Decoding COVID Insurance

The surge in the number of COVID cases in the country has led to a demand for Corona-specific insurance policies. Is there a need for COVID as a separate cover?

In July, the insurance regulator directed general and health insurance companies to offer insurance products tailored for COVID treatment.

"The need for health insurance in 2020 is higher than ever. Half the year has gone by, and the pandemic is still looming around. Having health insurance is as necessary as washing your hands," says Amit Chabbra, Head Health Insurance, Policybazaar.com. "Health insurance will help you manage your healthcare expenses and ensure you aren't faced with any financial emergencies at such a time," adds Chabbra.

Corona Kavach and Corona Rakshak

All the existing health insurance policies are covering COVID-19 expenses. However, there are Kavach and Rakshak plans launched by different insurers. In Corona Kavach Policy, only the hospital bill gets reimbursed as it is an indemnity-based plan. Still, in Corona Rakshak Policy, the 100 per cent of the sum insured is paid to the policyholder as it is a benefit-based plan.

The minimum sum insured for Corona Kavach Policy is Rs 50,000, and the maximum is Rs 5 lakh while for the Corona Rakshak Policy, the minimum sum insured is Rs. 50,000 and the maximum limit shall be Rs.2.5 lakh.

In the Corona Kavach Policy, hospitalization of a minimum period of 24 hours is required while in the case of Corona Rakshak Policy, it requires hospitalization for a minimum continuous period of 72 hours. Corona Kavach is available both on an individual basis and on Family Floater basis. Still, Corona Rakshak is offered on an individual basis only, and hence no Family Floater option is available in it.

Chabbra points out that in both policies, co-morbidity arising out of treatment in COVID-19 is also covered, so it is better to keep a high cover. "Being a short plan and considering the on-going incidence of the virus, it's better to choose a longer-term, and high sum assured. However, it cannot be considered a substitute for a comprehensive health insurance policy. This policy can help provide specific cover with regards to any medical expenses towards the treatment of COVID-19, at an affordable price. In case you already have a health insurance policy, you can purchase this policy as a supplementary cover," he explains.

Increase in the Number of Claims

According to a report by the Indian Express, general insurance companies, including standalone health insurers, have reported over 240 per cent increase in claims for treatment for the disease over the previous month.

"As per the figures of General Insurance Council, the apex body of general insurers, as of July last week, 71,423 people had claimed Rs 1,145.87 crore from insurance companies towards COVID treatment. 20,965 people had made claims for Rs 323 crore on June 22," the IE report states.

Source: Policybazaar.com

The problem itself has Changed

Jayan Mathews, co-founder of Vital, digital health financing platform points out that every health insurance company has seen a spike in demand for any form of health insurance by at least 30-40 per cent. "The nature of the disease and the nature of treatment is unique for COVID. It is an infectious illness at the end of the day. The cost of treatment for COVID is closed to 2.5 -3 lakh. If there's a complication, it is close to 13-14 lakhs. Even if you consider Dengue, the average cost of treatment is only Rs 50,000. Suddenly, the awareness about the need for protection for financial protection has gone up drastically," explains Mathews.

In most health insurance policies, consumables are not covered. "Because these expenses, generally used to be around 10-15 per cent of the total cost of expenses. However, for COVID, the proportion of the cost of consumables is very different. In certain cases, for patients without complication, the majority of the cost is due to PPE. A standard set of treatment protocols is agreed between the healthcare provider and the insurance company. For most common treatments, there are packages. For COVID, multiple protocols are followed by different hospitals. Some of the drugs were not readily available initially. The cost of imported drugs was around Rs 2-5-3 lakh. These are some of the shortfalls currently for health insurance policies and might have led to a need for a separate insurance policy for COVID," says Mathews.

Was the Regulator Proactive?

COVID insurance has evolved in multiple ways in India. When it was first introduced in India, there were some companies which were proactive in offering COVID insurance. However, soon many backed off due to the lack of data about the disease, says Mathews. "Plans soon started to change from covering the cost of treatment to fixed benefits. There were companies which came up with plans like lump sum payment of Rs 50,000 if you were diagnosed with COVID. It was not a policy which was useful for the treatment. The insurance regulator has been quite proactive from the beginning. They ensured that regulations were passed to ensure that COVID claims were settled quickly. They recently introduced another regulation that insurance companies should have a COVID-specific cover," he adds.

He also points out that from the insurance companies perspective, there is not enough data to accurately price the cover. Probably, that's why some of them are trying to control the distribution channels to ensure that they don't overburden their book.

Under the government's Ayushman Bharat scheme, COVID-19 testing and treatment are to be free for beneficiaries. The Supreme Court recently took note of complaints of insurance companies not reimbursing the full cost of COVID-19 treatment and told the Union government to look into the issue.

A Policy Maker's Perspective

Dr Sudhakar Shinde, CEO of Ayushman Bharat, Maharashtra points out that insurance products in India are defined in a specific way that many conditions are not included in the individual-owned health insurance schemes. "We should have comprehensive healthcare products. Last week, I got many complaints from people who took insurance policies; because when they got admitted to the hospital, a lot of things were not covered in the health insurance."

He also notes that hospitals should not charge patients 10 per cent above the purchase cost of consumables. "I had created the policy for healthcare price capping for Maharashtra. Healthcare providers shouldn't make windfall profit from such emergencies. If a hospital gets a PPE for 700 Rs and MRP is 1500, why should the hospital charge the patient Rs 1500," asks Dr Shinde.

He also adds that in his policy, he has mentioned that the cost of whatever measures that have been adopted for more than one patient should be divided by the total number of patients. "Insurance companies shouldn't expect to make a windfall during the time of a pandemic. Most patients are not going to the hospital for other procedures during this time. So the clock is ticking for these patients who have taken insurance, and it will get over pretty soon," explains Shinde.

Health Insurance Needs Revamping?

"Health insurance products need a complete revamping. They are stereotypic and have not evolved with time. Minimal efforts have been made towards designing and rationalizing the package rates. There are no standard treatment guidelines and no standardization in formats.If you set aside COVID, the disease profile of people is gradually changing. People nowadays are suffering more from lifestyle diseases, mental health issues, and the majority of Indian health insurance products are still conservative. Mental health remains wholly ignored.

Further, it doesn't cover rehabilitation, palliative care, and hospice. Eventually, the focus would shift to preventive healthcare like preventive medicine/vaccination and rehabilitative care. COVID will trigger innovative thought process amongst policymakers. They will now definitely factor in emergencies while designing and pricing their products. Present health insurance policies are not equipped to deal with such pandemics," says Dr Shweta Mohindru, Assistant CEO, State Health Agency, Punjab.

Challenge for any sector is that we get focused on given quandaries. We overlook that problem itself can change. The Insurance Regulatory and Development Authority of India should set up a fund to take care of health emergencies because if tomorrow, some other healthcare emergencies emerge, these expenses should be met.