The Hindu Business Line : Transfer of health insurance: Policyholders may lose `benefits'

Portability factor
The General Insurance Council has now constituted a task force to examine the issue of `portability'
Insurers may charge higher premium or create a minimum standardised cover, for which portability can be granted

Mumbai May 1 Health insurance policyholders may no longer be able to avail themselves of the existing benefits if they transfer their policy from one public sector insurance company to another.

Until now, all public sector insurance companies offered policies with similar clauses and rates. Policyholders could enjoy all the accrued benefits even if they shifted their policy from one company to another.

Such accrued benefits include the cumulative bonus, free health check-ups and most significantly the waiver of the waiting period for coverage of `pre-existing diseases'.

The `portability' of health insurance policies has been dealt a blow as several public sector insurance companies have either introduced or are on the verge of launching new health insurance products with variable rate structures and clauses.

"Earlier, if a policyholder transferred the policy to another company and then developed, say a heart ailment, the `pre-existing disease' clause would not be held against him — provided of course if he has had a `claim-free' three years with the first company. But with new products, variable clauses and sub-limits, such benefits can no longer be transferred," said a senior official at a public sector insurance company.

Oriental Insurance Company and National Insurance have already introduced new products with revised rates and clauses, while New India Assurance may soon come out with its new policy. Under Oriental's product, launched in September 2006, the health insurance premium for citizens above 50 has been increased by over 100 per cent. Instead of granting a cumulative bonus for `no claims' by increasing the sum insured by 5 per cent, Oriental Insurance now trims the premium by 5 per cent.

Task Force

The General Insurance Council, the self-regulatory body for non-life industry, has now constituted a task force to examine the issue of `portability' and evolve guidelines.

"Insurance companies have agreed that consumers should not face any inconveniences. We will look at a way of providing more flexibility to consumers while at the same time ensuring that it does not result in adverse selection for insurers," said Mr K.N. Bhandari, Secretary General, General Insurance Council.

He said that insurers would create minimum benchmarks for making policies portable. Insurers, for instance, could consider charging higher premium or create a minimum standardised cover, for which portability can be granted.

The main reasons that consumers transfer their policies include the agent moving jobs or disputes with the insurer. Senior insurance company official said that while insurers may consider providing some concession to customers on the clause of `pre-existing disease' they may not relent on transferring any other benefit.

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