03 November, 2010
The penetration of medical insurance is extremely low at ~ 15% (including all types of insurance - Central Government Health Scheme, Employee State Insurance, Group Health, Individual Health etc). There are concerted efforts initiated by Government as well as Insurance Regulatory and Development Authority (IRDA) to improve the reach of health insurance to all sections of the society and safeguarding the interest of the policy holders.
One of the important initiatives of the regulator to this effect is the proposed portability of health insurance. The intention of IRDA to introduce a portable product is to ensure that a customer continues to enjoy his continuity benefits under his health policy even if he wishes to change his insurance provider for genuine reasons.
In the current scenario, a customer is more or less wedged to an insurance company, given that if he chooses another insurer during renewal, it is more likely that his policy starts afresh with all the waiting periods commencing again. For the uninitiated, waiting period is the time frame during which some of the claims shall not be payable under the health policy. For most of the fresh health policy there is a waiting period of 30 days under which no claim can be made other than accidents. Besides, there is also 1 or 2 years waiting period for diseases like cataract, hysterectomy etc. And for other diseases which may have been existing prior to taking the policy commonly called as Pre existing diseases waiting period is of four years.
In simple words, portability is a state wherein, policy holders will no longer be compelled to renew their health policies with their existing insurance company for the fear of the waiting periods starting all over again. As and when IRDA introduces the portable health product in the market, customers who opt for such product will have freedom to shift insurers without having to worry about losing their continuity benefits.
Senior citizens, in particular, would be benefited since they would find it difficult to shift if they are unhappy with their present insurer, as other companies would be reluctant to offer them new policies.
The introduction of a portable health product would also prove beneficial to the insurance companies. This could act as a powerful product to approach the new customer segment hitherto untapped. And with competition, insurance companies would be thriving to continuously improve their efficiency standards in terms of customer engagement and relationship to ensure that the customers do not move away from them citing service deficiency.
In the current market scenario, it is very difficult to make a price comparison between products with exactly the same features. For customers who are price sensitive, opting for a health product with a lower premium might actually harm them at a later stage when they realize that the product features and terms & conditions do not cover (fully or partially) some of the ailments/conditions for which they have actually purchased the health product in the first place.
Portable health product on the other hand would have exactly the same features and terms & conditions and therefore a person intending to buy a portable product has to just compare the price before choosing the insurance company of his choice.