Posted on Feb 18, 2011 by Sergio Ulloa
From July 1st 2011, health insurance policy holders in India will be able to change insurance providers, without the fear of losing their benefits from their previous policy.
With the new initiative issued by the IRDA (Insurance Regulatory and Development Authority), industry leaders in India predict an increase in competition among health insurance providers, as policy-holders will be afforded greater freedom in moving their policies among insurers. Health insurance service standards are also expected to rise in return, as insurance companies will increasingly compete on the quality of customer service.
The IRDA issued a media release
on 10th February 2011, indicating that insurers should allow for portability of health insurance policies. The central thrust of the IRDA plans for health insurance portability is the ability to transfer credit for pre-existing conditions in regards to waiting periods on cover, provided that there has been no lapse in the policy. The IRDA also seeks to allow portability if the policy lapses due to delay by an insurer.
Prior to the regulatory change, policy holders were often at a disadvantage. If a policy-holder wanted to change to a different health insurer, particularly if they have acquired a chronic illness, they may face obstacles such as long waiting periods or exclusion of cover for pre-existing conditions when taking out the new policy.
Policy-holders should be happy with the recent changes in IRDA laws, which will allow them to carry their policy to another insurer, keeping the benefits of their previous policy. "It is essential to protect policyholders against discontinuity and consequential loss of pre-existing disease cover... The portability will ensure the policyholder is not tied to one insurer for the pre-existing disease cover" said the IRDA
in the February 10th media release.
CEO of Apollo Munich Health Insurance, Antony Jacob, explains
changes regarding the new law "a customer opting to choose our product (at similar sum insured level) can transfer indemnity based health policy from any insurer with the accumulated benefits".
The IRDA aims to protect the interests of policy-holders and this is one of their most recent regulations on health insurance companies in India. The IRDA, appointed by the Government of India, are ultimately setting its targets to not only protect the rights of consumers, but to protect the state in the burden of medical treatment placed on the public health system.
Looking ahead, as suggested by leading insurers, what we can expect to see is an increase in competition among insurers. Policy holders in India will find shopping for another insurance provider an easier process.
Increased competition on the market may initiate a drop in health insurance premiums; as insurers provider try to draw in customers. However, Dr BS Powdal, Head of Health Insurance, Bajaj Allianz, explains that this is unlikely to occur. With customers moving to different companies there is usually a particular reason for it, such as poor service, given the benefits under their policy will remain the same. 'Quality of services' will therefore be the likely motivator in the near future for customers within India moving to different health insurers.
Dr BS Powdal of Allianz explains
, "he is going to pay some extra amount for the added quality of service so it is unlikely that there will be a price wars because of portability but the customer benefits because he gets the benefit of the waiting period which he has already stayed with the previous insurance company", further adding that premiums are in fact likely to rise "if there is a person who has say suffered a heart attack with the previous insurer's policy period when he moves to the next insurer that insurer probably will charge a higher premium... prices may go up to some extent for those who have a claim history with the previous insurance company".
In the meantime, competition is on the increase in India with more and more individuals taking out health insurance policies in the country. The number of policy holders increased to 6.88 million from 4.57 million in the 2008-9 year, according to data issued by Third Party Administrators (TPA) and Insurers in India. With increasing numbers of policy holders, premium collection by health insurers has almost doubled along with the submission of claims.
Key players on the health insurance market in India include Star Health & Allied Insurance, Apollo MUNICH and Max BUPA; with other leaders including National Insurance Company, United India and Oriental Insurance and ICICI Lombard.
Insurance Companies mentioned:
Star Health & Allied Insurance
Star Health and Allied Insurance is a specialist health insurance provider and was the first stand alone health insurer in India. Star Health and Allied Insurance provides health, accident, student, travel, and life insurance products.
Apollo Munich Health Insurance
Apollo Munich Health Insurance Co. Ltd. (previously known as Apollo DKV Insurance Co. Ltd) is a joint venture between the Apollo Hospitals Group and Munich Health. Apollo Munich Health Insurance provides health, personal accident and travel insurance.
Max Bupa Health Insurance is a 74:26 joint venture between Max India Limited and UK-based Bupa. Bupa is a leading private healthcare provider with more than 10 million customers worldwide and over 60 years experience in the health sector. The Max India Group has expertise in both healthcare and insurance related services including hospitals, clinical research and life insurance.
Bajaj Allianz is a joint venture between Bajaj Finserv and Allianz SE, one of the world's largest insurance companies. Bajaj Finserv is engaged in life insurance, general insurance and consumer finance business. Allianz SE has over 119 years of industry experience and is present in over 70 countries around the world.
Founded in 2001, ICICI Lombard is a 74:26 joint venture between ICICI Bank Limited, India's second largest bank, and Fairfax Financial Holdings Limited, a Canada based financial services company. ICICI Lombard is a general insurance company offering a wide range of insurance policies including, business, liability, motor, travel, rural and health insurance products.
National Insurance Company
Founded in 1906, National Insurance Company Ltd (NIC) is one of the leading public sector insurance companies of India, carrying out non life insurance business. Headquartered in Kolkata, National Insurance has a large market presence in Northern and Eastern India.
United India Insurance
Incorporated in 1938, United India Insurance Company Limited is one of the leading General Insurance Companies in India. With headquarters based in Chennai, India, the company has more than three decades of experience in Non-life Insurance business. It was formed by the merger of 22 companies, consequent to the nationalization of General Insurance.