New portability rule brings little change in health insurance

The introduction of portability in life insurance by the IRDA two years back has ushered in little changes in medical insurance. Amarnath Ananthanarayanan, chief executive officer of Bharti AXA General Insurance, said only two per cent of policyholders successfully port their policies as the process is cumbrous.

T A Ramalingam, head-underwriting at Bajaj Allianz General Insurance said that the change in definition is fair in terms of the risk taken on by the insurer. “Portability norms allow insurers to charge a ported policyholder a little higher, in accordance to the risk being taken on.” However, the existing insurer might not be able to cover the cost of higher risk at par with the new insurer, largely on the back of the existing relationship with the policyholder.

The recent IRDA circular stated “Portability means transfer by an individual health insurance policyholder (including family cover) of the credit gained for pre-existing conditions and time-bound exclusions if he/she chooses to switch from one insurer to another.” In other words, if you are unhappy with the existing medical policy, the insurer could have earlier offered to port you to another product from its stable. But this cannot be done.

So, the latest change in definition from the regulator, of not allowing porting within the same insurer, means little. Portability was earlier defined as the right to transfer a health insurance policy from one insurer to another and from one plan to another of the same insurer. This has been revised to exclude the latter.