Premiums for staff insurance may rise amid second wave of Covid-19

Insurers say the second wave impact is more than first as normal claims and Covid ones are running parallel this time

Insurance policies that come up for renewal after the second wave of the pandemic may carry a higher premium, according to insurers.
 
The premium for group health insurance policies has gone up marginally for companies on a case-to-case basis, based on the claims experience of the preceding year.
 
Companies that renewed their group health insurance policies in April did not see a substantial hike in premium because in the first wave of Covid, hospitalisation rates were low compared to what they are now and hence the impact of Covid claims was not very drastic.
 
In the second wave, insurers say both normal claims and Covid-related ones are running in parallel, which was not the case in the first one. Hence, the impact of this wave will be felt more.
 
“Group health pricing is a function of claims. If the claims go up, premia will go up and vice-versa. For policies renewed on April 1, there has not been a substantial change in premiums because the impact of the second wave was not factored in. If some company is renewing its policy on September 1, the policy will be priced taking into account the impact of the second wave,” said the chief executive officer of a private sector general insurer.
 
A group health insurance plan covers people who work in the same organisation, the premium for which is borne by the employer. Coverage under such policies can be extended to the family members of the employees in some cases. Group policies are tailor-made and priced in the way the insurers want, unlike individual policies, where the rate has to be filed with the regulator.

 
In the case of group policies, insurers do not request medical tests and, as a result, pre-existing diseases are covered. They look at the previous two years’ loss ratio, demographics, the group size, and the basis on which they arrive at the pricing.
 
“Normally most group policies have high claim ratios, usually over 90 per cent. As far as Covid is concerned, in the first wave, while the claims went up, other claims came down. As the impact of the Covid claims was not that drastic last year, there has not been a substantial change in the pricing of such products. However, the impact of the second wave will be determined fairly soon to arrive at this year’s pricing,” said T A Ramalingam, chief technical officer, Bajaj Allianz General Insurance.
 
Sanjay Datta, chief (underwriting and claims), ICICI Lombard General Insurance, said: “Pricing has reacted to the losses incurred due to Covid on an account-to-account basis. Premiums have gone up on some group policies based on the claims experience. Also, we have seen good demand for group health policies lately and many have also opted for a higher sum assured.”
 
General and health insurance companies are seeing a rise in health claims due to Covid. As of May 14, non-life insurers have received 1.48 million claims, worth Rs 22,931 crore. They settled 1.23 million claims, amounting to Rs 11,784 crore.
 
“Our premium rates have moved up but simultaneously our claims have gone down because we are choosy about such policies,” said the chairman and managing director of a public sector general insurer.
 
Experts also say, given the talk of a third wave, the concern now is that in a one-policy period, the insurers may have to factor in claims coming from two waves.
 
“The policies that got renewed between March — April had variable impact by the second wave of Covid. Policies which will be renewed from July onwards may see greater impact of second wave as these policies were in force through most of the duration of the second wave. And, all corporates were not impacted by Covid in a similar manner. Some saw a higher impact due to covid while some did not.” said Bhabatosh Mishra, director (underwriting and claims), Max Bupa Health Insurance.