11 February 2011

Portability of health insurance policies from July

Portability of health insurance policies from July : Mediclaim policy holders, who are not satisfied with the services of their existing insurance providers, will now be able to switch to another firm easily without any change in the premium outgo, the insurance regulator IRDA has said.

After examining various issues and hearing representations by consumer associations and policyholders, Insurance Regulatory and Development Authority (IRDA) on Thursday said the portability of health insurance policies would come into effect from July 1.

"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," IRDA said in a statement. 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 policies.

The main features of portability are :

1. The credit from the period elapsed excluding PED shall be carried forward to the new insurer.
2. The accepting insurer shall provide cover, atleast upto the sum assured in the previous insurance policy.
3. The request for porting the policy shall be completed as per the timelines prescribed in the IRDA (Protection of Policyholders’ Interests) Regulations and guidelines.

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