PSBs’ merger cuts group health benefits

Bengaluru: Lakhs of mediclaim customers who bought group policies from public sector banks (PSBs) that are slated to merge with their larger peers may have to either pay more for individual health covers or risk lose continuity benefits under the policy.

Under the mega-merger plan for PSU banks announced last year, where 10 banks will combine into four, six lenders will cease to exist. The group covers sold by the six merging banks will also be discontinued. Customers will have the option to port into individual policies or shift to the group policy of the acquiring bank as new customers.

If they choose to be new customers, they will lose the benefits of the continuity, which includes certain exclusions and risk of claim rejection under the ‘pre-existing’ clause. If they choose to port into individual policies, the benefits continue to remain. However, they will see their premium going up between 50% and 300% from next year as group policy rates are much lower.

Currently, most PSBs offer their savings bank and credit card customers health covers through group mediclaim policies that are sourced from their bancassurance partners. “This is a peculiar situation that has arisen. But I am sure we (PSUs) can work out a solution,” said New India Assurance CMD Atul Sahai.

Erstwhile Vijaya Bank, which last year merged with Bank of Baroda, had 64,500 credit card customers. They have lost the benefit of the health insurance scheme from January 1, 2020. Former Vijaya Bank customers can buy into Bank of Baroda’s group policy with Max Bupa. A BoB spokesperson said that since group health portability was not allowed under IRDAI, so even if it wanted to migrate the existing policies of Vijaya Bank customers to Max Bupa’s mediclaim programme, the same is not possible.

B S Behl, 79, and his wife Shantha Behl, 78, had a mediclaim cover for Rs 5 lakh for the last 20 years, for which the annual premium was Rs 12,910. When they approached United India Insurance for a renewal, they were given a quote of Rs 49,000.

Source: Press Reader