General insurers and standalone health insurers have seen a huge surge in covid claims the past few months with the number of reported claims surpassing 475,000, amounting to Rs 7,313 crore as of October 27. Sources aware of the development said of these, over 325,000 claims worth Rs 3,146 crore have been settled by insurance companies so far.
At the end of July, only 81,000 Covid claims were filed with insurers. August and September, however, saw a huge rise in claims. Experts say claims intimated in September were close to 50 per cent of the total claims intimated since inception of the pandemic. However, from October, there seems to be some tapering off, which is a positive sign.
“Claims have risen in line with the rise in number of cases. In August and September the number of claims from covid peaked. But lately it has been tapering off, again in line with the cases coming down”, said a private sector insurance executive.
This is a cause of concern for the insurers because it is not something the insurers had anticipated. The cost of treatment for covid is also higher than usual treatment for infectious diseases, he added.
“The number of claims should taper down from the peak,” said the chief executive officer of another private sector insurance company.
“Loss ratios of the insurers should get impacted because while they have sold Covid specific policies, but the traditional medi-claim policies or the group health policies, they were never priced for Covid. So, those are the one’s which will have a greater hit. And, standalone health companies will have a bigger challenge”, he added.
When the pandemic hit, insurers were asked to cover covid treatment under traditional health policies. These policies had not anticipated the cost of covid, however, the insurers decided to cover the Covid treatment. Later, many insurers brought in their specific covid policies. The insurance regulator even brought in a standard covid policies, which all the insurers were mandated to sell.
The standard covid policies that the insurance regulator brought in has been a big hit amongst the consumers. As of mid-October, insurers have covered more than 15 million lives against covid through the standard covid product.
“Insurers are struggling to sell the normal policies. However, the standard covid policy is selling, which means people who foresee risk are buying such policies”, the second person quoted above said.
Data from General Insurance Council, which publishes the claim numbers that is not publicly available, suggests Maharashtra has reported the most number of covid claims so far, followed by Tamil Nadu, Gujarat, Karnataka, and Telangana.
To add to the worry of the insurers, non-Covid claims, which were muted in the initial months of the pandemic, have also picked up pace and are more or less at pre-covid levels. This coupled with rising Covid claims is like a double whammy for the general and standalone health insurers.