It has been more than four months since health insurance portability was introduced by the Insurance Regulatory and Development Authority in October 2011. However, several hurdles and issues in its implementation have prevented it from becoming as success as was anticipated. Both the insurers as well as the policyholders are facing impediments on the portability road.

Under portability, the health insurance customer can switch from one insurer to another insurer and the credit on continuity of the coverage would be passed on from the previous insurance policy to the new insurance policy. Earlier, a customer had to stick to one insurer for a long time for fear of losing benefits on pre-existing diseases and "waiting period" clause ranging from 30 days to three years.

“Although portability in health insurance was eagerly awaited, we are yet to see action from the customers. So far, the queries have been mainly from the distribution channels on behalf of their customers. We feel that the lack of a standardised product in health insurance may be a hindrance for customers to switch their insurer," says Suresh Sugathan, Head HAT operations, Bajaj Allianz.

Despite portability being a step in the right direction, it still has to go a long way till people become aware of such an option and the insurance companies become open to sharing information.

How to port

* Once you have decided to port the policy, look at the various insurance products available in the market.

* Visit the websites and study various policies, understand your requirement and compare the products in terms of waiting periods,capping, co–payments and exclusions under the policy.

* Once you have selected the product that meets your requirements, approach the insurance company at least 45 days prior to the policy expiry date.

* Fill the proposal form completely without leaving any field blank and disclose all the information correctly on the proposal form before submitting the same to the insurance company.

* If any further information is required from the previous insurer the new insurer will request for the same on the IRDA portal.

* On receipt of data from the previous insurer, the new insurer will process the proposal further and inform the decision to the customer within 15 working days.

* If the customer agrees with the proposed terms and conditions of the new insurer, the premium should be paid without any further delay.

* On receipt of the premium from the client, the policy would be issued with continuity and dispatched. Sanjay Datta, Head–Underwriting & Claims, ICICI Lombard, suggests, “since there is no standardisation of health insurance coverage, ensure that the cover of your new insurer is at par or better than your old one, like sum insured available.

The waiting period for certain ailments may be higher with the new insurer as compared to the existing one. Also verify the service and claims payment records of the new insurer.”

The bottlenecks

There are several bottlenecks in successful implementation of portability which relate to both the insurer as well as the insured.

* The key challenge in the porting process is data sharing amongst general insurance companies. The customer data including coverage against pre-existing diseases, his/her current health status and past claims history is critical information, which the new insurer would need before it chooses to underwrite the case.

* Policyholders do not have all the records of their health insurance policies and fail to provide such information in the portability form.

Hence, it becomes a challenge for the health insurance companies to validate the information with the data available on the IRDA portal.

* Many customers do not follow the time limit of 45 days and often end up missing the deadline requesting porting at last minute.

* Because of the lack of awareness due to poor financial literacy alarge number of people are not even aware of such a facility.

* No commission to the agents in case of portability is another serious issue that the health insurance companies have to grapple with. Due to lack of incentive, an agent may misguide a policyholder or dissuade him/her to change insurer.

Gaurav Garg, MD & CEO, Tata AIG General Insurance, says, “companies could feel the need to allocate additional resources towards product and service enhancement, to ensure that the customer is content with their offerings and service levels.”

Experts feel that maintaining persistency ratio may become a challenge for the industry as the customer could move to another insurer if he or she is unhappy with the current insurance company. However, it is just a matter a time before portability becomes a serious deterrent for the insurers who may be forced to keep up with the market demands and pace through product innovation and service level upgradation.