The Covid-19 pandemic has certainly changed the world for all times and has left a huge mark on human history. This mark is not only restricted to the health and safety of people but the pandemic has also imprinted on the insurance sector of the country like every other business firms. With lakhs and lakhs being infected in the country today, the number of insurance claims has inevitably increased at a non-stopping pace and with this, it has disturbed the management of the whole insurance department. Although surprisingly the health insurance claims have not been raising as much as it is in other pandemic hit countries. The reason behind this situation could be a lack of health insurance policy holders around the country. Till now there have been only 18% of the urban population and 14% of the rural population insured with a health insurance policy. Therefore, only a few claims related to Covid-19 have been registered because most of the infected population doesn't have health insurance plan to claim for.

The impact of COVID - 19 on the health insurance

But this doesn't mean that the insurance sector is not affected by the wrath of the pandemic. Other sectors of the insurance department like motor, travel and life insurance are widely affected due to the virus war going on in the country. Also, the Ayushman Bharat scheme proposed by the government to secure the underprivileged population with a health insurance policy has been put up to action during COVID- 19. With the new guidelines from IRDAI, all insurance companies are authorized to start taking COVID-19 claims under active health insurance coverage due to which there has been chaos in the insurance industry.

Let's take a look at some of the most impactful areas of health insurance under COVID - 19 :

Claims settlement

The unprecedented case of COVID - 19 has shocked the whole world along with the healthcare industry. Since there has been no full-proof cure developed for the coronavirus, it is even more difficult for the insurance companies to decide the nature of the infection and to categorize the disease into the health insurance policy bond. As the health insurance policies are very clear on the scope of their coverage and there are some illnesses totally excluded from the basic health insurance plan and requires an additional rider to cover for it. But in the case of COVID - 19, it is hard to put a label on the disease, hence, the treatment and coverage are all under a black hole.

Therefore, to untangle the situation between the insurer and insured, IRDAI has authorized all insurance companies to accept all COVID- 19 related claims under the general health insurance policy. This decision has left all insurance companies under a lot of pressure because treatment for COVID - 19 outside the government facilities is highly expensive and difficult to pay for considering the downfall in the Indian economy. In addition to the private sector insurance firms, the claims related to COVID- 19 has been much more in number from the government health program called Ayushman Bharat which is aimed at the betterment of the underprivileged. Thus, claims from these policies are also added to the government firms, in turn, weighing upon the insurance industry.

The IRDAI has also requested all insurance providers in the country to further extend or delay their renewal process for all insurance policies by nearly 15 - 30 days so that policyholders have enough time to save money to continue their insurance policies without any loss. But this favour is costing more to the insurance company given the nationwide economic crisis.

Non- COVID claims

The increase of the infectious virus has also elevated the non- COVID diseases especially for those patients who already have been different from other chronic diseases such as diabetes, lung or kidney illnesses. Therefore, there has been a rise in the number of claims and treatments for these chronic diseases due to the presence of coronavirus. Hence, health claims related to these have been laid on to the insurance companies. And this additional burden is further drowning the insurance industry more than ever before.

New policies

Well, the effect of the pandemic over the insurance department is not all alarming and worrisome. But in fact, the frightening spread of the deadly coronavirus has made people more receptive and conscious of the surging health-related diseases. There has been a sudden rise in the demand for health insurance policies over the course of nationwide lockdown. More and more people are coming forward and acknowledging the value of having health insurance coverage. Therefore, this unexpected rise in the population for health protection has proven to be a surprising opportunity for the insurance sector to innovate and design a health insurance plan specifically for COVID-19. Many insurance providers have already launched their products and it is assumed that the rest are soon to follow their steps. These health insurance policies are modelled for a short term basis and offer a certain benefit relating to hospital services. The new and reformed health insurance plans are also approved and marked by the IRDA and the insurers are free to set the desired price for COVID specific health policies. Still, there are few guidelines which these insurers have to keep in mind before advertising COVID specific policies, and they are :

  • The cost of premiums for these policies are hard to set because the treatment for the virus is still in its trial stage. And with no vaccine, it is certainly hard to put a definite value for the total cost of the treatment for the disease. Hence, the pricing for premium instalment has to be fixed based on the average estimation made from recent cases. Due to the absence of the correct data, there's a high chance that the price for these health insurance policies could either be more or less than what is required.
  • As mentioned above, the effect of the virus is also reflected in the increasing number of chronic diseases. And depending on the health care scenario, the expenses for the treatment of these chronic diseases are rising day by day. But there is no specific information related to this statement and so it is hard to estimate an average price. But in the light of this new information, insurance companies are advised to reconsider the existing hospitalization services.

Corporate partnership

This pandemic can also be helpful to the insurance industry as it can serve as a connector for corporate firms and insurance companies. Businesses all over the world have faced downfall and now more than ever the companies need their best employees at work and in good health. And to attain that, what better way is there than to gift employees a comprehensive health insurance plan. This way insurance company can partner with corporate firms and can develop a way that can serve both sides with equal benefits.

Thus, in conclusion, we can say that the health insurance sector has not been drastically affected by the Covid-19 pandemic. Although other departments of the insurance business like travel and motor are highly affected, the surge in the health insurance policies has proven to be the long-needed momentum which the health insurance sector of the country required. New policies and products based on the spread of the virus can ultimately lead to a bigger change in the overall scenario of the health care system.