Health insurance portability from Oct 1

Health insurance portability service, which would allow policy holders to switch insurers, is all set to be implemented from October 1, the Insurance Regulatory and Development Authority (Irda) said today.

The scheme was proposed to come into force from July 1 earlier, but was deferred for three months due to certain outstanding issues with insurance companies.

"We are ready to implement the health portability plan from October 1, 2011," Irda Chairman J Hari Narayan said here on the sidelines of a CII meet here.

Health portability will allow consumers to change their service provider without loosing the basic coverage of health insurance. As per portability rules, consumers will get credit for the time already spent for covering the pre-existing disease along with bonus accrued to him from his past insurer.

On the highest net asset value (NAV) guaranteed products, which are seen as a "risk products", Narayan said Irda was planning to come up with regulations for it.

"The concern, which I have as regulator is the communication mechanism for highest NAV product that might lead to misconception of the buyer. Therefore, it is a risky product. We are getting details about the matter and we will take a regulatory decision soon," he said without giving a timeline by when the rules would be out.

The highest NAV guaranteed products give consumers a guaranteed return based on the highest NAV that the policy has achieved during the entire term of the insurance plan.

At present, around 20 per cent of the total Unit-Linked Pension Plans (ULIP) comprise sales from highest NAV products.

Referring to the IPO guidelines for life insurance companies, Narayan said the guidelines are almost final.

"IPO guidelines are ready as far as Irda is concerned. However, there are two more nuts that have to be tied up. First is the requirement of comments from Sebi, which will come up in a day or two. Second is about a particular matrix for calculation of embedded value [of the company] that will be prescribed by Institute of Actuaries of India," he added.

Irda has already issued draft IPO guidelines.

According to industry body CII, India's health insurance market is expected to touch Rs 70,000 crore with a coverage of 500 million people by 2020.