All you need to know when switching insurers : Business Line

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You need not lose out on the waiting period or sacrifice your no-claim bonus, when you port your health policy

Are you finding it difficult to cope with medical costs because your health insurance is not comprehensive? Or do you have troubles with your existing insurance company because it delays settling claims?

Whatever the reason, if you are unhappy with your insurer, you have the option of moving to another one. Regulations allow portability between health policies offered by non-life insurers.

When porting your policy, you need not fear losing out on the credit you have on the waiting period or sacrifice your no-claim bonus. You are allowed to carry them along.

Here’s more information on the process.

 What portability allows

 The Insurance Regulatory and Development Authority of India (IRDAI) gave a green signal to portability of health insurance policies in 2011.

So, any individual holding a health policy of an insurance company ‘X’ is free to move to another insurer ‘Y’ if he so desires. Such porting allows you to carry with you some benefits of the old policy.

Suppose your existing health policy covers pre-existing diseases after a waiting period of four years and you have been renewing the policy continuously for two years. In the third year, if you port to another insurer and they have a three-year waiting period for pre-existing diseases, it is enough if you spend only one more year, before you are covered for pre-existing diseases.

Similarly, the no-claim bonus benefit too can be ported, says Sanjay Dutta, Chief-Underwriting and Claims, ICICI Lombard General Insurance. None of the other features of your old policy can be carried along to the new policy, though.

For instance, diseases covered, exclusions and sub-limits will be according to the mandates of the new policy. Remember that premium will also be according to the mandate of the new policy and may move up or down based on the insurer’s rate card.

In case you are carrying forward the no-claim bonus benefit, this will push up the premium. Premium will be calculated on the original sum assured and the no-claim bonus put together.

Conditions and procedure

Porting is allowed only on those policies that have been renewed without a break.

This means you should have renewed your policy every year on or before the renewal date (or at least within the allowed 30 days). Further, it is mandatory that you make the porting request to an insurer at least 45 days before your policy expires. When making the request, you should specify the name of the insurance company whose policy you hold.

After receiving the request from you, the new insurer will contact your current insurer to get your details, including the claims and medical history. Guidelines say that the new insurer should communicate his decision on the proposal within 15 days of receipt of the policyholder’s details. If he doesn’t, then he has to mandatorily accept your proposal.

 If the switch is not done before expiry of the existing policy because of delay in sharing information by the insurer, the policyholder can ask for an extension of the policy from his existing insurer. It is mandatory that insurers do this for their customers who are in the process of porting.

Premium will be calculated pro-rata for the cover during this transition period.

Risks

 Portability is not guaranteed, says Sandeep Patel, MD and CEO of Cigna TTK. “The insurance company (accepting the cover) may decline the proposal if the risk is not acceptable as per its underwriting policy.”

There is a possibility that senior citizens and individuals with high health risk may be denied a policy and, given that insurers are free to price the policy according their underwriting guidelines, the premium may even shoot up. But don’t worry, even mid-way in the process of porting, you can go back to your old insurer.

IRDAI’s portability guidelines hold that customers who come back to their old insurer shall be taken back by the insurer without any additional premium or condition.

 So, when you have problems with your health insurer, start the hunt for a new policy and begin the porting process well in advance of your policy renewal date. Though IRDAI has an information sharing portal on which the insurers exchange information about their porting clients, industry insiders say the process takes time, especially if the policyholder had stayed with a company for a long time.

It is also prudent for policyholders, on their part, to keep a file of all their policy papers, past claim documents and hospital investigation reports ready.