Loss ratios for health insurers to remain high for rest of the financial year

The rapidly rising health insurance claims from COVID-19 patients are likely to increase loss ratios for health insurers in the second half of the financial year ending 31 March 2021.

While COVID-19 claims continue to come in and the non-COVID claims normalise, the health loss ratio could deteriorate in the second half year of financial year 2021 (October 2020- March 2021).

A new analysis from ICICI Securities has said that if COVID claims maintain a run rate of $150m per month from September 2020, the total COVID-19 claim amount would be around $1.4bn in the current financial year.

Indian financial daily Financial Express has reported that as of 10 September 2020, general insurance companies had received around 200,000 claims from COVID-19 patients for over $446m, with insurers having settled over 130,000 claims amounting to $171m.

The gross direct premium income (GDPI) from health insurance covers between April and July 2020 was $2.45bn, according to the data from Insurance Regulatory and Development Authority of India. The ICICI Securities analysis said, “While for the month of July, the health insurance GDPI was $673m, and assuming August also was similar at $675m, the total health GDPI till August end works out to $3.2bn.  Hence, total COVID related claims till August end were approximately 11% of the total health GDPI.”

The analysis referring to industry reports, said that reinsurers are hesitant to underwrite COVID-19 risk, which has posed a major challenge to price insurance policies covering COVID-19 treatment.

Source: Asia Insurance Review