Health Insurance Portability Is Becoming a Trap for Policyholders

Actor and singer Suchitra Krishnamoorthi recently had her health insurance claim rejected after porting her policy to ICICI Lombard General Insurance Co. Ltd. She told Mint that her bank relationship manager pressured her into the switch, assuring her continuity benefits from the previous policy and no need for fresh medical disclosures. After nearly 30 years of health insurance without disputes, the rejection shocked her. She has taken the matter to the insurance ombudsman.

New Delhi-based Lokesh Sharma described a similar case involving his 69-year-old father. A bank relationship manager connected the family with an insurer representative who suggested switching to another product within the same company, promising no fresh disclosures and a lower premium. The family believed it was a port. When they filed a claim, it was rejected on waiting period grounds because the policy had been issued as a fresh policy. The insurance ombudsman ruled in favour of the insurer. The Sharma family plans to move the consumer court.

Introduced in 2011, health insurance portability was designed to let policyholders switch insurers or products without losing continuity benefits on waiting periods already served and accumulated no-claim bonus. Keshav Jain, director at Rajesh Chetan Insurance Brokers, said the mechanism is being misused. "Since porting carries little or no commission, policies that should ideally be ported are often booked as fresh sales," he said. "Customers rarely examine the policy certificate to verify whether portability benefits have actually been carried forward."

How the Process Works

To port a policy, you need to apply at least 40-60 days before renewal. The new insurer must obtain policy details from the existing insurer through the Insurance Information Bureau of India (IIB), a data repository promoted by the Insurance Regulatory and Development Authority of India (Irdai). Dr. Mukund Kulkarni, chief business officer at IIB, said Irdai mandated that every portability request be routed through the bureau because earlier the process depended on insurers exchanging information among themselves, leading to incomplete data and delays.

The IIB lets insurers access underwriting details, medical disclosures, claims history and waiting periods already served. The existing insurer must share information within 72 hours, and the new insurer has to communicate its decision within five days of receiving complete records.

"Many times, we discover that customers have not made appropriate health disclosures or disclosed their claims history after reviewing information available through the IIB," said Bhabatosh Mishra, director of underwriting, products and claims at Niva Bupa Health Insurance.

If the port request is accepted, continuity benefits are carried forward and mentioned explicitly in the policy certificate. That includes waiting periods already served, no-claim bonus, continuity of sum insured and the moratorium period. Once you complete 60 months of continuous health insurance coverage, even across multiple insurers through portability, your policy or claim cannot ordinarily be challenged on grounds of non-disclosure or misrepresentation, except where fraud is established.

Any absence of your insurance history in the policy certificate is a red flag.

Why Claims Get Rejected

Waiting periods protect insurers from immediate claims. When waiting periods are waived during a port through continuity benefits, insurers offset the added risk with other safeguards. "These include mandatory deductibles and restrictions on higher sum insured," said insurance consultant Akshay Bansal.

Mayank Gosar, founder and CEO of Softcon Capital, cited insurer-specific portability norms that included deductibles at HDFC Ergo General Insurance Co. Ltd and mandatory step-up in low sum insured policies and caps on high sum-insured policies at Tata AIG General Insurance Co. Ltd.

From an insurer's perspective, ported customers carry higher risk, prompting greater caution. Experts say portability remains a valuable consumer right, only if policyholders verify that the policy has actually been issued as a ported policy.

"If you verify every detail before signing a cheque, why not do the same while buying an insurance policy?" Mishra asked. Policyholders should not assume information from the previous insurer is automatically transferred via the IIB portal even though it is mandated by regulations. "In the absence of a dedicated reporting mechanism to Irdai, the possibility of portability transactions occurring outside the IIB-mandated platform cannot be entirely ruled out," Kulkarni added.

"The most common reasons for claim rejection under ported policies are non-disclosure of diseases and disputes over pre-existing disease waiting periods. More than half of the rejected claims in ported policies arise due to these reasons," said Shilpa Arora, co-founder and COO of Insurance Samadhan.

Policyholders should make full disclosures, even when they develop a new medical condition after being insured, when porting. "Depending on the underwriting assessment, the insurer may impose permanent exclusions in some cases," Mishra said.

Continuity benefits apply only to the sum insured carried forward from the previous base policy. "Any additional sum insured opted for during porting will be subject to fresh waiting periods," Bansal said.

Portability is not a paperwork-free process. Make fresh disclosures, preserve records from the previous insurer, verify that portability benefits are reflected in the Certificate of Insurance, and avoid switching insurers just because another policy is cheaper, especially if you have made claims or developed medical conditions.