Dip in Covid-specific policy sales as consumers go for comprehensive covers

However, despite losing money on short-term Covid products, insurers say they will offer them till the regulator specifies

Demand for short-term Covid-specific policies has dipped considerably with consumers understanding the need to get comprehensive coverage against all health-related risks and insurers reluctance to aggressively push for such products, given the huge claims they have seen from this segment and the low premiums that these products fetch.  

However, despite losing money on short-term Covid specific products, insurers say they will offer them to customers till the time the regulator has specified.

Recently, the insurance regulator issued circular asking insurers to offer and renew short-term Covid specific products, including Corona Kavach and Corona Rakshak till March 31, 2022. It had extended the timeline for the sale and renewal of such policies till September this year, given the second wave.

The industry has not particularly been upbeat about selling these products, though they were highly in demand during the first wave of Covid. Till this March, the standard Covid-specific indemnity-based policy Corona Kavach covered 4.2 million lives, while the standard benefit-based product Corona Rakshak covered 540,000 lives. And, all Covid specific policies together have covered more than 13.5 million lives.

In the past, the regulator has pulled up the insurers for being reluctant to offer these products to consumers and mandated them to offer Corona Kavach, an indemnity-based standard Covid-specific product introduced by the regulator last year.

Industry insiders are of the view that when these products were introduced last year, insurers sold them to help people get coverage against Covid. These are short-term products hence people priced them accordingly but now insurers may have to revisit their stance on pricing. The loss ratio has been adverse on these products. Also, some insurers are of the opinion that these products are undercutting their comprehensive products.

Experts said the decision to push these Covid specific products now will be a function of how insurers perceive the risk associated with such products and how the consumers view Covid risk in the coming months.

“We are still offering these products but what we have noticed is the demand for such products have come down.”, said the CEO of a private sector insurer.

An industry veteran, on the condition of anonymity, said insurers have suffered huge losses in the segment as the premium for these products is very low but the claims they have received have been particularly high. So, it will depend on each company if they want to push such products aggressively. Even the companies who decide to push these products may ask for a price correction.

“These products have seen a lot of claims but if there is no third wave, then it should not be a huge problem for insurers. But, these products should not be stretched beyond a point and the focus should be on creating awareness for comprehensive products and incentivise them by perhaps reducing the GST rate on health premiums”, the private sector CEO quoted above said.

The Covid specific products were designed to address the needs of the consumers when Covid hit because at that time there was a lot of confusion if normal health products covered Covid and the consumables. And, these standard Covid specific plans were influential in creating awareness and educating the masses about health insurance.

“..they were quite instrumental in giving a cushion to the uninsured people. However, with the vaccination drive being in full swing, the controlled number of Covid19 cases, and an understanding of the fact that comprehensive health plans offer the complete treatment for the Covid19 and its after-effects, there is a diminishing pattern in the demand for Covid specific plans”, said Naval Goel, Founder & CEO, PolicyX.com

"The current demand for this kind of policies has been muted since many of the users are now aware that Covid 19 is also covered in the base plan, and the demand of the policy might be seen rising when the third wave hits, the reason for low demand of these policies have been mass vaccination and rise in awareness among users”, said John Mayne, Executive Director, Coverfox.