Agents trip health cover porting

STICKING WITH ONE

Hesitate To Woo Customers In Absence Of Commissions

Mumbai: Health insurance portability, which has been in force for a year, has not resulted in any major churn among policyholders. Insurers say that one of the reasons could be that agents are reluctant to hand-hold customers as regulations bar commissions on ported policies. 
    Most non-life insurance companies have reported a couple of thousands of customers who have moved out while standalone health companies were the ones to have recorded a net inflow because of portability. A public sector company said that it received a little over 4,000 proposals to shift but ultimately only half the number actually moved. One advantage with standalone companies is that they do not have to license their own agents as existing insurance agents are allowed to sell products of health companies. 
    "Our main distribution channel is our agency force. Since there is no commission paid to the intermediary in the year of porting, there is no incentive for the agent," said K G Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance. According to Sanjay Datta, head of underwriting and claims at ICICI Lombard, the experience of health insurance portability is comparable with telecom where the ratio of customers opting to port is not high. "Health cover customers are stickier compared to mobile customers as ininsurance they have multiple policies with the same company." 
    Manasije Mishra, CEO (designate), Max Bupa Health, said, "Customers are porting in through various channels, agents are also bringing in portability proposals because they know that if they keep their customers' best interests in mind, they will get their commission in subsequent years also. We are discovering that some of the older policies are for a low value and the portability benefits are available only on the original sum insured. The customer finds it prudent to buy a family floater with a larger sum insured." 
    In September last year, IRDA issued its guidelines on portability of healthinsurance. The objective of the guidelines was to allow customers to shift from one company to another without losing their 'no claim' track record or running the risk of claims being rejected under pre-existing conditions.Insurance norms do not allow companies to use the 'pre-existing' defence if an insured has been with the company for four years. 
    The conditions for portability were that the shift could happen only at the time of renewal and both companies are given sufficient notice. Commissions were not allowed on ported policies to discourage agents from needlessly churning policies and also it was expected to be initiated by the policyholder. 
    According to an intermediary, one of the issues with portability is that insurers can willy-nilly be selective about proposals to shift by not having any customer touch points for portability. "At the same time, it is not fair to force insurers to accept policies which might have been shoddily underwritten by others," he adds.