Covid insurance claims not steep, say insurers even as cases rise

With the number of Covid infections in the country continuing to rise, albeit at a slower pace, health claims, too, are on the rise. 

As of November 18, as many as 576,000 Covid health claims have been reported to insurers, amounting to approximately Rs 8,600 crore, said sources aware of the development.

The insurers, on the other hand, have, so far, settled around 420,000 claims, worth approximately Rs 3,900 crore.

At the end of July, only 81,000 Covid claims were filed with insurers. That number doubled in a month’s time. By August-end, insurers had as many as 160,000 reported Covid claims. By October-end, the reported Covid claims had breached 475,000.

Experts said the claims initiated in September were close to 50 per cent of the total claims received since the start of the pandemic. October started to see some tapering off.

According to Bhaskar Nerurkar, head-health & travel administration at Bajaj Allianz General Insurance, the rise in the number of Covid claims is not as steep now as it was earlier. It has more or less stabilised.

“Now, growth is not so alarming as far as Covid claims are concerned. We expect the claims to come down. A lot will depend on how the second wave will impact us,” said Nerurkar.

Bajaj Allianz General Insurance has received close to 20,000 Covid claims, with an average claim size of more than Rs 1 lakh.

“In October, we saw marginal decline in Covid claims. But the definitiveness of the trend will take some time to be established,” said the chief executive officer (CEO) of a private insurance company.

Another worrying factor for insurers is that non-Covid claims are now within kissing distance of pre-Covid levels. While in the initial days of the pandemic, the insurers had benefited from fewer traditional health claims as people had apprehensions of visiting a hospital, now, they are seeing a spike in such claims as well. This, coupled with the Covid claims streaming in, has put insurers in a spot as far as their loss ratios are concerned in the health segment.

“There will be a huge impact on the loss ratios because the cost of Covid was an unanticipated one for insurers,” said a senior insurance executive.

Loss ratio indicates the underwriting performance of an insurer. If it is above 100, the premium collected is not adequate to pay claims. For the industry, in corporate group health, the loss ratio is between 90 per cent and 95 per cent. And, in retail health, the loss ratio varies between 60 per cent and 90 per cent.

“Loss ratios are going to get impacted in the heath segment this year because the regular claims have almost reached 90 per cent of pre-Covid claims. On top of it, there is an additional claims load of 24 per cent coming from Covid claims. So, we are receiving more claims overall, compared to the same period last year,” said Nerurkar.

Also, the average Covid claim is more than double what insurers pay for an average non-Covid claim, said experts. While this may not result in solvency for the insurers, some companies may get impacted if the claims continue to rise. 

But there is a possibility of increase in premiums of health insurance products, depending upon the claim experience insurers have this financial year.

“It will be a painful year for health insurers. Hospitals are charging more now, other surgeries are spiking, and bed utilisation is also very high. In the next few months, we will see a surge in claims,” the CEO added.

Status check:

Non-life insurers have received 576,000 Covid-related health claims

Of which, around 420,000 claims have been settled worth Rs 3,900 crore

Insurers say growth of Covid claims have stabilised

But, non-Covid health claims have also spiked

Insurers may see their loss ratios in the segment getting impacted