Safeguarding public health was the main concern of the government, but for insurers, designing viable products was the goal
Health insurance has come a long way in the last one year in providing succour to the general public affected by the Covid-19 crisis.
In the last one year, product innovation and standardisation have been driven by the insurance regulator, Insurance Regulatory and Development Authority of India (IRDAI), whose policy framework was met with an enthusiastic response from industry players.
The IRDAI has also played a pivotal role in simplifying complexities in health insurance policies, bringing in transparency to provide clarity to policyholders.
Standard Covid basic products
In the face of the Covid-19 challenge, the regulator rose to the occasion by introducing standard Covid basic products, ‘Corona Kavach’ and ‘Corona Rakshak’, to be offered by non-life and life insurers mandatorily for nine-and-a-half months.
All general and standalone health insurers began offering the products from July 10, 2020. In the backdrop of Covid cases surging between March and September 2020, the introduction of standard covers made a key difference to general public, according to industry experts. As the focus shifted gradually from hospitalisation to home care treatment, a provision to cover home care treatment costs under Covid-specific insurance products was brought in.
The Corona Kavach policy underwent regular modifications in the backdrop of changing ground realities and requirements of patients, and was made to cover some associated costs, including expenditure for personal protective equipment.
The IRDAI Chairman, Subhash C Khuntia, underscored that insurance companies must come to the rescue of policyholders and cater to the changing needs of customers in difficult times. The Covid-specific insurance products are a case in point, and reflect the adaptability of the regulator as well industry players. Corona Kavach finally turned out to be the right product that is aptly designed to cover all specific aspects associated with Covid-19, such as testing and home treatment costs.
The systematisation/standardisation of treatment costs were also ensured by the General Insurance Council (GIC), which brought out an indicative list of treatment costs. This had a positive impact on all Covid-related claims in the last one year.
Covid-19 hospitalisation rates have been arrived at by the council after taking into account the rates fixed by different State governments and after consultations with doctors. Similarly, the basic standard health cover product, ‘Arogya Sanjeevani’, has made good inroads. The standard health cover policy, offered by general and health insurers, provides a maximum cover of ₹5 lakh.
Going forward, Arogya Sanjeevani can provide a further boost to the health insurance portfolio in the post-Covid era.
A big shift
The Covid-19 outbreak and the need for health insurance can prove to be a game-changer for the industry in the days to come.
Innovative products and new service offerings such as telemedicine are likely to pick up, opening up new avenues in health cover, too. Digital technologies and their increased use, both by insurers and customers, are also expected.
There has also been an increase in demand for health insurance by consumers as they have become more health-conscious. The increase in demand has been fuelled to a significant extent by the younger generation, say industry sources.
As per the data available with insurers, millennials were the top buyers of the Corona Kavach plan, as over 40 per cent of the buyers are in the age group of 18-30 years.
As the treatment costs are high in private hospitals, data show that a good number of policyholders had opted for the higher side of the sum insured of ₹2 lakh to ₹5 lakh.
While the Covid threat is expected to pass over a period of time, with vaccination as well as preventive protocols by the larger public, the interest in health insurance is here to stay.
According to Sanjay Datta, Chief-Underwriting, Claims and Reinsurance, ICICI Lombard GIC, while Covid-specific policies were short-term policies, they created greater awareness on the need for long-term and regular health insurance.
“Overall, they have created large-scale awareness among the general public,” he told BusinessLine. As per industry estimates, insurance penetration in the country was at 3.78 per cent in FY20, which is low compared to the global average of 7.23 per cent.
Of this, the non-life segment penetration amounts to only 0.97 per cent. This is expected to expand further.
The final impact
What will be the final impact of coronavirus on the bottom line of insurers? It may take more time to get an answer for this question.
According to the CEO of a major non-life insurance company, an understanding of the net impact of Covid on the business of general insurers, may differ from company to company.
“As of now, we can say that health insurance business has certainly got a boost and it has overtaken motor segment. But the real picture will only come out with full-year numbers,” he added.
The lessons learnt in response to Covid can also go a long way in preparing for future perils to public health and designing viable and efficacious products.