COVID-19 & the challenges it poses to Indian insurance industry

As the coronavirus pandemic continues to wreak havoc, expeditiously unfolding from a health crisis to a financial one – insurance players across the nation were quick to switch gears. A 100% digitization route has been adopted with minimized in-person interactions and paperless process to steer clear of field visits.

But as insurers navigate through this new normal, the major question that arises is pricing insurance products that cover the COVID-19 treatment. With major challenges posed to the profitability of the insurance sector with the contraction of the premiums, how will insurers price a COVID insurance policy?

Speaking at the Global Fintech Fest, Vibha Pdalkar, MD & CEO of HDFC Life attempts to answer this question. “Pricing that kind of catastrophe is difficult. We are in the commercial business; today there is not a single reinsurer that is willing to underwrite risks for us in terms of corona policy. For regular term policies, we reinsure a large part of our book but there is a very high probability of policies under COVID, we will be retailing all risk on our own balance sheets.”

The outbreak has made it very critical for customers to have relevant covers, more so for those who don’t own any sort of health insurance cover. Vibha maintains that an approach of investing in technology is the only way to reach target customers and service them. Speaking at the same event, Yashish Dahiya, Co-Founder and Group CEO of India’s largest Insurance online aggregator, Policybazaar.com highlights the responsibility of consumers when it comes to having an insurance cover.

“Protection against death, disease and disability – is highly under bought as a segment. Buying insurance before and not after a catastrophe is happened is the customer’s responsibility,” he reiterates.

Mining The Digital Arena

Insurance players with much advanced digital underwriting and a streamlined claim settlement process have an advantage over those who don’t -- especially, in cases where the policyholders’ patience with a non-digitized procedure is low.

“At HDFC Life, 100% of insurance transactions have been digitized. We have a 3-way communication wherein through our partners, we bring on board an insurance expert to explain the jargon virtually. So really, it is up to our partners and policyholders to embrace it,” Vibha reiterates.

On the other hand, Dahiya is of the view that telemedicine is the future. “In health insurance, there is a 100% inclusion of telemedicine and in life insurance; the figure is 60% as opposed to 30% earlier. In the health insurance industry, the fresh business in a year is about Rs 6000 crores. 25% of this business takes place online. In term insurance, I would say 50% is already online,” he says.

The sector is keeping up well so far. But that’s not to say that the pain points do not exist. The Insurance Regulatory and Development Authority of India mandated standard covid-19 health insurance product—Corona Kavach and a standard benefit-based policy—Corona Rakshak. Most insurers are not offering these policies online. And the ones that do offer that advantage do not allow the purchase of the product to those with co-morbidities.

Source: Times Now News