Agents are no longer eligible to get to commissions from insurance companies on portability of health insurance policies, states IRDAI’s health insurance guidelines.
However, intermediaries will continue to get commission on renewal of such policies.
IRDAI said, “No commission shall be payable to any intermediary on the acceptance of a ported policy.”
According to IRDAI norms, policy holders can swap their existing health insurer just the way mobile users can switch to a rival service provider to get better services. On portability of health insurance policy, all the benefits of the existing policy like accumulated bonuses, pre-exiting conditions and waiting period are carried forward to the new policy. However, policyholders are required to port their policy at least 45 days prior to the expiry date.
The portability option encourages insurance companies to come out with more cost competitive schemes and provide quality services in order to retain existing policyholders and attract new clients.
Financial advisers say that the move will discourage portability of health insurance. Imran Gilani, a Palghar based IFA is of the view that the insurance industry may witness decline in the volume of portability. “Portability is a good option to get rid of mis-sold products. Also, in health insurance, all credits of policy like pre-existing ailments and waiting period can be carried forward whenever switch happens. This is good for policyholders. However, due to absence of incentives, many agents may choose to sell a fresh policy instead of porting exiting one. This will affect policyholders.”
However, a few advisers have a different opinion. Ritesh Sheth of Tejas Consultancy believes that the move will reduce churning. “Due to stiff competition in the insurance distribution space, many agents poach customers and encourage them to port policy. The move will take care of churning.”
Typically, general insurers and standalone health insurers pay commission of 15% on annual premium. Currently, agents get first year commission on every renewal as most health insurance schemes are one-year contracts.
