Come October and health insurance policy holders, dissatisfied with the service of their insurer, can switch to another company and carry with them their track record and noclaim bonuses.

The IRDA on Tuesday issued final guidelines which gives insurance companies directions on portability. In terms of the guidelines, a policyholder will have to approach an insurer 45 days before his policy with the old insurer expires, to enable the new company consider his application.

The acquiring insurer will verify the claims history from the common database which will have two years of claims experience. Based on the data, the acquirer will decide whether to accept the proposal and the price at which it will do so.

The old insurer will be bound to provide additional data to the new insurer within 7 days of receipt of the application and the new insurer will have to either accept or reject the proposal within 15 days after receipt of data from the old insurer. If the decision is not communicated within a fortnight the new insurer will be bound to accept the proposal.

"It is unlikely that there will be a price war as insurers will quote rates based on what they have filed with the regulator," said K G Krishnamoorthy Rao, CEO, Future Generali Insurance. He added that since Future Generali was a relatively young company , portability was an opportunity to acquire new customers.

Besides benefiting those who are unhappy with the service provided by their current insurer, portability will also benefit those who are covered under a group policy provided by their employer and do not have any individual policy of their own.

According to the final guidelines, the insured under the group policy will have to first shift his policy into an individual or a family floater cover with the same insurance company which has provided the group policy. After a year he will have the option to shift to any other insurance company just like any other individual policyholder.

While the new insurer will be bound to consider every application, the acceptance will be subject to the new insurers rules. For instance, if the old policy offers 90 day post hospitalization treatment and the new insurer provides only 60 days, the new policy will have only 60 days cover.

According to one private insurer, companies have been providing portability albeit selectively to customers based on their renewal notices. The advantage of the present guidelines are that they completely remove the risk that the new insurer will reject a claim on the grounds that the ailment was existing before the policy was issued.