Seeking New Company

Chandralekha Mukerji        Print Edition: July 2012

In October 2011, websites of health insurers flashed the new portability menu that promised customers the moon. Many considered it an easy way to end the bitter relationship with their health insurer . The switch, it turns out, is not so simple, or easy.

You cannot port a policy as and when you wish. The regulator, the Insurance Regulatory and Development Authority, or Irda, has given insurers the right to accept or reject port-in requests . This implies that if the other insurer finds your application 'unfavourable', it can decline your request, and you'll have to stick with your insurer.

All portability proposals are treated as new and put through the underwriting guidelines afresh. The underwriter has the right to reject any proposal. Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that.

PORTABILITY FACTS

> Portability is applicable only to health insurance indemnity policies issued by non-life/general insurance companies.

> Only like-to-like health policies are portable. That is, basic reimbursement to basic reimbursement or top-up to top-up.

> The premium and policy benefits may differ from your existing policy. It will depend on the product plan you want to port to.

> There are no extra charges for porting. You only have to pay the premium applicable for the plan chosen by you.

> Portability isn't guaranteed. The insurer may decline the proposal if it is not suitable as per its underwriting policy.

> The new insurer, if required, can seek more information from the customer within seven days of submission of the portability request.

> The existing insurer has to provide information to the new insurer within seven days. The details are shared through the common Irda portal.

> The new insurer has to inform the customer about its decision on the request within15 days.

> The advantage of no-claim bonus, which results in an increase in sum insured, is lost as the new insurance company will treat the increased sum insured (with bonus) as the base sum insured in the new policy and charge premium accordingly.

> One can also upgrade and switch to a new plan offered by the same insurer. Employer group health policies can also be ported to an individual cover.

> One can visit a branch or contact the new insurer's agents, corporate agents or brokers for portability.

> If there is a delay in sharing information by the current insurer, the new insurer may not accept the proposal. In this case the current insurer will have to extend the policy term by accepting a pro-rata premium of one-two months. There should be no break in policy.
"Most insurers are keen to insure the young. They don't accept portability proposals if the insured has a higher age and poor health. In fact, they put a lot of clauses and restrictions which are not encouraging for customers, who may drop the idea to port," says Divya Gandhi, head of general insurance and principal officer, Emkay Global Financial Services.

The application may also be rejected on grounds of insufficient information, delay in submitting documents and poor claim history.

SPECIAL:Are you insured enough?

We look at these impediments and things that must be kept in mind while porting health insurance policies.

UNDERWRITING RULES

Industry players say a common reason for porting is dissatisfaction with the quality of service. Customers hate reimbursement limits for different medical procedures, age caps for renewal, increase in premium in case of a claim, hassleprone claim settlement, limits on room rent, co-payment clauses, etc.

"With awareness about health insurance rising, people now understand the features offered by companies better," says Antony Jacob, chief executive officer, Apollo Munich Health Insurance. However, rules give insurers the right to reject your application on the basis of their underwriting guidelines. You may not get the improved plan you want simply because the other insurer considers you overweight and so more likely to fall ill.

"When a customer applies, he has to undergo underwriting procedures just like a new applicant, based on which the terms for porting are decided," says Karan Chopra, head, retail business group, HDFC ERGO General Insurance.

Each insurer uses own principles to assess customers' risk profile. So, the other company's norms may differ from your existing insurer's. If the new underwriter finds your case unsuitable, the insurer has the right to reject your application. "If a customer wants to shift to an insurer who only accepts cases without claim history and has strict norms on body mass index (appropriate height and weight ratio), there are chances your application will be rejected," says Yashish Dahiya, founder, Policybazaar.com.

Huge differences between exclusions and inclusions and other features between the policies of the two insurers may also lead to rejection.

AGE MATTERS

You bought your policy when you were young and healthy. That's why you got it easily. Now, if you have aged, joining a new insurer may not be easy.

Senior citizens already have limited options in terms of availability of policies that cover old age-specific diseases. But the biggest problem is that since the probability of falling ill is much higher in old age, few insurers want to cover the elderly.

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The general guidelines given by insurers to insurance brokerage firms are to submit the proposal well is advance, that is, 45 days before the renewal date of the existing policy. Also, they have instructed against submitting proposals where any claim has been lodged in last two years and the sum insured has been requested to be increased substantially (say from Rs 2 lakh to Rs 10 lakh). Cases with pre-existing and chronic illnesses are to be shunned as well.

S K SETHI

CEO, Ria Insurance Brokers

"Insurers will not want the liability of an arduous policy and try to avoid portability requests from senior citizens," says Dahiya.

"Those who are above 70 years are definitely not considered for portability. Some companies may accept people in the age band of 60-69 years. However, they are choosy and use strict underwriting guidelines in such cases," says S K Sethi, chief executive officer, Ria Insurance Brokers. Also, the premium will most probably be abnormally high. There may be high loading (increase in premium in case of a claim) as well, besides a co-payment clause.

ADVERSE HISTORY

A general rule is that applicants above 45 years of age are asked to undergo medical tests. You may have been healthy when you bought your existing policy, but if you later contract a disease not covered by the other insurer, your application may be rejected. Even a minor illness that may affect your health in future may affect your chances.

"If medical reports show conditions such as diabetes or hypertension, the insurer may put the application in the highrisk category and reject the proposal," says Arvind Laddha, chief executive officer, Vantage Insurance Brokers and Risk Advisors.

Moreover, your current insurer cannot refuse to renew your policy if any chronic ailment was detected after you bought the policy. However, the other insurer may reject your request in such a case.

If you have a pre-existing disease or suffer from an ailment that requires regular treatment, your case will definitely be rejected. Those with a history of cancer or renal failure, where recurrent costs are high, fall in this category.

"If the policyholder has a chronic disease, say, he needs dialysis regularly, the portability application is rejected. This is because major illnesses mean high risk. The ongoing treatment and regular medication and other expenses result in multiple claims," says Shreeraj Deshpande, head, health insurance, Future Generali.

A poor claim history can also spoil your chances. Though the policy is bought to pay your medical bills, insurers look suspiciously at portability requests where multiple claims have been lodged recently.

"Portability helps a customer only as long as the policy is profitable, that is, when you have been paying premium regularly without claim. Till this point every insurance company is good to the insured. If there is no claim, there cannot be any dispute," says Dahiya.

INCREASE IN SUM INSURED

While applying for portability, you can seek an increase in sum insured. However, this will be subject to acceptance by the insurer's underwriter. The insurer can be sceptical if you request a very high increase in sum assured, for instance, 100-200 per cent.

"This usually happens when the insured has made a claim in the recent past and realises that the present cover is inadequate. So, he tries to increase the cover while porting. This is obviously not favourable for the insurer and indicates a bigger claim in the next onetwo years," says Sethi of Ria Insurance Brokers.

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Portability helps a customer only as long as the health insurance policy is profitable for the company, that is, the customer has been paying premium regularly and has not filed any claim. Till this point every insurance company is good to the insured. If there is no claim, there cannot be any dispute. This case becomes even more difficult for senior citizens, who are already seen as a high-risk category.

YASHISH DAHIYA

Chief Executive Officer and Founder, Policybazaar.com

Likewise, you will be looked at with suspicion if you try to port out of a floater cover.

"Selection of risk, that is, when a client opts to port a single member out of a floater cover with a higher sum insured than available under the existing policy, can face rejection. This generally happens in cases where an individual with an adverse health declaration wants to enhance the cover," says Shreeraj Deshpande of Future Generali.

However, in the draft guidelines on health insurance, the regulator has asked insurers to accept such requests at the renewal of the policy or the end of the specified exit age by providing suitable credits for all previous policy years, provided the policy has been maintained without break.

TECHNICAL SNAGS

Inadequate information, delay in filling of application, non-availability of previous policy documents and break in cover are some procedural issues on which the insurer can reject your case. Know the process of portability thoroughly to avoid these pitfalls.

According to the guidelines, insurers have to be informed 45 days before renewal of the existing policy. A portability request made after 45 days may be rejected.

Therefore, it is important that you remember the expiry date of your policy and get your documents in place in time. "Things such as non-availability of copies of policy documents for the last three years could lead to rejection," says Sethi.

So, it is better to initiate the process well in advance, say, around 60 days, to be on the safe side. Decide the insurer you want to port your policy to and have the required papers in place. Also, fill the forms carefully and be honest about your existing and earlier claims.

"Ensure that there is no break in cover even for a day," says Damien Marmion, chief executive officer, Max Bupa.

If your current insurer delays sharing of claim information, the other insurer may keep acceptance of the porting request in abeyance. In such a case, apply to your insurer for paying premium for one-two months on a pro-rata basis and extend the cover till you get a nod from the other insurer. The draft guidelines say the insurer cannot force you to pay the whole year's premium in such a case. Plus, the insurer has to convey the decision in 15 days; otherwise, the application is understood to have been accepted.

BEFORE YOU PORT

The picture will be much clearer if you look at it this way: health insurance portability is not transferring your old policy to a new insurer but buying a new policy without the waiting period clause.

"Portability regulations suggest the customer can choose the new insurance plan in 'totality', that is, both premium and benefits offered. Hence, it is important for the customer to fully understand the benefits under his existing policy and match them with the plan he wishes to port to," says Antony Jacob of Apollo Munich.

Therefore, before switching, know the product you are buying and its differences with your existing plan such as flexibility and slabs for sum insured, pricing, restrictions on entry age, renewal limits, waiting period, capping and co-payment clauses, ailments covered, rules about preexisting diseases and the list of hospital network.

The other insurer may also decide to underwrite the policy with some loading on table premium. This may not suit everyone.

"If the new insurer interprets some adverse condition which can be accepted with some nominal loading on table premium rates, it will charge the same on the insured," says Divya Gandhi.

Similarly, the new policy may have restrictions such as lower sub-limits, capping and co-payment. So, while your old policy didn't put any restriction on ailment-based claims, the new insurer may be willing to accept your proposal only with a cap of Rs 50,000 on heart ailments or apply 20 per cent copayment on each claim.

Cumulative bonus is usually not carried forward. Instead, the additional cover which you got in the old policy against the bonus you have collected is added to the basic sum insured in the new policy on which premium is charged.

Also, for any increase in cover you ask for, the complete waiting period for pre-existing diseases will have to be served. So, let us say you have a health policy that has been continuously renewed for the last four years and whose sum insured is Rs 2 lakh. You now want to port it to another insurer with a higher cover of, say, Rs 3 lakh.

The portability sum insured (applicable for pre-existing diseases and other time-bound exclusions) in the new policy will only be Rs 2 lakh, while the sum insured available otherwise will be Rs 3 lakh. That is, if the waiting period in the new policy is four years, and you are hospitalised in between for a pre-existing ailment, you'll be eligible to claim only up to Rs 2 lakh.

The additional Rs 1 lakh will only be available after you've spent four years with the new policy. For any other hospitalisation, the whole Rs 3 lakh will be available to you.

Similarly, if the previous insurer has a waiting period of three years (which you have served) while the insurer you are porting your policy to mandates four years, you will have to serve one additional year for coverage of pre-existing diseases under the new policy.

There can be differences in inclusions, exclusions and other features between the existing and the new policy. For instance, while the old policy covered 13 critical illnesses, including maternal benefits, the new policy might have a shorter list or have a waiting period before certain ailments are included in the cover.


DOCUMENTS DEMANDED

Previous Insurer Documents:

Policy certificates of all previous years

Latest renewal notice received from the existing insurer

Self-declaration by customer in no-claim cases

If claims have been made, additional documents like discharge summary, investigation report, etc, could be required.

New Insurer Documents:

Duly filled proposal form

Duly filled portability form Escape Route

The portability application should reach the new insurer 45 days prior to the last date of renewal of your existing policy.

On receiving your request, the new insurer will provide you a proposal form and a portability form.

Choose a product, fill up proposal and portability forms and submit them to the new insurer.

Once the insurance company receives these forms, it will go to the Irda website and seek details such as medical records and claim history.

The existing insurer will have to furnish all the details through this common data-sharing portal developed by Irda within seven working days.

After the new insurer has the requisite information, it has to take a decision on underwriting the policy within 15 days. If it fails to take a view within this time frame, it is bound to accept your application.


CASE STUDY: Samir Dave, a resident of Ahmedabad

CASE STUDY: Samir Dave, 42, a resident of Ahmedabad

Dave wanted to port his nine-year-old family mediclaim policy from New India Assurance last November when his son was hospitalised and the insurer didn't pay the full claim as the policy had sub-limits on room charges which he was unaware of. He decided to switch to Apollo Munich, which had a 'no-sub-limit' policy. His existing policy gave a cover of Rs 2 lakh each to him, his wife and child for an annual premium of around Rs 7,800. He had earned a cumulative bonus of Rs 70,000 on this policy.

When he approached Apollo Munich, the company appointed one of its sales representative to assist him. As per the guidelines, he was promised that he was eligible for all the accrued benefits - will not have to serve the waiting period for covering pre-existing diseases and will be eligible for a cover of Rs 2.7 lakh for his family.

However, he was shocked when he got the policy document from Apollo Munich as none of the continuity benefits were passed on to him. He was to serve the waiting period for coverage of pre-existing ailments. Even the cumulative bonus was not added to the sum insured. This after being under coverage for nine consecutive years.

When he enquired with the company, he was told that the continuity benefits were considered for only one year. On probing further, he came to know that the company had a policy of asking the insured to submit all previous policy documents to prove continuity.

However, the sales representative had guaranteed that last year's papers were enough to get the continuity benefits. He has been following up with the company writing regularly to the grievance redressal cell. He has also approached the regulator, which has instructed the company to sort out the case immediately. However, his application is still pending with the company.

WHAT DOES THE COMPANY SAY

Samir Dave applied for portability to Apollo Munich from New India Assurance on 22 October 2011. On 24 October 2011, we requested New India Assurance to share Dave's case history with us on Irda's portal but did not get any response till 25 November 2011.

So, based on the documents provided by Dave (only 2010-11 policy schedule of New India Assurance plus a selfdeclaration from about his earlier insurance coverage), we proceeded with our underwriting process and ported his policy to us. We accepted the application made by him to book the policy after extending one-year portability benefit.

Even though Dave had mentioned about his previous policy coverage in self-declaration forms, we needed policy documents to extend the portability benefits. The same have not been shared with us as yet.

Nevertheless, even today, on submission of previous insurance coverage documents we could extend further portability benefits to him via endorsement.

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