The insurance regulator seems to be on the verge of postponing another one of its promises. After a long debate, the Insurance Regulatory and Development Authority (Irda) had issued orders in February this year for portability of health insurance policies to be effective from July 1. Portability means dissatisfied policyholders will not have to put up with poor service from their insurance companies for fear of losing the no-claim bonus and the pre-existing disease cover. Instead, they can now switch to another insurer. The insurance regulator has now called a meeting of all general and specialist health insurers on June 24 to take stock of their preparedness and the hurdles in the smooth transition of portability. But reading into the concerns raised by insurance companies on how to price a product where consumers can be fickle, the rollout of portability is unlikely to happen from the scheduled date. Basically, the companies are saying they need to have more freedom to build their policies in a market where consumers can shop without loss of cover. The exclusions for coverage of certain treatments as suggested by Irda in its draft guidelines are very few while most of the current products in the markets have a host of exclusions. The regulator needs to figure these and arrive at a standardised rate across the same kind of product. The concerns have some merit for the R8,305 crore industry. If customers get the impression that portability has its perils, that will go against the very objective of the switching system.
Perhaps both the regulator and the insurers can take a lesson from their counterparts in the telecom industry, which has managed the transition more smoothly. In this context, probably a common pool or a company that centralises the data of customers who want to switch can be considered even at this stage, though this could be tricky, given the intense sensitivities of the insurance companies about sharing data. General insurers, especially the public sectors ones, are bleeding on their health insurance portfolio so they have reason to fear portability. The experience of last year, when public sector insurers suddenly withdrew the cashless facility that was being offered to policyholders, is something the industry considers seriously. The experience with portability suggests that the regulator needs to be more careful in planning changes that the nascent nature of the industry will not allow. The plan for public issue, for example, has had to be postponed too many times, mostly because the industry is not ready for it. But the postponements do not reflect too well on the regulator. Is the Irda working too much in a silo?
