Saturday, 28 Nov 2020

Indians buying health insurance like never before

BANGALORE – Purchases of Covid-specific health insurance policies in India have grown almost 10 times in a month, making it the fastest selling insurance policy in decades.

The chairman of India’s insurance regulatory body, the Insurance Regulatory and Development Authority (Irdai), said on Oct 16 that the market grew from 1.5 million rupees (S$27,560) to 11 million rupees (S$202,112) from September to October.

India has had close to eight million Covid cases, and 119,000 people have died. Although the Ministry of Health says more people are recovering than ever before and infection rates are declining, India still records the world’s second largest number of Covid infections and is set to overtake the USA as the worst-hit country.

Industry sources said that since July, 450,000 insurance claims worth about 67.5 billion rupees (S$1.24 billion) had been reported. Of this, about 300,000 claims worth around 28 billion rupees have been settled and paid.

Many Indians were spurred to buy insurance in July as infections peaked and the lockdown was eased.

Mr Mohan Elango, a 28-year-old television producer in Chennai said that it was when India’s pandemic “situation got serious” that he bought a Covid-specific insurance policy from Star Health and Allied Insurance company for a cover of about S$9,200. It was his first health insurance policy.

“One of my relatives was admitted in a private hospital with Covid, but in six days the family opted for home treatment because they could not afford to pay more bills. I too can’t bear the expense, so I got a Covid insurance policy,” added Mr Elango.

Although treatment in government hospitals is free of charge, shortage of beds and lack of trust about safety has made many Indians opt for private hospitals. Some state governments have regulated Covid testing and treatment fees, but many hospitals have still been charging controversially high prices for sanitation, admission and personal safety equipment of medical staff.

Several patients and health rights activists have challenged this in courts across India.

As Covid-infected Indians struggled with enormous bills and rejected claims on their existing health insurance policies, the Irdai designed two standard Covid specific products called Corona Kavach (Armour) and Corona Rakshak (Protector) in June.

Based on these guidelines, many insurance companies have rolled out policies that will cover the treatment cost of the Covid disease. Corona Kavach is an indemnity-type plan for individuals and families to get their hospital bill reimbursed up to the sum insured.

A benefit-based plan, Corona Rakshak gives hospitalised individuals a fixed payout to cover expenses.

Both are short-term policies, issued for 3.5, 6.5, and 9.5 months. The one-time premiums are low, ranging from 120 to 15,000 rupees, based on each insurer’s underwriting standards and expectations of claim ratios, reported online insurance retailer PolicyBazaar.

“We have witnessed a steep increase in our website traffic and online sale of health insurance has grown by 100 per cent vis-a-vis last year. Also, the pandemic has forced the customers to think about larger sum insured policies. We have witnessed increased demand for our super top-up health product which offers sum insured of INR 20 lakh (2 million rupees, or S$36,855) with a deductible of INR 5 lakh (500,000 rupees) for a premium of 2,420 rupees for customers below 45 years of age,” said Mr Ravi Vishwanath, President – Accident and Health, HDFC ERGO General Insurance.

Some corporate companies are also purchasing Covid insurance for employees, as a stand-alone policy or as a “top-up” to their existing health cover.

“My company took the policy cover for all employees. They have borne the entire cost,” said Ms Subhashini Ravichandran, a content writer working at Customised Energy Solutions in Chennai. The policy from Oriental Insurance for 200,000 rupees covers diagnostics, hospitalisation, and home care for up to 14 days. The premium was only 600 rupees.

Mr Sanjay Datta, chief of underwritings, claims and reinsurance at ICICI Lombard, India’s largest private-sector insurer, said short-term insurance products like the Covid plans were unprecedented for India.

“It is a crisis mitigation product, in a sense, like extinguishers to put out a fire,” he said.

“The pandemic has raised awareness about health risks in general, not just from an old age perspective. Indians are otherwise very fatalistic about disease and death. But now even young people are taking insurance.”

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