PSU Bank customers may have to pay up to 300% higher premium for their health insurance.

New Delhi: Lakhs of customers of state-owned banks, which are being merged,may soon have to pay between 50% to 300% higher premium for their health insurance this year, said a report in the Times of India. Senior citizens, who mainly depend on interest income for their expenses, are likely to be the biggestcasualty as their premium may see thesteepest increase. The impact of higher premium will be less for younger customers, ToI mentioned in the report.

Most of the PSBs currently offer their savings bank and credit card customers health covers through group mediclaim policies, which are provided by their bancassurance partners. As per current rules of IRDA, a bank can have only one bancassurance partner for each type of insurance -- life, health, auto.

Once the PSU banks get merged, their existing bancassurance tie-ups will also get dissolved. As IRDA rules do not allow for portability of group health plans, customers of the merged banks will either have to buy individual mediclaim plans or will be treated as new customers by the new bank under the group health cover, which will significantly increase their renewal premium, said the daily.

Customers of Vijaya Bank have become the first casualty with effect from January 1, 2020. They will no longer be covered under the health insurance scheme they had for the last two decades. According to the daily, PSB customers, who for years used to get mediclaim policy at Rs 7,500-12,000, may have to pay between Rs 22,000 and Rs 75,000 if their policies get converted into individual policies with annual renewal.

Prior to Vijaya Bank's merger with Bank of Baroda, United India Insurance was the bancassurance partner of Vijaya Bank while Max Bupa was the insurance partner of Bank of Baroda. But after the merger with effect from April 1, 2019, all Vijaya Bank customers have to buy group insurance plan from Max Bupa as new customers.

The ToI report citing a BoB spokesperson said that since group health portability was not allowed under IRDA, so even if it wanted to migrate the existing policies of Vijaya Bank customers with Max Bupa's mediclaim programme, the same is not possible.

Source: Times Now News