Mr Roy, 36, has asthma, which is listed as a pre-existing condition in his insurance policy. When his insurance provider of three years raised the premium, he wanted to switch to a new insurer.
What worried him was that the new insurer will treat him as a fresh policyholder and impose a waiting period for the pre-existing disease.
But Insurance Regulatory and Development Authority’s (IRDA) guidelines on health insurance portability ensured that Mr Roy was able to switch to a new insurer without having to lose the benefits he had accumulated with the previous insurance provider.
A pre-existing condition is any disease that the policyholder was suffering from within 48 months prior to purchase of the health insurance policy.
Health insurance portability was introduced by the IRDA in 2011. Portability makes it possible for a policyholder to transfer the credit gained for pre-existing conditions and time bound exclusions when switching from one plan to another of the same insurer, or from one insurer to another.
The insured will also be entitled to all continuity benefits, like no-claims bonus and free medical check-ups, which were accumulated during the previous policy.
Every policyholder has the right of portability provided the previous policy was maintained without any breaks.
In order to avail this facility, the policyholder has to apply to the insurance company, where he wishes to port his/her policy, at least 45 days before the premium renewal date of the existing policy.
If the policyholder fails to do so, it is up to the insurer to decide whether it will at all consider the application for portability.
A person can only apply for portability when his/her existing policy is due for renewal.
When the insurance company receives an application from a policyholder seeking portability, it will provide the latter with a proposal form, a portability form, and details of various products offered by it.
After the insurance company receives the filled in forms, it will obtain the medical records and claim history from the existing insurer.
The existing insurer must furnish the details within seven working days through a common data sharing portal developed by IRDA.
Once the new insurer obtains all the details, it will have to take a decision about underwriting the policy within 15 days. If it fails to do so, it will be bound to accept the application.
The Insurer’s Rights
While the IRDA has empowered all policyholders with the right of portability, it has also given insurers the right to reject any port-in requests.
All requests for portability are treated as new and are subject to scrutiny by the underwriter.
The underwriter assesses the risk exposure in order to determine the premium that needs to be charged.
The insurer can reject the proposal if it’s deemed unfavorable. In that case, the policyholder will have no other option but to continue with the existing insurance provider.
Things to Consider
The terms and condition of the policy will differ from insurer to insurer.The policyholder will have to weigh in those factors before making the switch.
People in the ‘high-risk’ category may also end up paying more premium during the process.
Also, if under the previous policy, the pre-existing condition was excluded from coverage for two years, and the exclusion period for the same condition under the new insurer is three years, then the policyholder will have to undergo one year waiting period.
People usually purchase health insurance policies when they are younger. It’s easier and hassle-free because even insurance companies prefer covering the young and the healthy.
Therefore, portability will be difficult later in life since a new insurer will not be willing to risk covering an elderly citizen.