When porting a health policy puts your claim at risk

Nothing stings quite like having a health insurance claim rejected for no apparent fault of yours. Yet, this is a risk policyholders may unknowingly face when they port their health insurance policies.

Portability was introduced by the insurance regulator to ensure that customers were not trapped in policies that did not serve them well. The idea was simple: give policyholders the freedom to walk away from a bad insurer and, in the process, encourage better service, better products, competitive pricing and greater choice.

The system works beautifully on paper. On the ground, however, it does not seem to be working as intended.

Switching health insurance is not as simple as moving from one financial product to another. Buying a fresh policy means starting from scratch and serving the initial waiting periods all over again. Portability was designed to solve precisely this problem. It allows policyholders to carry forward the time already spent with their existing insurer so that they retain continuity benefits when they switch to a better product.

And to ensure portability worked as intended, the Insurance Regulatory and Development Authority (Irdai) prohibited intermediaries from earning a commission in the first year after a policy was ported.

Over the years, the regulator also strengthened the infrastructure supporting portability by creating a central repository at the Insurance Information Bureau of India (IIB). All porting requests must be routed through this common platform, allowing the acquiring insurer to obtain the policyholder’s underwriting and claims history from the existing insurer within a specified period. The new insurer remains free to assess the customer based on the information available. Once the port is approved, the policyholder carries forward benefits earned under the previous policy. These include the accumulated no-claim bonus, credit for waiting periods already served and the period completed towards the 60-month moratorium.

When portability becomes a sales tool

Yet Mint Money’s reporting on portability points to failures at two levels. The first is the way portability is being used by intermediaries. Instead of serving primarily as an instrument of customer choice, it is increasingly becoming a sales tool.

Two prominent practices came to light during Mint Money’s reporting. First, intermediaries are paid incentives to port policies, even though such payments are prohibited. Porting by itself is not the problem. The regulation exists precisely to allow dissatisfied policyholders to switch insurers. The problem arises when the decision to port is driven not by the customer’s needs but by the intermediary’s payout.

At the industry level, roughly one in four customers did not renew the same plan, according to the FY26 retention figures for insurers’ highest-selling health plans. The data does not tell us whether these customers ported to another insurer, migrated to another plan within the same insurer or dropped their cover altogether. Insurers, however, say porting accounts for a significant share of this churn and if the decision is driven by sales incentives rather than customer needs, there is a clear problem.

Second, some intermediaries sell a fresh policy under the guise of a port. For customers, the distinction may not become apparent until much later and often, when it matters the most.

The transparency gap

The second failure is regulatory. Nearly 15 years after portability was introduced, Irdai still does not publish enough data to establish whether the mechanism is working as intended. Insurers’ public disclosure documents do not provide data on the number of policies ported in and out during a year. Routing porting requests through the IIB may be mandatory, but there is no publicly available data to establish compliance.

There is also no data around claims rejected from the ported bucket and, consequently, little clarity on how claim rejections due to alleged non-disclosure are treated in the case of ported policies. The acquiring insurer can obtain the customer’s previous underwriting and claims history centrally from the existing insurer. So, when a claim is rejected over information that was already available and should have travelled with the policy, the policyholder deserves to know where the process failed. More importantly, it should trigger compliance scrutiny.

Under the current system, portability appears seamless when everything is going well. It is only when a claim arises that the glaring cracks between regulation and its implementation on the ground become visible. Without adequate transparency and oversight, portability, which was meant to be a lifeline for policyholders, risks becoming a noose around their necks.

Deepti Bhaskaran, Editor, Mint Money

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