Mediclaim portability guidelines of IRDA – True portability may remain a wish

IRDA has put out mediclaim portability guidelines that could be tough on insurance companies with time limits for handling the portability proposal; policyholders may also lose benefits

The Insurance Regulatory and Development Authority (IRDA) has finally issued new guidelines for the 1 October 2011 implementation of health insurance portability. Even though these address some of the issues, there are several conditions that will make portability fall through the cracks. So, will insurance companies be able to meet the tough time limits for handling portability proposals?

According to Subrahmanyam B, vice-president, health and PA, Bharti AXA General Insurance, "The guidelines are comprehensive and cover only non-life insurance. The policyholder has to initiate the process for portability 45 days before it is due for renewal, by filling a proposal form with the new insurer and the portability request form. The new insurer will then have to write to the policyholder's earlier insurer within seven days. The old insurer has to provide the policyholder's medical and claims history to the new insurer within seven days thereafter.

We learn that IRDA intends to create a website (already under testing) on which the previous insurer would have to upload the policyholder's data. If the new insurer does not respond to a request within 15 days of it being made, it will be deemed as accepted.

Insurance companies have an escape route by way of the premium loading and the right to underwrite. According to one senior industry executive, "In view of the waivers offered on pre-existing diseases (PED), insurers need to have flexibility on loadings and IRDA should clear such filing requests for loadings within a fixed time frame of 30 days." Clearly, loading will be the ultimate tool that will be used to dissuade a 'bad' pool of policyholders to migrate to a new insurance company.

The other issue is no-claim bonus (NCB) where the net effect may deplete the bonus. The new insurer can port the sum insured (SI) on an existing policy inclusive of the NCB that has accrued on it. However, the premium charged will be on the higher sum which is inclusive of the bonus. This effectively erodes the effect of the NCB itself. For instance, if a policyholder has an insurance of Rs2 lakh, which has increased to Rs2.5 lakh due to the NCB, that is the sum that will be transferred to the new insurer. However, the premium charged by the new insurer will be on Rs2.5 lakh. Consequently, the net effect is that the policyholder loses the true benefit of NCB.

Interestingly, Segar Sampathkumar, deputy general manager, New India Assurance, had anticipated this. Earlier this year, he told Moneylife, "A no-claim bonus cannot be portable, as it is earned due to a relation with the insurer."

IRDA has also failed to address another major issue, that is, the medical conditions developed by the policyholder with the old insurer. For instance, a policyholder has no pre-existing diseases (PED) when the initial policy was taken, but has developed conditions over the next couple of years. If the policyholder wishes to port to a new insurer who has a standard four-year PED waiting period, the new insurer will make the policyholder wait for a couple of years to cover these conditions. These are considered PED with the new insurer even though they consider the time spent with the old insurer. In this case the policyholder would be better off with the old insurer as there is no PED and hence all the conditions are covered with no waiting period.

The guidelines address group to retail (individual) policy porting. It also allows porting to a retail policy of the same insurer in the first step. After a one-year wait, the policyholder can port to another insurer. It's a two-step process that will be far from easy.

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    COMMENTS

    Srinivas Someswar

    1 year ago

    Hi I have applied for porting from Star to Cigna ttk and my insurance will expire tonight. I have been asked to provide 4 previous year policy for continuity. I have provided last year policy copy and I am yet get to get the 3 years policy copy from star. I have provided premium payment receipt for last 4 years which is not acceptable to Cigna ttk. What is the solution here

    SANJAY SINVHAL

    7 years ago

    What abt entry age? I wanted to Port my Parents New India Mediclaim policy (with NCB) & no claim for past 12 yrs to Apollo Munich. However Apollo denied porting stating that max entry age is 65yrs while my parents are 72 yr old. How entry age can be a barrier for a portability case? Is it as per IRDA portability guidelines?

    Harish Shah

    8 years ago

    Good news for those who are fed up of harassment by Insurance company and Third Party Administrator their co- partner in adding to harassment. To find a good insurance company and to get serviced by a good Third Party administrator will be like searching for a needle with the candle lamp in the dark. Good news also for the agents who irrespective of giving good service had to listen to abuses from the insured person for claim settlement. Please be happy if such clients of yours move away to other insurance company. Insurance company in anyway will remain uncooperative to welcome new Medi-Claim business and will be too happy to get rid of business for which the agents had made effort to bring in the business during the time of promotion.

    SAMAR

    8 years ago

    In a seminar on the subject, it was highlighted, that much is being expected of the concept.Basically, the issue originated from irda report on mediclaim for sr citizens. The recommendation , was to keep the cost/cover stable for a retiring person , from a group scheme.The very same insurer for the group, was expected to continue the cover, a prudent and inclusive approach.Portability was needlessly hyped and the same has fallen flat on the face of the customer, unlike PORTABILITY in mobile phone domain, without change of number.

    m kumar

    8 years ago

    ALL INDIAN REGULATORS - TRAI, IRDA, SEBI ARE OUT OF SYNC. WITH REALITY & REAL ISSUES OF MILLIONS OF PEOPLE WHOSE INTEREST THEY ARE SUPPOSED TO PROTECT!

    THEY ARE IN A WORLD OF THEIR OWN. THEY DONT HAVE THE NUTS & BOLTS OF ANY ISSUE & OPERATE IN AIR, IN HYBERNATION!

    LEAST OF ALL, THEY DONT HAVE THE GUTS TO TAME THE VESTED INTERESTS & COMPANIES WHO INFLUENCE THESE GUYS AGAINST PUBLIC INTEREST.

    Deepak R Khemani

    8 years ago

    The idea is basically good but the problem is in the way it is supposed to be implemented.
    Every insurer has it own premium across age slabs, National Insurance has a age slab of 0-25 and then in blocks of ten years other have it in a block of 5 years, some load the premium in case of a claim some remove the no claim bonus in case of a claim. How can anyone port their policy to a different insurer when the terms and conditions of the policy are different?
    Some have Tpa's which change every year sometimes, some have in house TPA's, Max Bupa has one of the highest premiums in the industry but they have no sub limits in their policy, how will a person from a PSU Insurer Port to Max? Will he pay a premium which is substantially higher for the same cover?
    Portability should only be allowed in products which are exactly same.
    Mediclaim is a very loose term, Every Policy issued by every insurer is DIFFERENT, continue with your old policy and keep on renewing it, that's the best thing to do, do not port, at least you old insurer has some record of your previous policies, your claim history and no claim bonus.

    REPLY

    nagesh kini

    In Reply to Deepak R Khemani 8 years ago

    IRDA has done nothing about illegal abrogation of the cashless. The insureds had to knock at the doors of Delhi and Bombay HC.
    The TPAs have to go.
    The age slabs of 5 years ought to be standard.
    There ought to be a uniform no frills standard health cover.

    Raj Pradhan

    In Reply to Deepak R Khemani 8 years ago

    policyholder has to accept the t&c of new policy completely. may loose some benefits, may gain some. Problem will be conditions developed during the policy term. the new insurer will still look it as PED (subject to time spent with previous insurer). It is not PED with previous insurer (conditions developed after policy taken). Customer benefits in this case by continuation with existing insurer.

    Nagesh KiniFCA

    8 years ago

    It is apparent that the IRDA has neither applied its mind nor taken into consideration the many sensible suggestions both from the millions of insureds and the insured.
    Portability is for simplifying health insurance problems faced by generally the elders. In stead of addressing their concerns aiding lucrative group covers is no resolution.
    The issue of no claim bonus has necessarily to be addressed by providing for a straight deduction in the annual premium as is done in motor policies. If one insurer can do it why not the others. The increasing of the cover by the same % makes no economic sense, more particularly for senior citizens. I have not lodged a single claim in the last 15 years.This takes away one of the major bugbears of portability.
    The issue of providing history of covers can be addressed by making available the data available in the branch records both for the past covers and claim history. It's no big deal.
    All the issues raised can be resolved with one Simple Standard Policy for say Rs.1,2.5 and 5 lakhs with all the standard clauses for PED.Something on the Frill less bank savings accounts.

    Let IRDA and the Insurance Council come out with sensible insured friendly policies that are easy to operate rather than going for a cut-n-paste US models that have failed there forcing Obama to come with a new policy.

    REPLY

    Raj Pradhan

    In Reply to Nagesh KiniFCA 8 years ago

    Insurers could not agree on standard (common) mediclaim product. How will they ensure portability will be successful?

    Hoshang Nekoo

    8 years ago

    Many Medi-Claim Policy holders were eagerly waiting for introduction of Policy Portability by IRDA. Since Portability of Policy is made effective from 1.10.2011 only those policy holders whose policy expires after 15.11.2011 will get the benefit of change if they start negotiating with the New Insurer immediately. Has IRDA made sure that all the Insurance Companies are geared up and are ready to handle policy holders request for a change and that they have proper update Policy record of Policy holders from the date of inception of the policy? The insured person unless having a clean record of policy since inception will have very hard time getting the policy transferred if proper No claim bonus, PED and history of Claims made during policy period is not made available to the new insurer. Many insurers have no record of policy holders since inception date and will put the insured person to lot of harassment. Age limit for portability is also not specified. Which insurer will welcome policy holders over 50 years of age and with previous claim history is a question. Previous Insurer will be too happy to get rid of policy holders with adverse claim record. A person over 50-60 years or more of age having policy for over two decades will have difficulty in getting a medical history certificate in case a claim or more is made. With change of T.P.A. every three years for reason best known the claim history from one T.P.A. to other T.P.A. is not made known. Nor the insurance company has update claim history. Should then the insured in the New Proposal form write about the previous claim made and settled. Will the insurance company accepting the new proposal, of course as continuation of policy will not subject the insured to exclusion of ailment declared and suffered during policy period or will exclude as PED. Lots of problems are bound to arise when all Insurers have their own terms and conditions very much different from one another. IRDA not getting involved in the customer disputes and grudge will only watch the show seeing the portability rolling from one insurer to other.
    IRDA EVERY MONTH MUST ASK FOR THE STATISTICS FROM EVERY INSURANCE COMPANY AS TO HOW MANY POLICY HOLDERS HAVE MOVED AWAY AND HOW MANY PROPOSALS ARE ACCEPTED, AND HOW MANY TURNED DOWN UNDER PORTABILITY SCHEME IN DETAIL WITH THE INSURED PERSON NAME, POLICY NO. AND PERIOD OF INSURANCE.

    REPLY

    Raj Pradhan

    In Reply to Hoshang Nekoo 8 years ago

    good comments. seven days to give claims & medical history will be challenge for many insurers

    Sundaram

    8 years ago

    Net,net,seems it would be best to stick to the existing insurer!

    REPLY

    Hoshang Nekoo

    In Reply to Sundaram 8 years ago

    What you said is correct. No choice but to stick to one company if a person is over 55years of age or insured person having any PED or claim history. Announcing Portabilty of policy by IRDA is only to make insured person happy mentally that something good is happening. The same happiness was felt by announcing appointment of T.P.A and Cashless Benifit to policy holders.

    Bajaj Allianz General Insurance: Right risks should get right price for mediclaim, motor insurance

    Bajaj Allianz General Insurance is collecting detailed customer information which together with the claims experience will help it to arrive at the right price for health and motor insurance

    TA Ramalingam, head-underwriting, Bajaj Allianz General Insurance, says motor insurance has better data availability than health insurance so far. In an interview to Moneylife, he was optimistic that health insurance, like motor insurance, will be able to offer the right price for good policyholders. Excerpts:

    You mentioned about in-house data for analysis. Do you use the data from the Insurance Information Bureau (IIB), a body of the Insurance Regulatory and Development Authority (IRDA)?

    We depend on management information systems and constant feedback from our in-house claims processing team (health administration team, or HAT). It sends signals based on the claims experience to help us refine the underwriting process. We do look at IIB at the macro level to crosscheck our experience, like on the top five diseases and so on.

    IIB data may not be accurate. Your comments.

    We may get misled if we entirely rely on it. We may end up on a different track. Some insurers may not give data in the format that is actually wanted by IIB. For example, new insurers may give data in sub ICD level rather than ICD level. (ICD stands for International Classification of Diseases.) We depend on our data analysis and just crosscheck with IIB at the macro level. The more qualitative data we get, the better it is from the business perspective. If the common insurance database is available with accurate information, it will help the industry.

    You have rich data from your claims experience. How would you improve on it? New insurers have a lot of questions at the time of proposal.

    New companies are capturing detailed information about customer profile and medical conditions. It helps with proper customer segmentation. Beyond a certain level, we can't just fight on price. We will be competitive with proper segmentation. The detailed data capture has to happen to offer right pricing for customers. It will happen soon in health insurance. Agents will see other agents doing it and will follow suit.

    Car insurance has started capturing a lot of information at the proposal stage to offer better premium rates for good drivers compared to bad drivers.


    Exactly. Motor is doing it to a great extent and health will follow it. After all, motor and health are big portfolios of general insurance. Today, the available information is not good enough. The actuaries cannot do proper pricing due to lack of complete information. Right risks should get the right price.

    (The first part of this interview was published on Friday. Read, "Bajaj Allianz General Insurance: Senior citizen mediclaim product has been profitable"

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