17,000 new credit cards issued by ICICI linked to wrong users

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The second wave of Covid-19 has inundated general and health insurers with rising claims. The Covid-specific policies which were launched by all insurers last year on the direction of Insurance Regulator and Development Authority of India (IRDAI) are feeling the brunt most. The claim ratios in these policies are going through the roof, leaving insurers in a spot of bother.

“Claim ratio in Covid Rakshak policy is as high as 300% while in Covid Kavach, it is around 90%. Pricing is the issue in these policies, as when these policies were launched last year there was no data,” said Suresh Mathur, executive director, health insurance, surveyors, IMF & Reinsurance, IRDAI during a webinar organized by Insurance Foundation of India in association with PHD Chamber of Commerce and Industry.

Claim ratio in these Covid-specific policies is very high compared to claim ratio in individual policies (70%). In the group health insurance, where premium rates have always been lower because of cutthroat competition in the market, the claim ratio is 107-120% for public sector companies and 90% for private companies. The low premium in group health policies is often cross-subsidised by other types of insurance covers sold to the same organisation.

What do they cover?

Covid Rakshak and Covid Kavach were launched last year specifically after the debilitating impact of the Covid-19 was felt across segments. Covid Rakshak policy does not reimburse hospital bills instead pays a lump sum benefit on the positive diagnosis of the policyholder. The sum insured range is between Rs 50,000 to Rs 2,50,000 for the policy. The important point to note is it requires hospitalisation for a minimum continuous period of 72 hours and the policy terminates after the payment of the sum insured.

Corona Kavach policy covers hospitalisation expenses for the treatment of Covid-19. This indemnity policy does not have any room rent limit and covers home treatment maximum of up to 14 days per incident. Most importantly, given that there are a lot of consumables such as PPE that are not paid in a standard policy, the Covid Kavach policy covers the cost of PPE as well as expenses incurred on treatment of any comorbidity.

Rising Covid claims have been a concern for the industry. Insurance companies have already received claims worth up to Rs 8,385 crore, which is 57% of Rs 14,560 crore of total covid claims received in the last financial year. Cumulatively, the industry has received a total covid claim of Rs 14.8 lakh as of May 14, 2021, for a total value of Rs 22,955 crore.

Expert view

“Though there has been an increase in Covid claims, the number of elective surgeries and motor insurance claims have also come down because of lockdown in most of the states. One needs to look at the overall situation in terms of Covid claims,” said SK Sethi, founder and chief executive officer, Insurance Foundation of India.