Has Covid-19 changed underwriting norms of insurers?

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The insurance industry saw a steep surge in claims during the peak of the second wave of Covid-19. The claims in the first three months of this financial year were more than the total claims in the previous year for the industry. Given the serious impact, has Covid-19 changed the underwriting norms of insurers? Are insurers more careful while issuing new policies? How easy or difficult is it for Covid recovered patient to get an insurance policy?

Experts say the underwriting norms of insurance companies have not changed post-covid-19. For Covid recovered patients, however, there will be some waiting period and medical checks depending on the severity of the case.

Life Insurance

The life insurance industry saw a surge in claims due to the high mortality rate during the second wave of Covid-19. The good news is the number of claims has gone down from the peak of April-May based on which there will be no change in underwriting norms. However, people with health conditions need to undergo medical check-ups, as subjected earlier.

“There will be no challenge for Covid survivors in getting a new term policy. Apart from the waiting period, the normal underwriting practices will be followed for the Covid recovered customers,” said Vibha Padalkar, CEO and MD, HDFC Life.

She, however, mentioned that there is some hesitancy in people for undergoing medical tests due to which the conversion rate has slowed down. ” There is reluctance in people to undergo medical tests, which has in turn slowed down conversion rates for term insurance policies. Out of every 100 people, we are able to issue only 62 policies. However, we are seeing improvement in conversion rates.”

Health Insurance

At the time of buying a policy insurance companies ask several questions about the health of the policyholder according to the underwriting standards of the company. If the customer is assumed to be fit the policy is issued without a medical check-up. However, generally, if the person is above 55 years of age or has some medical history then the person is asked to undergo certain medical check-ups

“Underwriting practices continue the same. Specific to Covid cases insurance companies do keep a waiting period from the date of recovery. General practice is a waiting period of 3 months to evaluate and give a policy. If the person has undergone mild Covid then it is 3 months waiting period. If it is severe, if the person was in the hospital for 15-25 days, insurance companies will insist on a longer waiting period and evaluation. After that, we issue a policy. For any other illness as an insurer we follow the usual underwriting norms,” said Shreeraj Deshpande, COO, Future Generali India Insurance.