Ravi Kumar, an IT professional in his late forties walked into the office of a general insurer. He was not happy with the way his current insurer had treated his health claim; they had kept dilly-dallying the processing for a couple of months, asking for additional documents every time he submitted the previous ones, and eventually denied the claim on absurd grounds.
Ravi was a reasonable man and would have been okay if he had gotten a satisfactory reason for the rejection, but after endless conversations, he had come to realize that all his conversations were going in circles with no end in sight. That is when he decided he had had enough and landed at the doorstep of the new Insurer seeking health insurance portability.
His policy was due on the 31st of December, and he was therefore asked to initiate proceedings in the last week of November, which he promptly did. He then kept following up with the new Insurer about the status of his application every alternate day. This went on for another couple of weeks. Finally, with no end in sight, a frustrated Ravi decided to continue his policy with the existing Insurer, at least for a year just to ensure his policy didn’t break on continuity.
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Sound familiar?
Portability of health insurance policies is undoubtedly one of the most popular tools that the regulator IRDAI, has supplemented the Indian consumer with. In this article we explore some questions about portability like the difference between portability and migration, when can you port, why should you port and how.
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Question: What is portability, and how is it different from migration?
Answer: IRDAI defines health insurance portability as moving from one individual health policy (IHP) of an Insurer to another IHP of a different Insurer as opposed to migration which is defined as moving from one health product of an Insurer to a different health product of the same Insurer.
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Question: Can you port from any health insurance policy into any other policy?
Answer: Yes and No
Technically, you can migrate from a group health insurance portability to an individual health insurance policy offered by the same insurer. But you can subsequently port to an IHP offered by a different insurer the next year.
One complexity that could arise during porting or migration is in the case of co-branded health products. Co-branded health products are group health insurance products offered to all retail Customers of Banks. While the product is underwritten as GHP, most Customers are issued individual certificates which could make them think they are covered under an IHP.
That said, the norms of migration as stipulated by IRDAI apply to the product as well, for eg: an individual who wants to migrate out of a New India Canara family floater policy would need to migrate to an IHP or FHP with New India before they can move to an IHP/ FHP with HDFC Ergo.
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Question: What timelines need to be adhered to during the process of porting?
Answer: IRDAI guidelines state that portability can be initiated 45 days prior to the expiry of the policy while migration can be initiated 30 days ahead. But guidelines also state that this time frame is just an indicative one and need not act as a bottleneck for portability or migration.
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Question: Why should I port?
Answer: While there is no objective answer to this question, our experience suggests most Customers exercise their choice of portability after they have preferred a claim under the current policy and their claim processing experience has been far from satisfactory.
While Insurance is offered as a service, the parameters of evaluation of service get enhanced at the time of claim processing. Prudent insurers realize this and put their best people in the claim servicing vertical. But given the nature of loss, we as humans are not wired to look at personal loss objectively. This can lead to enhanced expectations and therefore unsatisfied outcomes.
We suggest due diligence be carried out before choosing an Insurer. A little margin should be accorded to Insurers before taking hasty decisions.
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Question: Can I increase my existing Sum Insured at the time of porting?
Answer: Yes, Sum Insured can be increased at the time of porting. There are a couple of complexities, though that one needs to understand while doing so. Benefits of portability are granted to the extent Sum insured, i.e., to the extent of the sum you were insured for in your previous policy.
Say you bought an insurance cover for Rs. 5 lakh in 2018, accrued a no claim bonus of Rs. 1 Lakh in 2019 and decide to port the policy in 2020. While porting, you are made aware that you have the option of porting to a sum insured of Rs. 8 Lakh with the new insurer. You decide to exercise this option and transfer to a Sum Insured of Rs. 8 Lakh.
Complexity I – The one tiny detail that goes missing is, while you ported, the benefit of continuity is granted to an extent of Rs. 6 Lakh (your Sum Insured in the previous policy). You would still need to wait the stipulated number of years (i.e. the number of years of waiting period with the current insurer) for access to the balance sum insured, which is Rs. 2 Lakh in the current case.
This essentially means that say you have a heart condition (which was declared at the time of taking the previous policy in 2018), the cover for any hospitalization arising out of this heart condition would be payable to the extent of Rs. 6 Lakh in the current policy year (i.e. 2020), despite the fact that you are insured for a Sum of Rs. 8 Lakh.
Complexity II – Another complexity to note is the disease you contract after you took the first policy. Say you have been diagnosed with diabetes in 2019, while your earlier policy would have covered hospitalization arising out of it, the current Insurer could deny covering it, on the grounds that diabetes is a pre-existing disease for the new Insurer and would therefore need to be declared at the time of porting into this new policy. This essentially means that any hospitalization claim arising out of diabetes could be denied by the current insurer (irrespective of the Sum Insured), if it has not been decl`ared while porting.
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Question: What are some points to be considered while porting?
Answer :
- Third Party Administrators (TPAs) form an indispensable link in the claim processing vertical of an insurance value chain. They are the ones who work on ground zero and maintain all the data. Continuing the policy with the same TPA after porting ensures continuity of data and lesser document exchange hassles for the Consumer. If you do get the choice, stick with the same TPA.
- Ensure sum insured continuity for all members. When porting a Family Health Policy (FHP) which provides a floater Sum Insured to an IHP which provides individual Sum Insured for each member, one of the complexities that could go overlooked is the Sum Insured cover for individual members. Ensure every member in the new IHP has coverage equal to their floater cover in the previous policy, for eg: if a Father, Mother, Son & Daughter were covered for a floater cover of Rs. 5 Lakh in an FHP, they are entitled for an equal individual coverage under IHP.
- Waiting periods for ailments/ pre-existing diseases (PEDs) are waived off to the extent of the tenure of coverage under the earlier policy, for eg : if you had been covered under a GHP for two years and are now migrating to an IHP with a waiting period of 3 years for PED, your waiting period for any hospitalization arising out of PED would only be a year, subject to appropriate declarations at the time of enrolling in the GHP.
The regulator has equipped the Insurers with tools to carry out seamless business activity; in the same vein it has also equipped the Customer with the power of information to ensure appropriate questions are raised when they find deviations from guidelines.
Health Insurance Portability is one such tool that compels Insurers to improve on service delivery while constantly improving on the overall architecture of the Health Insurance ecosystem.
