No bonus on portable health covers

General insurers to seek regulator’s approval this week for product launch.

Insurance companies are calling it a portable health cover but if you opt to change your insurer the no-claim bonus that you have earned over the years will lapse.

This is among a host of exemptions that the General Insurance Council, the lobby group which represents non-life insurers, has decided to build in while finalising the portable health cover.

Even at present, most people who purchase a Mediclaim or any other health insurance policy from a general insurer have to give up their no-claim bonus if they shift to another insurance company. Unlike a motor insurance policy, where there is a discount of the annual premium when you have not made a claim, in health covers, insurers increase the sum assured.

The only relief to the policyholders of the proposed portable health product is that insurance companies will charge different premium rates from every individual, depending on their track record. So, those who have a record of making claims will have to shell out higher.

It is, however, unclear if insurance companies will treat illnesses for which claims have been made in the past as ‘pre-existing’ when you buy the portable cover for the first time.

“Insurance company will charge lower premiums to those with lesser or no claim record in the past,” said a member of the General Insurance Council.

The cover will give flexibility to the policyholders to shift companies with the benefits of pre-existing diseases covered from the first year of switching to a new company. At present pre-existing diseases are covered only after four years of a policy.

According to the action plan drawn up, insurers will sell the portable health cover with a maximum coverage of Rs 1 lakh. After three years, they will decide if they wish to continue the policy or not. In case they continue with it, the coverage may be expanded.

In addition, the scheme will be available for the age group of 18-40 years. General Insurance Council, the representative body of general insurance companies will approach the Insurance Regulatory Development (Irda) for approval this week.

Insurers said the portable health product has to be a standardised product which can be underwritten by all 21 general companies.

“Even the Mediclaim policies of many insurance companies do not offer bonus. Bonus becomes more meaningful when one continues with the same company. This is a basic product and policyholders can supplement it with higher sum assured,” said Oriental Insurance Company Chairman and Managing Director M Ramadoss.

“The council has decided on no bonus with the consent of all general insurance companies. However, the regulator is yet to approve the product,” added National Insurance Chairman and Managing Director V Ramasaamy.