Coronavirus: Asia

2nd worst-hit country India sees sales surge for Covid-19 insurance

People with heart conditions who recovered from Covid-19 preparing to return home during World Heart Day celebrations at a government hospital in Chennai last month. Treatment in government hospitals is free, but a shortage of beds and lack of trust
People with heart conditions who recovered from Covid-19 preparing to return home during World Heart Day celebrations at a government hospital in Chennai last month. Treatment in government hospitals is free, but a shortage of beds and lack of trust about safety have made many Indians opt for private hospitals. PHOTO: AGENCE FRANCE-PRESSE

Purchases of Covid-specific health insurance policies in India have grown almost 10 times in a month, making it the fastest-selling insurance policy in decades.

The chairman of India's insurance regulatory body, the Insurance Regulatory and Development Authority (Irdai), said on Oct 16 that the market grew from 1.5 million rupees (S$27,670) to 11 million rupees from last month to this month.

India has had close to eight million coronavirus cases, and more than 120,000 people have died. Although the Ministry of Health says more people are recovering than ever and infection rates are declining, India still records the world's second-largest number of infections.

Industry sources said that since July, 450,000 insurance claims worth about 67.5 billion rupees have been reported. Of this, about 300,000 claims worth around 28 billion rupees have been settled.

Many Indians were spurred to buy insurance in July as infections peaked and the lockdown was eased.

Mr Mohan Elango, a 28-year-old television producer in Chennai, said that it was when India's pandemic "situation got serious" that he bought a Covid-specific insurance policy from Star Health and Allied Insurance company for a cover of about $9,200. It was his first health insurance policy.

"One of my relatives was admitted to a private hospital with Covid, but in six days the family opted for home treatment because they could not afford to pay more bills. I too can't bear the expense, so I got a Covid insurance policy," he added.

Treatment in government hospitals is free of charge, but a shortage of beds and lack of trust about safety have made many Indians opt for private hospitals. Some state governments have regulated Covid-19 testing and treatment fees, but many hospitals have still been charging controversially high prices for sanitation, admission and personal safety equipment of medical staff.

Several patients and health rights activists have challenged this in courts across India.

As infected Indians struggled with enormous bills and rejected claims on their existing health insurance policies, the Irdai designed two standard Covid-specific products called Corona Kavach (Armour) and Corona Rakshak (Protector) in June.

Based on these guidelines, many insurance companies have rolled out policies that will cover the treatment cost of Covid-19. Corona Kavach is an indemnity-type plan for individuals and families to get their hospital bill reimbursed up to the sum insured.

A benefit-based plan, Corona Rakshak gives hospitalised individuals a fixed payout to cover expenses.

Both are short-term policies, issued for 31/2, 61/2, and 91/2 months. The one-time premiums are low, ranging from 120 rupees to 15,000 rupees, based on each insurer's underwriting standards and expectations of claim ratios, reported online insurance retailer Policybazaar.

"The pandemic has forced customers to think about larger sum insured policies. We have witnessed increased demand for our super top-up health product which offers sum insured of INR 20 lakh (two million rupees) with a deductible of INR 5 lakh for a premium of 2,420 rupees for customers below 45 years of age," said HDFC ERGO General Insurance president of accident and health Ravi Vishwanath.

Some companies are also buying Covid-19 insurance for staff, as a standalone policy or as a "top-up" to their existing health cover.

"My company took the policy cover for all employees. They have borne the entire cost," said Ms Subhashini Ravichandran, a content writer at Customised Energy Solutions in Chennai. The policy from Oriental Insurance for 200,000 rupees covers diagnostics, hospitalisation, and home care for up to 14 days. The premium was only 600 rupees.

Mr Sanjay Datta, chief of underwriting, claims and reinsurance at ICICI Lombard, India's largest private sector insurer, said short-term insurance products like the Covid-19 plans were unprecedented for India. "It is a crisis mitigation product, in a sense, like extinguishers to put out a fire," he said.

"The pandemic has raised awareness about health risks in general, not just from an old age perspective. Indians are otherwise very fatalistic about disease and death. But now even young people are taking insurance."

 
A version of this article appeared in the print edition of The Straits Times on October 29, 2020, with the headline '2nd worst-hit country India sees sales surge for Covid-19 insurance'. Print Edition | Subscribe