Renewal, Portability & Conversion to Individual Policy

Renewal and the incurred claims ratio

A group policy usually runs for a year. At renewal the premium is negotiated on the group's own claims experience, which is often summarised in one figure: the incurred claims ratio (ICR). It is incurred claims as a percentage of earned premium. Incurred claims are the claims paid in the period plus the change in the provision for outstanding claims, closing minus opening.

An ICR of 120% means claims were ₹120 for every ₹100 of premium, 20% more than the premium, before the insurer's own expenses are counted. Insurers usually seek a higher premium at renewal for such a group. A low ratio works the other way: the lower the ICR, the less the insurer paid out relative to what it collected, and the more room the employer has to negotiate. The level at which an insurer actually agrees to reduce a premium differs by insurer and by group.

Portability belongs to the individual

The regulated right of portability, in the Master Circular on Health Insurance Business (29 May 2024), is written for an individual who holds an indemnity health policy. Such a policyholder can change insurer and keep earned credits, such as waiting periods already served and the moratorium period. The existing insurer supplies the data within 72 hours and the new insurer decides within 5 days.

When an employer moves its whole group to a new insurer, that is a commercial arrangement, not portability under the circular. Continuity for members, for example whether waiting periods already served are recognised, is a term to be agreed with the new insurer.

Conversion for a leaving member

Group cover normally ends when a member leaves the group. A conversion option lets the member move to an individual policy, on terms set by the master policy and the insurer. Whether conversion is offered, and the time allowed, are set by the master policy and the insurer; no IRDAI-fixed window has been identified.

Moving to another product of the same insurer is called migration, and it is available to members of group policies too. On migration, credits such as waiting periods already served carry over to the extent of the earlier cover.

GST at renewal

The GST exemption that took effect on 22 September 2025 covers individual health and life policies, including family floater and senior-citizen policies. Group policies, such as an employer's group health cover, are not within it. Their premiums continue to carry GST at 18%.

Rules at a glance

Key points

• A group policy usually runs for a year, and the renewal premium is negotiated on the group's claims experience.
• ICR is incurred claims as a percentage of earned premium; 120% means claims were 20% more than the premium.
• Regulated portability is the right of an individual indemnity policyholder, not of an employer group.
• Conversion to an individual policy is on terms set by the master policy and the insurer.
• Group premiums carry GST at 18%; the nil rate applies to individual policies only.

Common misunderstandings

• An ICR of 120% does not mean the insurer made a 20% loss in all: it means claims alone were 20% above the premium, before expenses.
• Portability under IRDAI's circular is not a right of the employer group: it is written for an individual indemnity policyholder.
• A conversion window is not to be assumed from regulation: no IRDAI-fixed window has been identified, and whether conversion is offered, and the time allowed, are set by the master policy and the insurer.
• The nil GST rate does not reach group policies: an employer's group health premium carries 18%.

Questions people ask