A nexus between insurance companies, their distributors and agents seems to hinder the penetration of health insurance portability.
Insurance Regulatory and Development Authority (IRDA) has introduced the health insurance portability to ensure competition, quality of service and to rein in premiums.
Insurance agents do not encourage health insurance portability for lack of incentive; insurers do not encourage it as they didn’t want to face competition. And policyholders have to suffer due to lack of awareness.
At present neither agents nor brokers are allowed any commission on new health insurance cases that are ported. The commission earned by brokers on new health insurance business is around 17.5% while individual agents get around 15%. On ported policies agents and brokers do not get commission in the first year, but from second year they get commission.
Traditionally agency channel generates highest business for insurance companies. Brokers and corporate agents generates a substantial chunk of business while direct sales accounts for only around 10-20%. Hence, insurers are also not encouraging health insurance portability.
For low level of portability, insurers put blame on agents for not processing porting cases. As per insurers as intermediaries like agents and brokers do not get commission on ported business for the first year, this acts as lack of motivation for them. Insurers also say that insurance companies are also required to be more pro-active in their approach to educate their customers about porting facility.
Internationally health insurance portability is very popular, hence dissatisfied policyholders can easily switch from one insurer to another. But, in India due to unholy nexus of insurers, intermediaries and agents it has made it next to impossible.
Health insurance portability came into effect from first October 2011. According to which, if a customer is dissatisfied with services of his existing insurer, then he can switch to another insurer along with accrued benefits such as no claim bonus and waiting period for pre-existing deceases. Insurance companies can reject porting requests depending on their risk profile, but they have to give valid reason for it.