QUESTION 1
S, an individual has a health insurance policy with X Health Insurance Company Limited. The sum insured is Rs. 15 lakh and the policy has a floater option of Rs. 5 lakh. The policy was first taken in 2017 and has been current from them with S paying the renewal premium by due dates. In the currency of the policy with X,S has made some claims–small and big but all these have been rejected by the insurer. The policy is due for renewal on 15th December, 2021. S has been approached by Z, an agent of a different company, Y Health Insurance Company Ltd. with a proposal that sounds attractive to S.
He wants to change over to Y from X.Indicate the option to S and the process involved. Does X Health Insurance Company Ltd. have any role to play in this move ? Discuss.
ANSWER
One of the facilities offered to a policy holder under the health insurance policies isthe right accorded to a policy holder to transfer the credit gained for pre-existing conditions and time bound exclusions from one insurer to another insurer or from one plan to another plan of the same issuer. It is called portability of an insurance policy.
PORTABILITY
It is a facility of right provided to a policyholder in case of health insurance policies to move from one insurer to another insurer to their choice or from one policy to another policy with the same insurer. In this case credit earned with the earlier insurer by the policyholder such as continuity bonus, pre-existing period etc., will be transferred with the new insurer subject to compliance of some terms and conditions.
PLEASE NOTE THAT- The new insurer has right to decline the portability request on the basis of the underwriting decision.
Such portability is not applicable to fixed benefits payable under health policies issued by a life insurer. The advantage of portability is the carry forward of the credit accrued on account of having a policy with the previous insurer. Long terms benefits gained under the terms of a policy will not be denied by a switch over to another insurer by the policyholder.
PLEASE NOTE THAT
1. The application for portability will have to be given to the existing insurer who will send it through a portal to the new Insurer who may request for the claims history and other details from the old insurer who shall give them to the new insurer within a period of 7 days from the date of receipt of request.
2. An insurer may reject the request for portability if the policyholder approaches 60 days before or within 45 days of the date of expiry of the insurance policy.
3. However, an insurer may at their option consider the request for renewal even outside the stated period. The new insurer is under obligation to accept or reject within a period of 15 days from the date of receipt of the Portability form.
4. If the new insurer does not convey any decision with the aforesaid 15 days, the new insurer is deemed to have accepted the request for portability.
5. No charges for portability can be levied either by the previous insurer of the new insurer. No commission shall be paid to any Agent or Intermediary for the policy which is ported from one insurer to another insurer.
In the present case, S obviously is a long-standing customer of X health insurance co. ltd. He apparently has accumulated some credits because of the longevity of the policy and his claims profile. Obviously he is not happy with X health insurance co. ltd and wants to move to Y health insurance co. ltd. S possibly feels that his needs may be taken better care by the agent of Y.
In the circumstance, S has the freedom to ask X health insurance co. ltd. to port his policy to Y health insurance co. and Y’s agreement within the time schedule as prescribed,it can be done whereby all the accumulated credits and benefits under the policy with X will continue to be enjoyed from Y under the scheme. Neither X or Y or the agent will be entitled to any fees or charges for the portability.
S can be advised to follow the prescribed procedure and seek portability of his health cover from X to Y
DISCLAIMER: The case law presented here is only for sharing knowledge with the readers. The views are personal, shall not be taken a professional advice. In case of necessity do consult with professionals for more understanding and clarity on the subject matter.
FOOTNOTE:
IRDAI, GUIDELINES ON MIGRATION AND PORTABILITY OF HEALTH INSURANCE POLICIES.
Ref: IRDAI/HLT/REG/CIR/003/01/2020
Dated: 01/01/2020.
A: NORMS OF PORTABILITY
1. Portability shall be allowed under all individual indemnity health insurance policies issued by General Insurers and Health Insurers including family floater policies.
B: NORMS ON MIGRATION
2. In addition to the migration option to be provided to the policyholders as specified under Regulation 17(i) of IRDAI (Health Insurance) Regulations 2016:
Every individual policyholder (including members under family floater policy) covered under an indemnity-based individual health insurance policy shall be provided an option of migration at the explicit option exercised by the policyholder.
a) to an individual health insurance policy or a family floater policy, or.
b) to a group health insurance policy, if the member complies with the norms relating to the health insurance coverage under the concerned group insurance policy
3. Every individual member, including family members covered under an indemnity-based group health insurance policy shall be provided an option of migration at the time of exit from group or in the event of modification of the group policy (including the revision in the premium rates) or withdrawal of the group policy:
a) to an individual health insurance policy or a family floater policy.
4. Migration shall be applicable to the extent of the sum insured under the previous policy and the cumulative bonus, if any, acquired from the previous policies.
5. Only the unexpired/residual waiting period not exceeding the applicable waiting period of the previous policy with respect to pre-existing diseases and time-bound exclusions shall be made applicable on migration under the new policy.
6. Migration may be subject to underwriting as follows:
a) For individual policies, if the policyholder is continuously covered in the previous policy without any break for a period of four years or more, migration shall be allowed without subjecting the policyholder to any underwriting to the extent of the sum insured and the benefits available in the previous policy.
b) Migration from group policies to individual policy will be subject to underwriting.
c) Where underwriting is done, the insurance company shall convey its decision to the policyholder within 15 days as per Regulation 8(6) of IRDAI (Protection of Policyholders’ interests) Regulations 2017.
7. A policyholder desirous of migrating his/her policy shall be allowed to apply to the insurance company to migrate the policy along with all members of the family, if any, at least 30 days before the premium renewal date of his/her existing policy. However, if the insurer is willing to consider even less than 30 days period, then the insurer may do so.
8. Insurer shall not levy any charges exclusively for migration.
9. Insurers shall clearly draw the attention of the policyholder in the policy contract and the prospectus that:
i) Migration is allowed as per these Guidelines as amended from time to time.
ii) Policyholder should initiate action to approach the insurer to exercise migration option well before the renewal date to avoid any break in the policy coverage.
10. Individual members, including the family members covered under an indemnity-based group health insurance policy shall have the right to migrate from such a group policy to an individual health insurance policy or a family floater policy, thereafter Portability shall be allowed as per Clause (1) above and in accordance with the norms specified under IRDAI (Health Insurance) Regulations, 2016.
11. These Guidelines are issued under the powers vested with Section 34 (1) of the Insurance Act, 1938 and will come in to force with immediate effect.
FAQS ON PORTABILITY
1. What is portability under Health insurance policy?
Portability means, the right accorded to Individual health insurance policyholders (Including all members under family cover) to shift his / her policy to another insurance company along with transfer of credit gained for pre-existing conditions and time bound exclusions.
2. For which of the policies portability is applicable?
For all indemnity based individual health insurance policies issued by General Insurers and Health Insurers including family floater policies portability is applicable. The Portability facility is also allowed under indemnity-based group health insurance schemes offered to account holders of a bank.
3. What benefits can be ported in a Health Insurance policy?
Time-bound exclusions in the existing policy, waiting period gained in the existing policies, can be ported to a new policy. For complete information please refer to Regulation No.17 (iii) and Schedule I of IRDAI (Health Insurance), 2016.
4. What are the conditions for opting Portability?
a. Portability option shall be exercised at the time of renewal.
b. The policy must be continuous without a break -n period.
c. Must apply to the new insurance company for portability at least 45 days prior to the date of renewal.
5. When can a policyholder exercise option of portability and whether any timelines applicable for exercising the above option?
A policyholder can port the policy only at the stage of policy renewal. A policyholder shall apply at least 45 days before the premium renewal date, but not earlier than 60 days from the premium renewal date of his / her existing policy.
6. Is there any Age limit applicable for policyholders to raise a portability request?
All Health insurance policyholders can exercise the option of portability.
7. What are the norms to be followed in case of the existing policy when the outcome on acceptance of portability is pending with new insurer?
a) The existing policy shall be allowed to be extended, if requested by the policyholder for a short period of time by accepting a pro-rata premium for such short period.
b) Existing insurer shall not cancel existing policy until such time, a confirmed policy from new insurer is received or there is a specific written request of the insured. For complete information please refer to clause 5 of schedule I of IRDAI (Health Insurance) Regulations, 2016.
8. What happens to claims reported in case of a short period policy issued during the pendency of the portability request with new insurer?
If there is a claim, the existing insurer may charge balance premium for remaining part of policy year subject to acceptance of the claim. In such cases, the policyholder is liable to pay the premium for balance period and continue with the existing insurer for that policy year. For complete information, please refer to clause 6 of schedule I of IRDAI (Health Insurance) Regulations, 2016.
9. Can I opt for Higher SI under the policy while exercising the option of portability with the new insurer?
Yes. The policyholder can choose for higher SI at the time of exercising the request for portability with new insurer. However, the portability benefits will be available only up to the extent of SI and cumulative bonus acquired in previous policies from previous insurer.
10. What happens to my waiting periods and time bound policy exclusions when portability option is exercised?
When the option of portability is exercised in health insurance policy, all the terms and conditions shall be as per the terms and conditions of the new policy. The credits gained in the previous health insurance policy on the waiting period and time bound exclusions are protected.
11. What happens to Policyholder if for certain disease or treatments in new policy, the waiting period are longer than that of the previous policy?
Upon porting, all the terms and condition of the policy shall be as per the new policy. However, the Policyholder should be clearly explained about the additional waiting periods by the porting in insurer.
12. I am a member of a group health insurance policy. Can I opt for Portability?
A member of a group health insurance policy shall initially migrate to an individual health insurance policy of the same insurer. However, members of an indemnity-based group health insurance policy offered to account holders of a bank are allowed portability of their insurance coverage.
13. Are there any charges or fees for availing portability facility?
No. There shall not be any additional charges levied exclusively for availing portability facility.
14. Who can avail the portability facility under group health insurance schemes offered by Banks?
All the members of an indemnity-based group health insurance scheme offered to account holders of a bank are allowed portability for their health insurance coverage.
15. How the portability facility is enabled in group health schemes offered by banks ?
The members of an indemnity-based group health insurance scheme offered to account holders of a bank are allowed porting of their health insurance coverage to another indemnity-based group health insurance scheme offered by a different insurer to the account holders of the same bank.
16. When shall a member of a group health insurance scheme offered by bank shall exercise the option of portability?
A member of an indemnity-based group health insurance scheme shall exercise the option of portability at the time of renewal of the policy or withdrawal/discontinuation of the policy.
FAQS ON MIGRATION
1. What is migration under Health insurance policies?
Migration means, the right accorded to health insurance policyholders (including all members under family cover and members of group insurance policy), to transfer the credit gained for pre-existing conditions and time bound exclusions, with the same insurer.
2. For which of the policies migration is applicable?
Migration is applicable to all indemnity-based individual health insurance plans including family floater policies and group health insurance policies.
3. Are there any time limits applicable for exercising option of migration?
policyholder desirous of migrating his / her policy shall be allowed to apply to the insurance company to migrate the policy along with all members of the family, if any at least 30 days before the premium renewal date of his / her existing policy. An insurer may consider even in less than 30days period.
4. What are the norms of migration of health policies?
i) Every Individual Policyholder ( Including members under the family floater policy ) covered under the indemnity-based health insurance policy shall be provided an option of migration at the explicit option exercised by policyholder:
a. To an individual health insurance policy or a family floater policy or.
b. To a group health insurance policy, if the member complies with the norms relating to the health insurance coverage under the concerned group insurance policy.
ii) Every individual member, including family members covered under an indemnity-based group insurance policy shall be provided an option of migration at the time of exit from group or in the event of modification of group policy ( including revision in the premium rates) or withdrawal of group policy, a. To an individual health insurance policy or a family floater policy.
5. What benefits can be made applicable on a migrated health insurance policy?
a. The extent of Sum Insured and cumulative bonus (If any), acquired from the previous policies.
b. The unexpired/residual waiting period not exceeding the applicable waiting period of the previous policy with respect to pre-existing diseases and time-bound exclusions shall be made applicable.
6. What are the underwriting conditions for effecting migration?
a. For Individual health policies, migration shall be allowed without subjecting the policyholder to any underwriting to the extent of sum insured and the benefits available in the previous policy provided the policyholder is covered in previous policy for a continuous period of four (4) years or more without any break in policy.
b. Migration from group policies to Individual policies shall be subject to underwriting.
7. Are there any charges or fees for availing migration facility?
There shall not be any additional charges levied exclusively for availing migration facility.
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