Health Insurance Portability « Archives of Policy Mantra Blog
Tag Archives: Health Insurance Portability

Health Insurance Porting Doesn’t See Major Churn

Posted on December 7, 2012 by
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Health Insurance PortabilityHealth insurance portability, which has been in force for a year, has not resulted in any major churn among policyholders. One of the major reason for this is that agents are reluctant to encourage policyholders to port a health insurance policies as regulations bar commissions on ported policies.

As per regulations, intermediaries do not get commissions in the porting year; hence there is no incentive for agents.

Most non-life insurance companies have reported a couple of thousands of customers who have moved out while standalone health insurance companies were the one to have recorded a net inflow because of portability. The standalone health insurers have one advantage that they do not have to license their own agents as existing insurance agents are allowed to sell products of standalone health insurance companies.

The experience of health insurance portability is comparable with telecom where the ratio of customers opting to port is not high compared to the base. Health insurance customers are stickier compared to mobile customers because in insurance they have multiple policies with the same company.

In September 2011, Insurance Regulatory and Development Authority (IRDA) issued guidelines on health insurance portability. The objective of the guidelines was to allow customers to shift from one insurer to another without losing their ‘no claim’ track record or running the risk of claims being rejected under pre-existing condition.

The insurance norms do not allow insurers to use the ‘pre-existing’ defense if an insured has been with the company for four years.

The conditions for the portability were that the shift could happen only at the time of renewal and both companies are given sufficient notice.

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Nexus between Insurers, Agents and Brokers Biggest Roadblock in Health Insurance Portability

Posted on July 19, 2012 by
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Health Insurance PortabilityA 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.

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Insurers to Enter Senior Citizen Segment with Renewed Focus

Posted on February 6, 2012 by
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Health InsuranceAs health insurance portability came into force since October 2011 insurers are focusing on innovation and one innovation that is expected to come in near future is health insurance policies for senior citizens.

 

Insurance Regulatory and Development Authority (IRDA) has also been encouraging universal health insurance plans and that objective can not be achieved without senior citizen health insurance plans.

 

Hence, few insurers such as Apollo Munich Health Insurance, Bharti Axa General and ICICI Lombard are planning to enter in the senior citizen segment with renewed focus.

 

Specialized senior citizen plans are designed catering to people above the age of 65 years. At present there are very few specialized senior citizen plans that are available in the market and those are available have many limitations.

 

Many reasons can be attributed why there are not many specialized senior citizen plans in the market like Insurance companies avoid providing cover to high risk individuals. Another reason is that premiums for health insurance for senior citizen are very high which de-motivates a person from buying it. Senior citizens also many times avoid buying insurance because of maximum age limit till which the existing policy can be renewed.

 

Health insurance is also evolving with time as earlier there were no policy that had life long renewal but now there are few policies that have option that policyholder can renew the policy till he wishes. But most of the insurers have cap on entry age.

 

Biggest problem in providing health cover to senior citizens is adverse medical history that policyholder might have. In such scenario insurers do not prefer to cover the risk or it had so high premiums that it might not suit the policyholder.

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Lack of incentive for intermediaries obstructing penetration of health insurance portability

Posted on January 17, 2012 by
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Health Insurance PortabilityThough Insurance Regulatory and Development Authority (IRDA) has introduced health insurance portability from first October 2011 but lack of incentive for intermediaries such as agents, brokers and corporate agents is not helping in increasing its awareness among policyholders. This becomes evident as since three months have been passed of introduction of health insurance portability but still insurers are getting very few porting requests.

 

Health insurance portability allows a policyholder to shift from one insurer to another without loosing out on his accrued benefits such as no-claim bonus and waiting period for pre-existing diseases at the time of renewal.

 

Agents play an important role in informing policyholders about the features available in the health insurance policies of different insurers. But at present if an agent advises his client to port to another insurer then he does not get any commission hence he does not take interest in it.

 

Take for instance if an individual has taken agencies of two companies on the name of two different family members and if he suggests his client to shift to another insurer then he will not get commission from either of them.

 

And guidelines of IRDA also do not clarify its stance on renewal commission. At present agents gets commission if policy is renewed from the same insurer for the second consecutive year while it is not clear whether he will get it in the case of ported policy or not .

 

Hence, agency’s bodies may approach IRDA to modify commission structure on ported health insurance policies.

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Merits and demerits of health insurance portability

Posted on October 25, 2011 by
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Health Insurance PortabilityFinally health insurance portability has been implemented from first October 2011; now policyholder is free to switch his health insurance policy from one non-life insurer to another without loosing out on his accumulated benefits. But Health insurance portability also has merits and demerits.

Merits

  • To make the process smooth and efficient Insurance Regulatory and Development Authority (IRDA) has made a clause; according to which if insurer does not respond into specified time then proposal would be considered to be accepted.
  • Portability also allows policyholder to switch from group health insurance policy to individual or family floater health insurance policy without loosing out on waiting period credit. This will help those employees who solely depend on group health insurance policies provided by their employer as now they can shift to individual health insurance policy without waiting for four years to pre-existing diseases to be covered.

Demerits

  • Policyholder would think to shift to another insurer only if he is not happy with the claim settlement of the existing insurer that means he had made a claim; Portability depends on health insurer as he has right to reject or accept the proposal hence no insurer would like to have a policyholder who had earlier made a claim.
  • Another drawback of portability is that there is high probability that insurer will reject the proposal of senior citizen who are considered high risk category.
  • If you have accumulated no-claim-bonus and willing to port your health insurance policy then you will have to pay higher premium for same cover under new policy because as per IRDA regulations no-claim-bonus can be transferred to new insurer but premium will be charged on enhanced amount.
  • Another point is that if policyholder is shifting from group policy to individual policy then he will get credit for period he has been insured with current insurer only this is a compromise for the insured especially if he has not made claim with previous insurer.
  • Another thing that you need to remember is that you can shift to individual health insurance policy of the same company which has provided you group health insurance policy; however, you can shift to another insurer after one year.
  • There is confusion on the definition of pre-existing diseases take for instance if a policyholder has gone for treatment for a disease and his earlier insurer had settled a claim then in such condition will the new company can deny a cover for that disease. If new insurer does not provide cover without waiting period for the ailments suffered during the tenure of the old policy then health insurance portability does not serve its purpose for senior citizen and persons having chronic diseases. Hence new insurer should cover such diseases. If disease is listed as pre-existing disease in the current policy then new insurer should also treat it as pre-existing disease.

Source: Economic Times

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Insurers are not keen to promote health insurance portability

Posted on October 19, 2011 by
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Though Health insurance portability is launched in India from first October 2011 but insurers are not looking keen to promote and create any kind of awareness about it.

Health insurance portability is like mobile phone portability which allows policyholder to switch from one insurer to another insurer if policyholder is not happy with his existing insurer without loosing any no-claim bonus.

Even though health insurance industry is highly competitive industry but still Insurers are not keen to promote health insurance portability. Till now none of the health insurer has launched any campaign to create awareness about it. Reason may be that they may be feared of attracting expensive, claim ridden customers.

It may be double whammy for insurers as on the one hand if new customer is coming then he may be unhappy with claim settlement of the old insurer i.e. he has earlier made a claim hence he is a risky customer. And on the other hand if customer is shifting that means he is older than when he bought the policy which makes him more susceptible to claim.

Most of the health insurance products are more or less similar; hence, it is not worth for insurer to launch portability campaign unless they have some thing really great to offer.

Though health insurance portfolio is the second largest segment in non-life insurer’s portfolio; but health insurance portability is targeted to only individual health insurance policies which accounts for only 20-30% of insurers health insurance portfolio. And cost which will be required for the campaign can not translate into proportionate return.

Therefore it looks like that health insurance portability will remain pull product not a push product.

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Check exclusions before buying insurance policy

Posted on October 19, 2011 by
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Insurance policy is meant to provide you financial support when some unfortunate event occurs. Insurance companies promise you to pay sum assured when insured event occurs for that you need to pay premium in advance. In order to bring down the possibility of anti-selection and also to limit losses insurers have introduced the concept which is called exclusions. Exclusion means the conditions that policy does not cover.

Exclusions protect insurers from fraudulent claims. Whereas while buying a policy you should read the exclusions in detail and if still you are not able to comprehend them then for further clarification you can read the policy wording or contact the insurance company.

If person want to fraud with insurance company then this concept protects insurers from it. Take for instance if a person with intension of defraud to insurance company buys a life insurance policy and then commits suicide; as life insurance policy covers death but suicide in the first year of the policy is excluded it protects life insurer to incur undue losses as individuals are highly unlikely to plan fraud by committing suicide. The same applies for group life insurance policies other than policies issued in lieu of employees deposits-linked insurance where sum assured is limited.

Accident disability rider excludes driving in drunken state, due to drug abuse or participating in car racing event that means if a policyholder dies in an accident while driving in drunken state, or participating in a car racing event or due to drug abuse then his nominee would not get benefit assured under accident disability rider.

There are some other exclusion as well such as death occurring in a war, droughts and accident incited by the action of policyholder.

In the case of surgical assistance cosmetic surgery are excluded.

In a health insurance policies there is a waiting period; waiting period means insurer excludes certain benefit for specific time period; for example critical illness cover has waiting period of 180 days.

Some Health insurance companies cover pre-existing diseases after waiting period of four year whereas a set of daycare surgeries is covered after waiting period of two years.

Therefore before porting your health insurance policy check exclusions in the new policy under benefits due to portability you are untitled to some exclusion waiver.

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Health Insurance Portability: Everything you wanted to know

Posted on October 3, 2011 by
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Health Insurance Portability: Portability is the quality of being movable; capable of being moved. In business terms it’s the ability of being transferred from one service provider to another without losing the earned benefits. Like in mobile number portability where you can switch the network provider but you can retain the number, and like in job portability when you switch your employer your PF (provident fund) also get transferred and you retain what you have earned in PF account from previous employer. Likewise, from today, portability in health insurance is available as the insurance companies are finally ready with the long-awaited portability norm.

Let’s see what is there in health insurance portability. Under health insurance portability norm one can change its insurance provider without losing the credit of waiting period and no-claim-bonus. This portability norm has two things:

  • Any person having individual or family floater policy of non-life insurance company can change its insurer at the time of renewal without losing the credit earned.
  • Any person or member of family covered under any group policy of non-life insurance company can opt-out to take individual or family floater policy first with the same insurance company for at least one year and after that policyholder will be accorded with the portability norm as mentioned in first point. In this the person will not lose the earned credit period of waiting clause while moving out from group policy to individual or family floater policy with same insurance company.
    For example: Mr. Ramesh is working with XYZ ltd from last two years and XYZ ltd has its group health insurance policy from Iffco-Tokio general insurance. If Mr. Ramesh wants to withdraw from group cover and wants to buy to individual or family floater policy then he can buy policy from Iffco-Tokio and he will be given due credit for his already spent times with the Iffco-Tokio, which means if there is waiting period of 2 years for some ailment to get covered under the policy he can get the claim from the first year from his newly bought policy. Earlier he had to wait for 2 years to make claim under fresh policy.

The procedure: Policyholder will have to apply with new insurance company 45 days prior to the expiry of existing policy to get the credit. This is the period given to insurance company to seek any information from existing insurance provider. If the complete information and data has been provided to the new insurance company and if the company does not communicates its decision within 15 days then it will lose the right to reject the proposal and has to accept the proposal.

Treatment of waiting period and sum insured under health insurance portability.

  • Waiting period: Credit will be given to the time already spent under policy with respect to pre-existing disease and time bound exclusions. Only the differential time waiting will be required to make claims. For example: If Mr. Ramesh has already spent 2 years with some health insurance policy of one non-life insurance company and any ailment which has 3 years waiting time period he will have to wait only one year with the new insurance company to make any claim, and if the waiting period is 1 year or 2 years he will not have to wait any further.
  • Sum insured: Portability will be applicable only for the sum insured under the previous policy including any enhanced sum insured due to no-claim bonuses acquired from previous insurer under previous policy.
    For example: If Mr. Ramesh had a sum insured of Rs. 2 lakhs and accrued bonus of Rs. 50,000 with Iffco-Tokio general insurance; when he shifts to another insurance company then the new insurance company has to offer him sum insured of Rs. 2.5 lakhs by charging the premium applicable for the same amount. If the new insurer has no product for Rs. 2.50 lakhs, then it has to offer the nearest higher slabs say Rs. 3 lakhs to insured by charging applicable premium for said sum insured but the portability norm will be applicable to only up to Rs. 2.50 lakhs and the incremental sum insured of Rs. 50,000 will be considered as fresh policy. So if the treatment costs Rs. 2.75lakhs and the treatment had waiting period of 2 years then under ported policy only Rs. 2.50lakhs can be claimed. This is also true with when any person opt for higher sum insured after having spent some time of lower sum insured with the same insurance company.

This has been one good move by IRDA as the portability will empower unsatisfied policyholders to move to an Insurance Company of their choice. Portability will bring in more competitive environment and better service experience.  In the current scenario, renewal of health policies is the headache of the customer. In the portability scenario in the long run, Insurance Companies will have to win their renewals through better services, responsiveness and claims experience. This is a good weapon given to customers but customers should be very careful in choosing the new insurers and should always look for the age limit for policy renewals as porting health insurance policy at older age will not be so easy.

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Health insurance portability likely to be implemented from First October

Posted on September 20, 2011 by
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Health insurance portability is expected to be finally implemented on 1st October 2011 as Insurance Regulatory and Development Authority (IRDA) has come out with final set of guidelines on portability.

As per guidelines customer who is willing to port his health insurance policy has to apply to the insurer before at least 45 days of the renewal date and in the other case insurer will be not liable to port his policy.

Any individual health insurance policy including family floater issued by non-life insurance company can be ported.

Policyholder’s credit gained by pre-existing conditions can be transferred provided that policy should be maintained without any break and if premium is not paid on due date or within 30 days then policy is considered a break in policy.

Guidelines also says if waiting period for the same disease in new policy is longer than the earlier policy then new insurer will have to clearly explain it to the incoming customer.

In the case of the group health insurance policies individual member will be given credit based on the number of years of continuous insurance cover irrespective of whether the previous policy had any pre-existing disease exclusion.

Cumulative bonus accrued for no-claim from the previous insurer will be added to the new policy take for instance if a policyholder had accumulated bonus of Rs 50,000 and his sum assured is Rs 2 lakh then total sum insured for the policyholder if he is porting the policy will be Rs 2.5 lakh. And if new insurer does not have any health insurance policy in Rs 2.5 lakh bracket then it will offer the policy in the nearest slab and charge the premium according to that.

When an insurance company receives an application from the applicant for porting then it has to provide him a portability form, proposal form and details of other products that the company is currently offering. New insurer has to write to the existing insurer to get the details of the past, current medical history and claim records of the policyholder. And it is mandatory that all these processes should be done within seven days of the receipt of the application. This information will be shared through the IRDA’s web portal.

Earlier insurers expressed their concerned on sharing the data with other insurers because according to them it could help rivals to poach their customers but as now portal of sharing the data will be managed by IRDA hence this concern is also resolved.

As per insurers health insurance portability to work it is necessary to develop standardized rate for different ailments and treatments as per the hospitals facilities. All companies have to develop a uniform health insurance policy for which they have to come out with new premium structures which should be inline with facilities offered by hospitals. And it is also required that insurers should ensure that exclusion and features of new insurer should not surprise the customers when he ports his health insurance policy.

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IRDA keen to standardize health insurance products

Posted on September 16, 2011 by
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IRDA is willing to standardized health insurance products. As per Insurance Regulatory and Development Authority (IRDA) standardization of health insurance products is needed so that it can be better understood by customers and it can also help to increase the penetration of health insurance.

Standardization of health insurance refers to developing straightforward and no-frills insurance health policies.

These policies may have simple features such as 24 hours hospitalization coverage, pre-existing cover after certain years of continuous renewal.

According to IRDA after standardization of healthcare insurance procedures, standardization of products can be the next step towards ensuring good health.

As per insurers, after standardization of products competition will depend on pricing and service delivery by the insurer.

Till now insurers have been launching new and innovative products and their pricing depends on it but over the times insurers have felt that standardization will prove more effective for increasing penetration.

However, according to some insurers innovation of products is necessary for the overall growth of the industry. Hence, as per them standardization is needed only for hospitalization related covers and which can be ported as well.

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