Health insurance portability still largely stuck

Both insurers and regulator have not promoted the concept or made provisions for its development

Health insurance portability, much like mobile number portability, was supposed to have changed the face of the insurance sector. But even after a year, nothing much seems to have changed. Insurers say there are few requests to port (shift from one companmy to another).

The story lies elsewhere. Experts blame both sector and regulator for the failure of the move to take off. Unlike the telecom industry, no insurance player has aggressively promoted portability. Admits Mukesh Kumar, head, strategic planning, HDFC Ergo, “We haven't seen too many transactions, as health insurance portability has not been publicised by insurers.”

Some even say the regulator did not approve a number of proposals which would have made porting profitable as a business. So while Anthony Jacob, chief executive officer of Apollo Munich Health Insurance, admits getting 1,000-1,500 requests a month, his industry colleagues cite a much lower number at five or 10 a month. Companies claim only one or two per cent is accepted. In other words, only a handful would have successfully ported.

The reason: Most people who want to port have a claim history. And, no one is willing to take a customer who has made even one claim in the past three years or even five years.

Even if there are no claims, Mahavir Chopra of Medimanage.com says it is a question of business viability. “If a porting customer has been covered by insurer A for 10 years, insurer B will be unwilling to provide all the facilities that have accrued to him, in terms of waiting periods and exclusions. No one will agree with this arrangement,” says Chopra. Also, since a ported policy is not considered a new one, there can’t be any waiting period applied to it. As a result, it becomes a risky proposition for the insurer.

Given the complications, a number of measures supposed to have been taken by companies to make porting viable have not been implemented. Some of these did not pass the Insurance Development and Regulatory Authority’s (Irda) muster as well.

For example, the proposal of a portability fund pool through which insurers were going to reduce losses for each other is yet to see the light of day. Also, a standard policy which could be easily ported was never introduced. Initially, the industry was trying to push portability by paying an additional commission to agents. But Irda, in a circular issued in April, put an end to commissions for ported policies.

In the absence of knowledge and a cumbersome process, customers have not been enthusiastic as well. While it might be easier for someone in the age bracket of 25-30 years to change insurers, in the higher bracket where it is actually required, the process involves extra documentation and medical tests.

Experts say to make portability viable for both insurers and customers, Irda might have to rethink the entire proposal. Less complications, please.