“Portability is not the answer to consumer complaints”  

March 24, 2011

The chief executive officer of Max Bupa Health Insurance, Dr Damien Marmion, says that portability will add to complexity from the customer point of view

Raj Pradhan

What are the major concerns affecting health insurance portability?

It is the beginning of a journey. We are in the early stages in trying to understand the issues. Portability will add to complexity from the customer point of view. The Insurance Regulatory and Development Authority (IRDA) is working on behalf on individual consumers (who have no collective power). They lack the bargaining power of group policies. There are consumer complaints related to denial of claims and so on that are pain points. The question is whether portability is the answer to the problem.

Portability will help in some ways, but we don't know what complexities it will drive. The main reason for portability is pre-existing diseases (PED) waiting period of four years, not applicable after moving to a new insurer.

What about the conditions (not PED) that were developed before or after moving to the new insurer? Is it PED for new insurer and waiting period before they are covered?

Insurers have waiting periods for specific diseases like kidney stones (may be two years waiting period) after joining the policy. Will portability make the insurer pay for these diseases even if the claim comes within two years? The insurer would not want kidney stone claims on day one and the policyholder leaving on day two. What about no-claim-bonus (NCB) or other benefits that earned with one insurer? Will it be ported to the new insurer? What about benefits like maternity (not PED), but which have a waiting period? Will the new insurer give this benefit just because the policyholder had spent time with the old insurer? Another issue is data transfer from the old to new insurer. How much is needed to understand risk, what parameters to transfer, authenticity of data received and so on. Will IRDA want Know-Your-Customer (KYC) norms? What if the policyholder leaves one insurer and new insurer delays getting approval for a policy and then there is a lapse? What about claims during the transition period?

What about portability from a benefit plan (even offered by life insurers) to indemnity (reimbursement) plans? What about loading by new insurer to accept a policyholder as PED will be covered?

You don't have individual loading, only community rating and premiums based on it. Will that change with portability?

We don't load today. If portability forces us (to do so), we may have to change it. For the new insurer to accept a policyholder and cover PED is a risk. We have to see the size and shape of regulations coming in before making any decision.

According to guidelines, the insurer will have to give a policyholder data within seven days to the new insurer for portability to work. It may be of issue for many insurers who do not even share data across divisions. How long will Max Bupa need to give data?

We have it (the data) in an electronic format and it can be given instantaneously.

Insurers still have the right to deny customer underwriting based on perceived risks What are your comments?  

Isn't that self-defeating for portability? It's good for insurers, but bad for customers.

What if IRDA forces an insurer to accept every policyholder applying for portability?

It is a hypothetical question. It is question for IRDA. Is portability the first step of many or only a single step? If it is only a single step, then there are many issues. If it is first of many, then there are hugely complex regulations around the issue. We are glad Moneylife Foundation has taken the initiative to hold a seminar on portability.

Will young customers be targeted for portability? Companies may ignore the older population.

The young (below 30) are difficult to market and attract. Ages 30 and 40 are value conscious and using services. They may port, but not the younger segment. Also, older population with public sector insurers will port to private players.
 
Why will the older population from public sector insurers move to private insurers? Most private players like ICICI Lombard and Bajaj Allianz don't even have life-long renewal. The public sector has an advantage here.

Many private players have an age limit for renewal. The philosophy of Indian insurers has been risk protection. It is about protecting insurers from bad risk coming in. The policy restrictions are to keep risk low. We offer life time renewal. Bupa does it everywhere in the world.

Will a common (vanilla) product work for portability? IRDA should issue guidelines for no-frills products, shouldn't it?

It is a starting point. Plain, vanilla and clean products will have to be low benefit (it will be the lowest denominator across insurer products). The uniformity will stifle innovation. We do offer portability across our products even across group to individual insurance.

What about sharing of risk between the old and new insurer (to share payment of PED claims)?

It will get complex, and will need a new insurance act.

How about a common pool like motor third party pool?

Motor insurance is mandatory in India, health is not. Such kind of an option will need legislative change. What if one insurer opts out of the pool and leaves others saddled with high risk?