Policyholders are facing claim rejections due to misleading sales tactics where agents sell fresh policies instead of porting existing ones. This results in the loss of continuity benefits and unexpected waiting periods, leaving customers vulnerable during medical emergencies.
Health insurance portability was launched by the Insurance Regulatory and Development Authority of India (IRDAI) in 2011 to empower customers. It allows individuals to switch their health insurance provider without losing benefits like no-claim bonuses or credit for waiting periods related to pre-existing diseases. However, recent trends show that this process is frequently bypassed by intermediaries, creating a significant trap for unsuspecting policyholders.
The Misrepresentation Gap
The core issue often stems from the incentives of insurance agents and relationship managers. Because the commission for processing a porting request is typically lower than that of selling a new policy, intermediaries may convince customers to buy a fresh policy instead. During this process, agents might incorrectly advise customers that they do not need to disclose past medical history or that continuity benefits will be automatically transferred, even if the paperwork indicates a new policy issuance.
This misrepresentation can lead to severe financial consequences. When a policyholder files a claim, the insurance company investigates the underlying data. If they find that previous medical disclosures were omitted or that the policy was issued as a new contract rather than a ported one, they may reject the claim citing non-disclosure or the start of a fresh waiting period. Public cases involving figures like Suchitra Krishnamoorthi highlight that even when policyholders rely on guidance from bank-affiliated managers, the final liability often rests on the accuracy of the declarations made in the policy document.
Protecting Your Continuity Benefits
To ensure that portability is applied correctly, policyholders must remain vigilant during the transition. The Insurance Information Bureau of India (IIB) maintains a database to facilitate the transfer of insurance history between companies. IRDAI mandates that insurers must share required policy details within 72 hours of a request, and the receiving insurer is expected to respond within five days. Despite these regulations, the technical execution often fails if the agent mislabels the application.
Investors and policyholders should note that receiving insurers often view ported customers as higher-risk individuals compared to fresh entrants. As a result, some companies, such as HDFC Ergo and Tata AIG, may impose specific conditions like mandatory deductibles or restrictions on the total sum insured that can be ported. Any sum insured that is increased during the porting process will not carry continuity benefits and will be subject to the standard waiting periods applicable to new policies.
The most critical step for any policyholder is to meticulously verify the final policy certificate. It must explicitly state the continuity benefits, the number of waiting periods already served, and the no-claim bonus status. If the policy certificate does not reflect the history of the previous policy, it should be flagged immediately as a major warning sign. Treating an insurance purchase as a long-term financial contract rather than a simple transaction is essential to avoiding disputes with insurers in the future.