With medical insurance portability becoming a reality from July 1, customers will be rejoicing as they can switch their insurance company. However, insurers are unsure if the transition will be smooth.
"A switching customer may have a history of ailments or claim experience.
"There needs to be greater cooperation and database sharing between insurers," says Antony Jacob, chief executive officer, Apollo Munich Health Insurance.
The insurance industry has also raised other issues. These include whether one can move from a benefit plan to an indemnity one.
However, the Insurance Regulatory and Development Authority (Irda) is yet to clarify.
One of the solutions mooted earlier was a common portable insurance plan. But, R Kannan, actuarial member of Irda, said the details of such a policy were still being worked out.
Irda's circular stated, "It is essential to protect policyholders against discontinuity and consequential loss of pre-existing disease cover. Portability will ensure the policyholder is not tied to one insurer for pre-existing disease cover."
Irda mandates the existing insurer to share the porting policyholder's information with the new insurer within seven days.
The industry says this is their biggest concern.
"Providing for data, and how much remains a problem," says Shriraj Deshpande, head, health insurance, Future Generali General Insurance.
Also, providing information would be easier if the policyholder has been with the insurer for long.
But, for someone who may have bought the policy recently, things could be more difficult.
"There is a need to know if all customers should be allowed to port out or should there be criteria for a certain number of years a policyholder should be around," asks a senior executive of Max Bupa Health Insurance
Insurers say Irda has only made amends pertaining to the waiting period for pre-existing diseases. However, there is more to it.
Say an individual has been around with one insurer for three years and decides to port out.
According to the circular, if the new company has a waiting period of four years, the policyholder has to wait only for a year.
"But, the waiting period is meant to mitigate risk. In that case, is the one-year waiting enough or should the previous employer share the risk with the new employer?" said another insurance head.
All health insurance plans have a mandatory waiting period of 30 or 90 days, varying from insurer to insurer. The industry needs to clarity if this waiting will be applicable to ported policies as well.
"Ideally, policyholders should not be allowed to shift from a benefit plan to an indemnity plan. But, we don't know it for sure," says Deshpande.
Also, experts feel there is no clarity about the portability of benefits. For instance, contrary to beliefs, maternity is a benefit not an ailment and, therefore, should not be portable.
There are a number of other issues that needed to be resolved, before one could make portability a reality, said insurers.
According to industry experts, if a policyholder plans to switch to a policy giving a higher sum assured, the increased sum assured should be treated as a fresh policy.
