Q: What Is the Process for a Policyholder to Port his Policy?
A: The policyholder will apply in the usual process (like a fresh application) to the new insurance company, providing current personal and health details of the family members to be covered in the proposal form.
Q: What are the Important things to take into Account When Switching Policy to another Company ?
A: Before switching it is important to do good homework and have a valid reason to switch. Some of reasons to switch may include the following:
- New added benefits in the new policy
- Larger network of hospital in its cover
- More diseases and ailments getting covered. For example with rising incidence of diabetes in India, it maybe an advantage to look for policies that cover treatment for kidney failure.
- Better out-patient coverage of investigation costs
- The customer maybe better off employing a Broker. Since a Broker deals with all Insurance Companies, one can get good guidance and advise regarding about different companies and the policies they provide.
Q: How Will Portability Help Customers?
A: Portability will empower unsatisfied consumers to move to an Insurance Company of their choice. Especially in the Retail segment, Portability will bring in more competitive environment and better service experience.
In the current scenario, renewal of health policies can become a headache for the customers. In the portability scenario in the long run, Insurance Companies will have to win their renewals through better service, responsiveness and claims experience. The no. of policies an insurer is able to retain will reflect the customer satisfaction.
Q: What If Customer Applies For An Increased Sum Insured In The New Policy?
A: For instance, if the customer has a policy which has been continuously renewed for the last 5 years and has a sum insured of Rs. 2 lakhs and now he / she wants to port the policy to another insurance company with a higher sum insured of say Rs. 5 lakhs the portability relief in waiting periods in the new policy would only be to the extent of Rs. 2 lakhs sum insured. The waiting periods for the additional sum insured of Rs. 3 lakhs would be similar to a fresh policy.
Q: What can be the Impact on Premiums?
A: There is a good chance of a price war in the younger age segment. Insurers could slash premiums in the lower age bands to attract portability of existing customers.
On the other hand, portability are not likely to help policy holders in the older age bands (say, 50 and above) and policyholders who suffer from pre-existing ailments. As such proposals are likely to be denied by the new Insurance Company.
Senior citizens and people with pre-existing ailments (especially chronic ones) would not benefit a lot from portability.
Q: Are Insurers Bound To Accept a Proposal For Portability? Can they Reject It?
A: The proposal and underwriting processes of Insurance companies will not change due to portability. The sum insured in the expiring policy cannot be the basis of what the new insurer will be ready to accept. The acceptance of risk would depend on the normal risk underwriting process. In fact, due to an already existing policy being declared for portability, the underwriting could demand additional claims history information for the past policies from the customer.
Once the proposal is accepted, the waiting period credits would have to be given in the new policy. The underwriter of the insurance company will continue to hold the discretion to deny a proposal.
Q: How Will Data Sharing Between Insurance Cos: Affect Consumer / Industry?
A: There is still some ambiguity on this issue as there is no system ion palce off sharing of data between insurance companies.
Firstly, Insurance Companies, especially the government companies and many private players do not seem to have a customer data management system in place, which can retrieve policyholder-wise data across various years of renewal.
Secondly, there is no unique ID or account number across Insurance Companies for the information for one policyholder to be consolidated. IRDA did talk about a unique Insurance Account no. Only once this unique number issuance is effective across all companies, the consolidation and hence sharing of information would be possible.
