Insurers see adverse claim ratio on Covid-specific health products

Covid-specific health products, introduced last year by many insurers and subsequently by the insurance regulator via two standard policies, have been a hit among consumers but insurers are having a hard time dealing with claims.
 
As of March 15, 13.3 million lives have been covered under specific products for a sum assured of Rs 13.29 trillion, shows the data compiled by the insurance regulator that is not publicly available.
 
The regulator’s two Covid standard products — Corona Kavach and Corona Rakshak — have covered more than 4.7 million lives.
 
Earlier this week, looking at the resurgence of Covid-19 infections, the insurance regulator allowed general and health insurers to offer and renew Covid-specific policies till the end of September. Earlier, these were allowed to offer such policies till March 31, 2021.
 
Bhabatosh Mishra, director, underwriting, products & claims, Max Bupa Health Insurance, said, “By and large these products have adverse claim ratios as premiums are lower. We saw that people bought these products when infection numbers were high but in tandem with the falling infections, the number of people buying such products fell significantly. Now, there is again a surge in demand as cases have started to rise. Covid has had an adverse impact on claims ratio of the other products, too, and if this continues not just the Covid-specific products but other products may also need a price correction.”
 
While the insurers are expecting a good uptake for such products going ahead, they are worried about the not-so-favourable claims experience. The selling point of these products is they are way cheaper than the comprehensive health products, provide coverage only against Covid-19, and are for shorter tenures.

 
According to the data, insurers have settled more than Rs 980 crore in 118,000 Covid-19 claims.
 
“The number of claims are very high from such policies. The premium was kept low so that people without any health cover could subscribe to such policies,” said a source on the condition of anonymity.
 
Most companies have loss ratios of 200-300 per cent on these products because these were not priced with such a huge event in mind, said the chief executive officer of a general insurer.
 
“Hence, the companies have not done well on Covid-specific products.”
 
According to Naval Goel, founder & CEO, PolicyX.com, these policies witnessed a huge demand last year as people were scared. Moreover, there was uncertainty whether regular health insurance policies would cover Covid-related expenses or not.
 
So far in FY21, health insurance premiums have grown 13 per cent, with retail health rising 28 per cent, driven by the surge in demand for health products due to the pandemic.