Health insurance portability to improve customer service standards

Health insurance portability, enabling individuals with health insurance policies of non-life companies to switch companies, which came into effect from 1 October 2011, is expected to result in better products and services for policy-holders.

Health insurance portability has been introduced by the Insurance Regulatory and Development Authority (IRDA), following the success of mobile phone number portability in India. The insurance sector regulator decided to introduce portability in health insurance in February and the guidelines were formulated recently.

IRDA initially planned to introduce portability from 1 July, but it was deferred by three months as insurance companies had to resolve certain issues.

A policy-holder can switch over to a new insurer if she is dissatisfied with the existing company, taking along her no-claim bonuses and track records. However, to be eligible for portability, she should have held the policy for a minimum of one year.

Under the IRDA guidelines, only health insurance policies by non-life companies are portable. These companies offer basic health insurance policies covering hospitalisation expenses. Defined benefit policies, which provide for a lump-sum benefit against a pre-defined medical condition, are not eligible for portability.

Individuals and their family members covered under group health insurance policies – usually provided by the employer – of a non-life insurer can also migrate from the group policy to an individual or family floater with the same insurer.