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Insurers receive Covid claims worth Rs 7,700 cr; premiums jump up to 100%

he rising number of claims and widening of illnesses under health policies have also pushed up premiums by up to 100 per cent, raising concern among senior citizens.

Written by George Mathew | Mumbai | November 8, 2020 1:02:00 am
With Covid cases remaining high, insurers witnessed a surge in demand for health policies with premium collection touching Rs 28,804 crore, showing a rise of 15.8 per cent till October 2020.

The persisting high level of Covid infections in the country has led to insurance companies getting a claims bill of Rs 7,700 crore as of October 30. The rising number of claims and widening of illnesses under health policies have also pushed up premiums by up to 100 per cent, raising concern among senior citizens.

While insurers have received 5.01 lakh claims for Rs 7,699.50 crore under the Covid insurance plan as of October 2020, they have settled 3.43 lakh claims worth Rs 3,315.5 crore, according to figures compiled by the General Insurance Council. Although the average claim per person across India was Rs 1,53,453, the average settled amount was Rs 96,434 per person. Maharashtra, which reported the maximum Covid infections, also made the maximum Covid insurance claim of 1.97 lakh worth Rs 2,443.69 crore. Insurers settled 1.31 lakh claims worth Rs 1,060.4 crore till October 30, 2020 in the state. The average claim per person settled in Maharashtra was the lowest at Rs 80,558. In Tamil Nadu, there were 49,704 claims worth Rs 906.68 crore and settled 35,451 claims worth Rs 361.17 crore so far. There were 46,900 claims for Rs 719.23 crore from Gujarat and 45,698 claims for Rs 696.79 crore from Karnataka. Insurers got 26,653 claims for Rs 533.6 crore from Delhi.

India has reported 83.64 lakh Covid cases as of November 5. The fact that only 5.01 lakh people have claimed health insurance means only 5.99 per cent of the infected people have health insurance coverage. With Covid cases remaining high and the cost of hospitalisation rising, insurance regulator IRDAI has advised insurance players to change their focus from hospitalisation to preventive care, especially home care and outpatient treatment, and bring down the costs. “We should look at home care facilities. We don’t need hospitalization if home treatment is possible. This cost will come down. Insurance companies, customers … everybody will benefit. We have allowed video-based consultation. We have also allowed wellness in insurance policies,” IRDA Chairman Subhash Khuntia said at an industry conference recently.

Premium rises

With Covid cases remaining high, insurers witnessed a surge in demand for health policies with premium collection touching Rs 28,804 crore, showing a rise of 15.8 per cent till October 2020. This is at a time the overall general insurance sector registered just a 1.37 per cent growth during the period. The rise in Covid claims and addition of more illnesses to the health policies have led to a spike in premium, insurance sources said.

“I had paid a Rs 13,418 premium on my Rs 2 lakh health policy of National Insurance Company last year. This year the company had asked me to pay a premium of Rs 27,467. This is a hike of more than 100 per cent in a year. How can people afford a 100 per cent hike in premium when Covid is still raging in the country? The hike is more pronounced in the case of senior citizens who are most vulnerable,” said Pawan Dharnidharka, a stock market professional. Policy holders above the age of 65 witnessed a major hike in the last a few months.

Adarsh Agarwal, appointed actuary, Digit General Insurance, said, “Over the last few years, many insurers haven’t revised the health insurance premium rates, owing to increase the penetration for health insurance. However, given medical inflation is close to 12 per cent plus each year, companies need to regularly revise premium rates to be afloat. In the current pandemic scenario, claim severity has also increased, which has further fueled inflation, requiring companies to relook at the premium and hence the increase.”

The scope of health insurance coverage is being widened. “It would also cover genetic disorders, mental health procedures, puberty, artificial life maintenance, internal congenital diseases, age-related muscular degeneration, menopause-related disorders and mental illnesses. This would require an applicable price rise due to comprehensive coverage and upsurge in medical inflation. Conversely, by paying a little extra premium, health insurance products would come to be more inclusive and less complicated,” said Sharad Mathur, MD & CEO, Universal Sompo General Insurance.

Bhabatosh Mishra, director underwriting, products & claims at Max Bupa Health Insurance, said, “We have taken a conscious decision to not increase premiums this year, especially in the times of pandemic, where health insurance has become an absolute necessity.”

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