With Covid pressure easing, patients throng hospitals for regular treatment; insurers set to take a hit

As the covid-19 pressure eases, people are now back in hospital to get treatment for regular ailments, including health check-ups and elective surgeries. With this, general insurance companies are preparing for a storm of health claims unrelated to the Covid-19 pandemic in the coming months. With lockdown measures being eased and normalcy returning across sectors, a massive spike in such cases is being anticipated by these insurers. The majority of this will come from elective procedures which were deferred due to the pandemic and in turn, this will have a bearing on the loss ratio of the insurers which provide health insurance.

Non-life insurers saw close to a 40% dip in non-Covid-19 claims during the lockdown period. This was mainly because many people across the country decided not to go ahead with their non-essential or elective procedure due to a fear of getting infected. Many such cases have piled up and the claims will surge once these people go for the elective procedures.

Higher tariffs: a cause of concern

With the number of active cases increasing, the uncertainty of non-life insurers has gone up and they might also see a surge of COVID-19 related claims in the coming months. As of now, these claims have not gone up significantly.

Another matter of concern for the insurance companies is the revision of tariffs by hospitals to make up for their losses. This could cause a substantial dent in their loss ratios, which is indicative of their underwriting performance. If the loss ratio exceeds 100, then the premium collected from their customers is not sufficient to pay out the claims. The loss ratio in corporate group health insurance is between 60-95%, while in retail health insurance it shuttles between 60-90%. With tariffs being revised the health insurers may face a huge impact on their revenue.

With non-COVID-19 claims dwindling near to 40%, many individuals are of the opinion that the loss ratios in the health segment will see a massive improvement. Insurers however are of a counter opinion and stated that a spike in claims in the future coupled with hospital costs could cancel out this temporary gain.