Page 23 - Insurance Times June 2021

consultation with doctors rather than hospital visits. A have been steadily increasing from 8% in May 2020 to 23%
number of hospitals have also started offering nursing in July 2020 to 34% in August 2020 and now 40% in
services at the homes of their patients. September 2020.

Over the past few months this trend has been increasing As cases rise and reliance on private healthcare increases
which has prompted the insurance regulator to take steps these are likely to rise further. This is scary - Covid claims
that will be beneficial to insureds. The regulator has now nearly form half of total health industry claims. One
requested insurers to allow claim settlement for must remember that non-Covid claims have also been
telemedicine consultation wherever normal consultation increasing. In March and April when the lockdown was
with a medical practitioner is allowed under the terms and severely enforced, we saw people postponing planned
conditions of the policy. The insured person taking surgeries like a cataract operation or knee-cap surgery. But
telemedicine consultation from a doctor will be allowed to in September, non-Covid claims rose because of the pile-up;
claim the expenses under the health insurance policy if it caused by people postponing necessary treatment in the first
covers outpatient department expenses or if telemedicine half of the lockdown. Industry analysts are concerned that
consultations are a part of pre- or post-hospitalization the rising Covid claims could put more pressure on the books
expenses. of general insurers, particularly the four public sector
general insurers.
The Regulator has advised insurers to allow telemedicine
wherever consultation with a medical practitioner is Health portfolio loss ratio could increase
permitted under the terms and conditions of the policy, and
where they are following guidelines given by the Medical by 10%:
Council of India. The provision of allowing telemedicine is Initially, there was a misconception that Covid-19 claims
part of claim settlement policy of the insurers and need not won't be paid under health insurance. Later, the regulator
be filed separately with the authority for any modification. clarified that Corona virus treatment would be covered, and
However, the norms of sub limits, monthly or annual limits there has been an uptick in policy purchase. Indian insurers
of the product shall apply without any relaxation. have received 349,000 claims for over $736m from Covid-
19 patients as of 5 October 2020 according to data made
COVID-19 claims form 40% of total available by IRDAI. The general insurers had settled 217,000
claims amounting to $297m up to 5 October 2020. If claims
health insurance claims: continue to rise then the loss ratio in the health portfolio

One analysis of claim costs (normal & Covid-linked) shows could increase by 8%-10% solely due to the ongoing
that blended impact for the sector seems manageable. So pandemic.
far (5mFY21), the overall claim incidence for the sector
should be 10-15% lower than normal claims (despite 13% During the financial year 2019-20, Indian health insurance
growth in premiums) because the rise in claims due to Covid had received premium income of $7bn, a growth of 13.41%
has been offset by lower claims for normal medical costs. In compared to the previous financial year 2018-19. As such,
FY20 sector paid Rs 330 bn worth of health-insurance claims claims arising from Covid-19 are around 10.5% of the health
implying that for 5m FY21 the normalized claim payment insurance premiums received during 2019-20. Typically,
would have been Rs 140 bn (assuming no growth). every year loss ratio for the retail health policy is around
65%-70% while for the group health policy its around 90%-
Against this, insurers would have paid Rs 120 bn (including 100%. But this year due to the pandemic we expect loss
claim of Rs 26 bn towards Covid) - which is a 10-15% decline. ratio to further go up by 8%-10% for the insurance
It's relevant to note that while claims paid are based on companies on account of the pandemic.
actual payouts, 'claims incurred' (i.e. charged to P&L) is
subjective & insurers have taken divergent policies. ICICI The average claim size reported for Covid-19 health
Lombard seems to have been conservative whereas PSU insurance is $2,127. The average claim size, however, varies
insurers and some standalone health insurers seem a bit from one state to another. Moreover, as the number of
aggressive about reserving for health insurance claims. active cases goes down, insurers expect claims to go down
Health insurance claims from Covid-19 are rapidly growing in the days to come. With the number of active cases going
and as at end of September 2020 they were 40% of the down in India, we have seen doubling of claims going up from
total claims of the Indian general insurers. Covid-19 claims 16 days to 31 days. This indicates slowing of growth rate. If

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