General insurers may be touting portability of health covers as the next big consumer-centric reform, but the benefits will be limited to only those individuals who decide to lower their coverage to Rs 100,000.
According to the action plan finalised by the General Insurance Council, the industry lobby for non-life insurers, the portable health cover will be available for a period of three years initially. Depending on the feedback in terms of claims ratio, the insurance companies will take a call on whether to extend the cover, a council member said.
Also, the scheme will be open to only those in the age group of 18-40. The older population, which often has to do without a cover after making a claim, will be excluded from the ambit of the new policy.
Those with a higher sum assured will have to deal with a situation where they have to either do without a cover after making a claim, pay a higher premium or not enjoy insurance for the disease that led to the claim.
At present, insurance companies are known to either deny a health cover or raise the premium in case of claim. For those over 60 years, it is virtually impossible to buy health insurance, if they were not insured in the past. This is what prompted Insurance Regulatory and Development Authority to take up the issue with the general insurers.
Once the finer details are worked out, the general insurers intend to approach Irda for approval to launch the product.
The benefits under the insurance cover will, however, be standardised across companies, which means that every insurer will offer the same product so that it is portable across companies. Insurance companies will have to freedom to fix their own premium rates.
"A portable health product cannot have an unlimited cover. It has to be a standardised product with a minimum cover that can be underwritten by all companies," said Oriental Insurance Chairman and Managing Director M Ramadoss. He added that the premium is yet to be finalised but is expected to remain uniform across the industry.
Insurers want to limit the benefits under health insurance policies due to high claims and lack of standardisation across hospitals, something that they have been striving to achieve for years. In addition, they complain that many customers get themselves admitted to hospitals for a routine check-up and claim insurance, increasing the losses.
Portable health cover will give flexibility to policyholders to shift companies with the benefits such as cumulative bonus and discounts after the change. While pre-existing diseases are only covered after four years of a policy, an insured person will be eligible to these benefits from the first year of switching to a new company.
The best option for an individual is to continue with his or her existing policy and purchase an additional 'portable' cover that is proposed to be launched later this year, said an insurance company executive.
