Times of India
01 October 2011
By , Mayur Shetty
Mumbai , India

Portability, Which Starts On Monday, May Not Reduce Cost Of Cover

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Consumers can expect a slew of innovative health insurance plans with new features as insurers compete to retain customers and attract new ones following the health insurance portability coming into effect from Monday. Insurers, however, say that the cost of health insurance is unlikely to come down.

The regulator has allowed health insurance policyholders to switch companies and retain their “no–claim benefits”. Customers are reluctant to switch insurers for fear of losing benefits of a good track record. These include lower premium and the assurance that their claims will not be rejected on the grounds that the illness was pre–existing. The procedure involves serving notice to the new insurer and giving them an opportunity to verify the policyholder’s track record.

“I do not think portability will bring pressure on prices. Insures will compete with one another with innovative products,” said G Srinivasan, who is currently holding charge as chairman of New India Assurance and United India Insurance. New India Assurance is also planning new health products to widen its product range. According to Srinivasan, there is unlikely to be much of poaching and customers would exercise their rights under portability only if they are unhappy with the existing level of service or they are drawn in by new features offered by a health company.

To a large extent, the innovation is coming from the standalone health insurance companies like Star Health, Apollo Munich and Max Bupa who are trying to differentiate themselves from the mainstream general insurers. “Max Bupa has introduced many industry firsts like any age enrollment, inhouse servicing of claims, underwriting at the point of sale through three–way calling and coverage of all day care procedures along with maternity and child care benefits. Product innovation will continue to be an important focus area,” said Damien Marmion, CEO, Max Bupa Health Insurance. He adds that rather than companies poaching, it will be customers choosing the insurer they want, for their service and product offerings.

“We have filed a new health insurance plan with the regulator,” said K G Krishnamoorthy Rao, MD&CEO, Future Generali Insurance. He added that competition was unlikely to be on the price front. One of the tricky issues that insurers will have to deal with is proposals from those who are currently covered under employers’ group mediclaim policies and are now set to retire. Under the guidelines, insurers are bound to issue individual policies to those whom they have covered under group policies. Many insurers cover parents of employees up to 80 years under group mediclaim policies but have a maximum entry age of 65 for individual health insurance. There is some confusion on how the portability guidelines will work. “Unlike in motor insurance, where there was not much of a variation in the base product earlier, there are probably 300 versions of the health insurance policy. What the customer was not able to do earlier was to port his waiting period (for pre–existing cases to be covered). Portability is therefore a great facilitator for customer choice,” said Sanjay Datta, head of health at ICICI Lombard.

A CII panel on health insurance for senior citizens had suggested that the government create a pool for providing health insurance cover for those who have not bought cover earlier. “While the government will have to fund the shortfall in the senior citizen pool, the general insurance industry can do the administration work of providing health insurance and servicing claims,” said Shreeraj Deshpande, headhealth at Future Generali, and one of the members of the CII panel.