will be able to port only the waiting periods or credits of bonus or pre-existing diseases and not the features of his policy.
  • Whenever insured plan to go in for portability keep 15-45 days in hand as the entire procedure may take that amount of time.
  • Insured cannot ignore the fact that while he moves towards a new insurer he will in no way abide by the terms and conditions of his existing insurer. He will have his own set of terms and conditions. Make sure to go through them.

Health insurance portability is undoubtedly a customer friendly move but it is important to understand that health insurance products and plans vary across different companies and all benefits of your existing policy do not get ported.

It is important for insured to do a good research work before you move in the direction of portability. Do not haste in opting out for new product or plan unless they are really worth the effort.

Challenges in Insurance Portability

The major problem faced in insurance portability is processing of critical data such as the following:

  • Coverage against previously existing ailments
  • Previous claims history
  • Present health status of the proposer

Policyholders often do not have with themselves all the records of their plans and thus are not able to provide the complete information in the portability forms. So it often becomes difficult for the companies to match the data provided to them with the information available on IRDA website. Sometimes, it has been seen that the customers are not following the 45 day deadline and more often than not miss the said time limit. Awareness is also a major issue in this regard with most people not knowing that such a facility even exists. Insurers are also trying to come to terms with the fact that the agents are not receiving any commissions in case of portability. It is expected that the agents might lead the policy owners the wrong way or discourage them from going for such a decision. Experts are of the opinion that keeping a proper persistency ratio may be a major problem for the insurers as the customers now have the freedom to switch over whenever they feel like it. Insurance portability is also expected to be a major problem for the insurance companies who may have to cope with the demands and speed of the market. They will need to innovate more on their products and upgrade their services in order to retain their clients.

Conclusion:

For India portability is new concept. India has recently witnessed portability in telecom sector, now government has introduced the same portability concept in health insurance sector.  Health insurance portability is new phenomenon, it will take time for insured to understand what really health insurance portability is and what they can gain from it? As this concept is mundane Indian insurance customer will understand this and try to gain much out of it. This portability concept will largely benefit to those who are not satisfied with their current insurer. As the time passes it has to be seen how the customer will react to it? How they get the maximum benefit out if it.

References

  1. The Financial Literates- Benefits and Process (http://www.tflguide.com/2011/10/health-insurance-portability-benefits-process.html)
  2. The Indian Express- health insurance portability is a reality (http://www.indianexpress.com/news/from-today-health-insurance-portability-is-a-reality/854161)
  3. Business Today – Seeking Fresh Protection (http://businesstoday.intoday.in/story/tips-to-use-health-insurance-portability-change-insurer/1/19555.html)
  4. Money Control.com- Health Insurance Portability: The customer is king again– (http://www.moneycontrol.com/news/health-insurance/health-insurance-portability-the-customer-is-king-again_621846.html)
  5. The Hindu- Business Line – ‘Health insurance portability, standardisation will bring in transparency (http://www.thehindubusinessline.com/industry-and-economy/banking/health-insurance-portability-standardisation-will-bring-in-transparency/article4382864.ece?ref=wl_industry-and-economy)
  6. The Times Of India – Few takers for medical portability (http://timesofindia.indiatimes.com/business/india-business/Few-takers-for-medical-portability/articleshow/16582471.cms)
  7. Daily News & Analysis – All you need to know about health insurance portability (http://www.dnaindia.com/money/report_all-you-need-to-know-about-health-insurance-portability_1597340)

Authors

Arjun Gupta & Rohit Bansal

Assistant Professor, Dept. of Management Studies
Vaish College of Engineering, Rohtak


Published : The Insurance Times : March-2013