Insurance Portability in India

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The concept of insurance portability may be defined as one whereby an insured can change his service provider if he or she is not satisfied, due to some reason or the other, with the products and services being offered by the present insurer.

The best benefit of this facility is that the insurer can opt for a similar product and keep his previous details like coverage and other benefits that were previously part of the plan.

Insurance Portability in India

So far, insurance portability in India is only applicable for the health policies. Following are some benefits that are transferred in these scenarios:
  • Waiting periods
  • Time bound exclusions
  • Waiting periods for already existing ailments
The facility of portability is now allowed in case of all family floater policies and individual plans being issued by all the health insurance and general insurance companies.

Advantages of Insurance Portability

The major benefit of insurance portability is that all the insurers will try to do their best to retain as well as attract customers. This means that overall quality of services can be expected to be better than before. The companies can also be expected to improve their claims settlement procedures.

The companies are also supposed to come up with better products than before so that they can keep the customers and also draw new ones. The premiums are also expected to be lower or at least competitive.

IRDA has asked the companies to create their policies in such a way that they can be transferred easily from one provider to another. Previously in case there was a shift in policy a 30 day waiting period was necessary to accrue the benefits of the new policy. This does not apply anymore.

With insurance portability the insured can also transfer their cumulative bonuses. In case of group health plans the members can be provided individual policies on the basis of their medical history. However, this benefit is provided a year after the insurance portability facility has been availed.

Process of Insurance Portability

In order to avail the portability feature the insured should make an application to the new company a minimum of 45 days prior to the date when his or her policy is renewed with the present company.

The insured needs to fill up the portability form and the proposal form of the new company. Once this is done, the new company will get the claim benefits and medical details of the insured from the present insurer within a 7 day period.

The new company holds the right to not agree to a policyholder’s proposal on the basis of their claim benefits and medical history. However, if the proposal is not rejected within 15 days then it can be said to have been accepted.

Documents required for Insurance Portability

The following papers are needed in order to successfully complete an insurance transfer:
  • Copy of the previous year’s policy schedule that has been issued by the earlier insurer or the renewal notice
  • If the existing policy has some claims then the copies of discharge summary, follow up, and investigation reports have to be provided
  • Self-declaration by customer regarding the absence of claims
  • If the insured has a previous medical history then the copies of his or her consultation papers, treatment, prescription, reports, and investigation need to be provided
  • Questions about the details of the present and earlier insurance plans are mentioned in the proposal forms and they have to be filled on a regulatory basis
The proposers should however keep in mind that the documents normally vary from one insurer to another.

Disadvantages of Insurance Portability

The major problem of insurance portability is that the features tend to vary with respect to companies. In several companies there is a cooling off period of a year, which may prove too much for the insured. Moreover, the only time when this benefit can be availed is during renewal.

If someone wants to change their group mediclaim policies, as per laws they will have to avail the services of the same company. It is only after a year that they will be able to change over to another company.

A new company may charge loading on premiums if the insured already has a critical medical condition. If someone changes over to an individual policy from a group policy they may not be provided similar benefits. One such benefit is maternity assistance.

In case of the top up medical insurance policies there is no clarity provided. The policyholders might also lose out on no claim bonus if they change their insurer. This is because every company does not provide cumulative bonus or no claim bonus.

Insurance Portability – Things to Remember

The first thing to be remembered while availing this facility is to be patient and watch the proceedings to have a full understanding of how things happen.

It is better to go look for the best possible insurance plan during the first time instead of trying to switch a present one as the insurers are themselves learning the ropes and trying to make the process smoother and easier for the consumers.

It is also worthwhile to wait for the present insurer to make changes to their product portfolio like introduction of new features or reduction in rates.

Insurance Portability in India – The Reality

Health insurance portability was expected to be a great boon for the insured. The Insurance Regulatory and Development Authority introduced the facility during October 2011 but there have been many problems in its implementation and all these factors have played a major role in not becoming the useful force it should have been in the first place.

It is not that the insured are the only ones facing problems in this regard – the insurers too have had to deal with several issues of their own. The head of HAT operations at Bajaj Allianz, Suresh Sugathan, has that the customers are yet to react to the new facility in spite of the fact that it was keenly awaited.

According to him, only the distributors have been posing the questions on behalf of their clients. Sugathan thinks the fact that there is no single standard health policy in the market may have contributed to the situation.

Experts think that it will take some time before insurance portability catches up as not all insured are yet aware of this benefit and the insurers are yet to be fully open when it comes to sharing information on these matters.

Challenges in Insurance Portability

The major problem faced in insurance portability is processing of critical data such as the following:
  • Coverage against previously existing ailments
  • Previous claims history
  • Present health status of the proposer
Policyholders often do not have with themselves all the records of their plans and thus are not able to provide the complete information in the portability forms. So it often becomes difficult for the companies to match the data provided to them with the information available on IRDA website.

Sometimes, it has been seen that the customers are not following the 45 day deadline and more often than not miss the said time limit. Awareness is also a major issue in this regard with most people not knowing that such a facility even exists.

Insurers are also trying to come to terms with the fact that the agents are not receiving any commissions in case of portability. It is expected that the agents might lead the policy owners the wrong way or discourage them from going for such a decision.

The MD and CEO of Tata AIG General Insurance, Gaurav Garg, has stated that companies may now be required to allot extra resources for improving their overall products and services and make sure that the clients are happy with the quality on offer.

Experts are of the opinion that keeping a proper persistency ratio may be a major problem for the insurers as the customers now have the freedom to switch over whenever they feel like it.

Insurance portability is also expected to be a major problem for the insurance companies who may have to cope with the demands and speed of the market. They will need to innovate more on their products and upgrade their services in order to retain their clients.

Last Updated on 10/03/2012