IRDAI’s mandatory Standard Covid-19 cover may cost Rs 2000-Rs 3000 premium for Rs 5 lakh sum insured

The Insurance Regulatory and Development Authority of India (Irdai) has mandated all general and health insurance companies to offer a standard individual Covid-19 health insurance cover from June 15. The maximum sum insured for this product would be Rs 5 lakh and minimum would be Rs 50,000.

Insurance companies are still working on the premium amount for this product, but it is estimated that premiums will be in the range of Rs 2,000-3,000 for a sum insured of Rs 5 lakh. This policy will be a standard product with common policy wordings across the industry.

The insurance regulator in its draft on the product has stated that base cover for novel coronavirus shall be offered on indemnity basis while add-ons shall be made available on benefit basis. Under indemnity health insurance plans, insurers cover the cost of medical expenses during hospitalisation, while in defined benefit plans a lumpsum is paid irrespective of the actual hospital expense.

Currently insurance companies like Star Health and Allied Insurance, ICICI Lombard General Insurance and Reliance General Insurance among others are providing Covid-19 specific covers. However, most of the products are either on the group platform or are benefit plans. “The new standard plan will be an indemnity product and most of the plans currently offered to the policyholders are benefit policy and this is one of the key differences. Also sum insured in the current policies are low compared to the costs incurred any someone who is tested positive for novel Coronavirus,” said a senior official from the top private sector insurance company. Currently the sum insured for the Covid-19 products are in the range of Rs 25,000-2 lakh.

According to the officials in the non-life industry, average claims for novel coronavirus is around Rs 2-2.5 lakh. In many cases where the condition of patient is severe and has been admitted to an intensive care unit (ICU) the claims are in the range of Rs 6-8 lakh.

As on June 6, 2020, General Insurance companies have received over 9,700 claims amounting to Rs 150 crore for novel coronavirus. Out of total claims around 5,600 have been registered only in Maharashtra. The data from General Insurance Council also shows that insurance companies have received 1,500 claims from Delhi (including National Capital Region), 1,022 claims in Tamil Nadu and 522 claims in West Bengal.

However, players in the industry say that it is always better to buy comprehensive health cover rather than buying such disease specific cover. Anand Roy, MD at Star Health and Allied Insurance says, “I always suggest that a person should go for comprehensive cover if they can afford it. But in today’s scenario many people are undergoing financial stress and at the same time there is a danger of novel coronavirus. So, in case they do not have any health insurance policy and they are not in a position to buy comprehensive cover, they should definitely buy this policy.”

Source: Financial Express