Insured customers wanting to switch over to another health insurer can now do so. Insurance Regulatory and Development Authority (IRDA) has issued a directive mandating all health insurance companies to allow portability of policies.
Prior to this directive, health insurance companies had a waiting period on all new policies before providing cover on pre-existing diseases. Hence a policyholder would have to wait for a specified period during the initial few years.
IRDA has observed that because of this, policyholders were discouraged from switching to a better insurance plan or company as they would not get credit for their previous cover. Customers would be tied to the same company or risk losing their coverage on pre-existing diseases. This would also hinder healthy competition amongst health insurance companies not to mention the disadvantage to policyholders.
Owing to this, as per IRDA rules, all health insurance companies will take into consideration the credit earned by policyholders on their previous policy. The criterion is that the policy switch should be done well within the renewal date and the previous policy should have been maintained without any break or discontinuance. Also the credit in terms of waiting period would be limited to the sum assured (including bonus) under the previous policy.
If a policy has resulted in discontinuance because of a delay by the insurer, then the insurer will have to allow portability. The insurer cannot treat the policy as discontinuance due to their internal error.
All new literature like policy brochures, promotional materials etc will clearly highlight the fact that all health insurance policies are portable. In addition to this, they will also specifically mention that the portability should be initiated by the policyholder well before renewal date.
Insurance companies will have to share their database with their counterparts within 7 days, on request. This database would carry claim details of the policyholder.
Health insurance portability will be allowed on all new and existing policies effective July, 1, 2011. Insurance companies should acknowledge customers request for portability within 3 working days.
