REFORM: India To Have Health Insurance Portability From July 1

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In a big relief to dissatisfied health insurance policy holders, sectoral regulator IRDA has allowed them portability — shifting policies from one insurer to another on same terms – from 1st July.

"The Authority has examined various issues involved in the portability of health insurance plan and has issued necessary orders for effecting portability which will be implemented from July 01, 2011," Insurance Regulatory and Development Authority (Irda) said in a statement on Thursday.

The portability facility will allow policy holders to switch over to another insurance company with the same conditions.

"The accepting insurer shall provide cover, at least up to the sum assured in the previous insurance policy," the regulator said.

The new facility will also help those policy holders who stick to one insurer throughout life for fear of losing the cover for Pre Existing Diseases (PED).

"It is essential to protect the policyholders against discontinuity and consequential loss of PED cover by making the health insurance plans portable across the insurance companies," Irda said.

In general, health insurance policies have specific exclusions for PED for a specified period of cover during the initial year, and policy holders do not get this cover in the event of changing insurance firm. It was considered "detrimental to competition".

Irda decision comes after it received several representations from consumer associations and policyholders for enabling portability of health insurance policies. Currently, Irda allows portability of motor insurance polices.

Health insurance policy portability will also help people shifting from one part of the country to another. In want of such facility they were put to disadvantage due to lack of their insurers' offices at new locations.

Also, in case of change of jobs, policy holders lose health insurance cover as they could not change their insurer.

Irda has directed insurance companies to mention in the prospectus and sales literature that all health insurance policies are portable.

The request of porting the policy shall be completed as per the timelines prescribed in the Irda regulations and guidelines, the regulator has told the insurance companies.

Besides, three standalone health insurers — Star Health & Allied Insurance, Apollo MUNICH and Max BUPA — number of other players including National Insurance Company, United India and Oriental Insurance and ICICI Lombard are active in this field.

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