Insurance portability yet to catch up

Health insurance portability is helping customers especially in the case of pre-existing diseases. The insurance companies do not cover illness caused by pre-existing diseases up to four years. However, it varies from policy to policy and the insurer.

If a customer wants to change the insurer after some time, the time he was with the old insurer will not be taken into account for making a claim on health policies.

However, the insurance portability helps the customers change the insurer and get the time counted that he was with previous insurer too.

The customer can claim insurance for pre-existing diseases only after he completes the prescribed time limit, taking into account the policy time, with the previous insurer, says P Nandagopal, managing director and CEO, IndiaFirst Life Insurance.

Health insurance portability will also give a freedom to the customer to shift the insurer, if he is unhappy with the existing insurer. Interestingly, the portability hasn’t proved to be a major hit as in the case of mobile phones.

There are differences in the policies and services that are being offered by different insurance companies. Customer is also not in touch with the company on a regular basis to understand or analyse the services provided. It is also difficult for him to draw a comparison among the services offered by different companies, said Nandagopal.

The number of people who are shifting to new insurance companies using insurance portability is very less. The portability may impact the older companies than the younger insurance companies. Industry has no issues and is comfortable with insurance portability. There is also a need to extend the portability beyond health insurance plans, he said.

The blame lies with a company to a large extent in case of mis-selling. It is the principal responsibility of the insurance company to control its agents and prevent them from mis-selling of policies. However, it is extremely difficult to monitor the agents especially for an insurance company with a large number of agents.

The companies should sort out this problem by making their products much simpler to understand. They also need to check and explain to customers about the conditions and features of a policy once it is purchased. There is a need for invigilation by insurers on the policy selling procedures. Secondly, the customer should not have blind trust in the agent. He has to do some basic verification with the insurance company on what the agent has promised. The insurance policy drafting, and conditions are long and complex and even educated people cannot understand. The regulator has to make sure whether the product is easy to understand, fairly priced and serviced efficiently.

In fact, the IRDA constituted a panel to simplify the policy language and conditions. Chairman of IRDA J Hari Narayan has been advocating the need for simplifying the language. Though some progress has been made in this direction, it is yet to translate into reality, say IRDA sources.

If the insurance company, customer and regulator will play a larger role, the agent will automatically behave himself, he said.

Tags: Health insurance, Health insurance portability, IndiaFirst Life Insurance, insurance, insurer, policy

Category: Business, Business News