Money9 Edit | Increase the terms of Covid-19 insurance policies

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Covid-19 is here to stay. With new variants coming to the fore and even developed economies suffering a sudden surge respite doesn’t look possible in the near future. In this context, there is a need to revise the term of Covid-specific insurance policies too. Currently, these are short-term policies with a tenure of 3.5, 6.5, and 9.5 months. The need is to make them annual policies just like any other insurance policy. The annual term will also protect policyholders from the hassle of renewing these policies multiple times in a year.

Another issue that has come to the forefront is the high claim ratio of these policies. For instance, Covid Rakshak has a claim ratio as high as 300% while Covid Kavach has a claim ratio of 90%. With such high claims, many insurers had stopped renewing these policies but later Insurance Regulatory and Development Authority (IRDAI) intervened directing insurers to renew and issue new policies. The pricing of these policies has been another source of worry for insurers. When these policies were launched in mid-2020 insurers didn’t have enough data to support the pricing. But now with mounting claims, many insurers have started talking about the pricing pressure on Covid policies.

From the customer’s perspective, these policies do not cover other diseases as comprehensive policies do. They cover the expenditure only for the management and treatment of Covid. But within Covid, they give very wide coverage ranging from homecare treatment to PPE coverage. And these policies are very reasonably priced compared to the cost of Covid-19 treatment.

There is an urgent need that the insurance regulator immediately looks into the matter and first revise the tenure of these policies. They should be made annual so that more people can buy them and keep their families protected without hassles.