Visit branch to buy Corona Kavach: How insurers are discouraging Covid policies

With Covid claims crossing well over Rs 20,000 crore, insurance firms are going slow on Covid specific policies and discouraging their sales.

While the insurance firms cannot scrap these covers altogether, they are making the process of buying such cover harder. Many insurers have stopped offering the Corona Kavach policies online, cut down on agent commissions to discourage sales, and raised premium tariffs.

The withdrawal of online policy sales means that prospective policyholders have to visit branches where they must sign extensive self-declaration forms to be eligible to buy these plans.

Only four insurers are allowing online sales of Corona Kavach. These are New India Assurance, United India Insurance, Aditya Birla Health Insurance and Raheja QBE. Other insurers have either disabled the option to purchase online or are asking buyers to contact their respective customer care facilities.

The policies

Two Covid-specific products were launched by insurers last year — Corona Rakshak and Corona Kavach. These covers offer a guaranteed hospitalisation benefit for Covid-19 treatment and home quarantine facilities.

The Insurance Regulatory Development Authority had made it mandatory for all general and health insurers to sell and renew ‘Corona Kavach’ to enable interim access to hospitalisation benefits for millions of uninsured Indian households and blue-collar frontline workers who couldn’t afford more comprehensive long-term health policies. In March, the regulator extended the validity of these covers till September 30, 2021. Irda has allowed different insurers to price these differently: The prices of such policies range from as low as Rs 350/400 a year to Rs 3,000, depending on the insurer.

Life insurance hurdle

In the case of life insurance, the covid survivor will have to undergo a waiting period ranging from one-three months or more, depending on the criticality of the infection, the prevalence of underwriting checks as required.

However, a three-month waiting period may not be sufficient in some cases and can be extended. Some insurers have increased the scrutiny for pre-existing diseases such as lung and chronic diseases or even diabetes.

What insurers say

While the insurers introduced and sold the policies during last year, they are not gung-ho about it this year due to the severity of the pandemic. They had not anticipated such a huge surge of 4 lakh cases per day.

They say with cases rising at alarming rates, such policies are unviable for insurers, mainly due to low premiums and high claims ratio. The loss ratio has been adverse on these products, which were offered at low pricing. Insurers may have to raise premiums on these policies.

Insurance firms also feel that Covid policies cannibalise on their comprehensive products. Several general insurers have reported loss ratios above 100 per cent for Covid covers.

As on May 14, a total of 1.482 million Covid-19 claims worth Rs 23,000 crore have been reported. Of this, 1.233 million claims worth Rs 11,700 crore have been settled by insurers in India since the pandemic, according to the General Insurance Council of India (GIC).

Source: The Economic Times