When it comes to insurance portability, it was formulated by the IRDAI (Insurance Regulatory and Development Authority of India) as a convenient mechanism for people who were not happy with their present health insurance plans and companies. Health insurance portability essentially enables the transfer of current health insurance plans of policy holders to new providers. Portability is a safeguard for customers with regard to being taken for a ride by their insurers and they always have better options to look out for. Portability enables customers to freely switch their insurance provider without losing out on any of the benefits accrued from the earlier health insurance policy. The waiting period for covering pre-existing ailments may also be carried forward to the new insurer.
Here are some of the biggest reasons why people opt for health insurance portability-
· Sudden increases in premiums after claims are made
· Bad customer service and assistance
· Insufficient coverage for particular ailments
· Hidden terms and conditions
· Lengthy claim settlement process
· Limits on room rent
· Non-timely reimbursements
· Co-payment terms and conditions
· More personalized, cheaper and better offerings elsewhere
These are some of the commonest reasons for people choosing health insurance portability. However, while there are several advantages of this mechanism, there are quite a few challenges as well. Here’s looking at the top 5 challenges of insurance portability-
1. Features of insurance plans will always vary from one insurer to another. For several companies, there is a one-year cooling off period which may not be always suitable for the person insured.
2. In case a customer wishes to get his/her group mediclaim policy changed, they will have to get services from the same company and only after one year will they be able to switch to another insurance provider.
3. A new insurance company may be charging loading on premiums in case the customer already has a critical ailment. In case a person switches to individual policy from a group policy, similar benefits may not be available like maternity assistance.
4. There is often insufficient clarity on top-up medical insurance plans and no-claim bonuses are often lost by changing the insurance provider since not every company offers a no claim bonus or cumulative bonus to customers.
5. Policyholders do not always have sufficient records of their insurance plans and many a time, are unable to provide total information on forms for portability and it becomes tougher for companies to match information given to them with details on the IRDAI site.
A few other challenges also exist in this scenario. Sometimes customers do not adhere to the 45 day deadline and miss the time limit in most cases. This is something that people should be aware of. Insurance companies are also trying to accept that agents will not get commissions whenever there is any portability move in place. This is because agents may lead policy holders in different directions or mislead them and hence there is no commission.
Maintaining a suitable persistency ratio may be problematic for top insurance companies since customers can switch whenever they feel like it. Portability is also affecting companies who now have to continually review and upgrade product and service offerings in order to retain clients and this may be a source of unnecessary strain at times. In fact, such competition may even take away the focus from providing good service in the first place. On the other hand, proponents of portability state rightly that such mechanisms will safeguard policy holders and give them more freedom in terms of choices. The challenges arising from insurance portability should be ironed out as a collaborative measure by all key stakeholders in order to ensure smoother functioning of this entire system.