Its now easy to move your health insurance

If you have been saddled with a health insurance policy because of a nagging relative or the insurer's customer service is dissatisfying, take heart. Thanks to insurance regulator- IRDA's nod for portability of health insurance policies, you can now switch your policy to an insurer of your choice. And the best part is, you will not lose out on waiting period and can carry along the accumulated bonus too! Insurers have been asked to process requests of customers to switch health policies within three working days of receiving the request and enable transfer within seven days. As health insurance portability kicks-off from July 1, policyholders can expect better service delivery.

Waiting period advantage

Until now, moving to a new health insurer meant that you had to undergo the ?initial waiting period' (the time period in which claims other than accident claims will not be accepted) of about 30 days all over again.

Switches also tended to reset the waiting period for claims on pre-existing diseases. ?The method of treating waiting period where the clock started from day one every time a customer switched to a new insurer, disillusioned him from shifting to an insurer who offered better service?IRDA's recent move is in the best interests of customers?, says Mr Subrahmanyam B, Vice-President and Head, Health Vertical, Bharti AXA General Insurance.

After July 1, you can carry credit for the waiting period you already completed. Suppose you have completed one year on a health policy with insurer X where the waiting period is two years and are moving to another insurer Y taking a policy with three years waiting period, then you need to wait for only two years for claiming on pre-existing diseases. Also, the initial waiting period of 30 days will be waived by the second insurer. Investors can benefit from the new rules to move to an insurer with a lesser waiting time, says Mr Subrahmanyam.

Carry your bonus along

Health insurers credit their policyholders with a bonus for every no-claim year. Now, when switching between insurers, the policyholders have to forego this bonus credit but post July 1, they can carry this bonus along with their policy.

?When you switch to a new insurer, the cumulative sum assured- the sum assured with the accumulated bonus on your earlier policy will be ported?, says Mr Neeraj Basur, Chief Financial Officer, Max Bupa Health Insurance.

Continuing our earlier example, if you had an accumulated bonus of Rs 20,000 on the policy with X where the sum assured was Rs 2 lakh, you will be entitled to a maximum claim of Rs 2,20,000 on pre-existing diseases at the end of two years after you move to Y (the total waiting period is three years). However, if the policy with Y is for a higher sum assured, say Rs 5 lakh, then for claiming at the higher limit of the policy for a pre-existing disease, waiting period as per the clause under the new policy will apply.

You would need to wait for three years (original waiting period of insurer Y) to claim Rs 5 lakh on a pre-existing disease. For all other claims (other than those on pre-existing disease), the limit of Rs 5 lakh will apply from day one.

Will premium rates fall?

As buyers of health insurance, portability may also mean more choices- as competition between players to retain customers will see more innovative products and better service. But, will the premium rates come down?

With rising medical costs and many health insurers just covering costs on their health portfolio, it is unlikely that there will be sharp drop in premium rates, say insurers. Bajaj Allianz had recently increased its premium rates on health policy citing inflation in medical costs.

The company's top official had suggested last week in a media address that they will not resort to attracting customers by lowering premium rates.

The other factor you need to bear in mind is that the complications one has developed during the first policy's term will be counted while determining the premium rate for the new policy ( you would be required to repeat the health check-up). So, you might have to pay more on premium for your health policy when you switch insurers.

Service delivery (of the TPA and the claim staff), number of network hospitals of the insurer and claim settlement ratio are some factors you should analyse before the switch.

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