Regular health insurance policies cover Covid-19, says Irdai chairman

The Centre has already sponsored the Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Pradhan Mantri Jan Arogya Yojana for life, personal accident, and health coverage for workers in the unorganised sector, says Subhash Chandra Khuntia, chairman of Irdai, on the role of insurance sector.
The Insurance Regulatory Development Authority of India (Irdai) has been offering various dispensations to both policyholders and insurance providers to combat the Covid-19 crisis. In an e-mail interview, Subhash Chandra Khuntia, chairman of Irdai, tells Namrata Acharya about some interventions and the road ahead. Edited excerpts:

How has the insurance sector tackled the crisis and what more needs to be done?

The Indian insurance industry has been able to organise itself quickly to tackle the unprecedented situation. During the lockdown, insurers were able to switch to ‘work from home’ via digital communication.

Irdai had issued advisories to insurers well before the lockdown, providing clarity on coverage of Covid-19 claims under existing policies. Irdai had also instructed insurers for faster settlement of Covid-19 claims. Additional time was granted for premium payment, while continuing coverage under existing life, health, and motor third-party policies.

Insurers have put in place digital and alternative methods for premium payment. Several of them have introduced Covid-specific products. Irdai has instructed them to prepare business continuity plans (BCP) after assessing emerging risks, so as to take necessary prudential measures like capital conservation, to adhere to market conduct regulations, and also to look into genuine needs of customers. As mandated, all general and health insurers have launched a standard health product called ‘Aarogya Sanjeevani’.

What has been your assessment of the long-term and short-term impact on the sector?

In the short term, there has been some disruption due to the restriction in both movement and face-to-face contact with customers. Reduction in economic activity may result in a demand fall. Similarly, market volatility has put pressure on asset valuation of insurers.

However, with the easing of restrictions and a pick-up in economic activity in the long term, the industry will be stable given the increase in awareness about the need for financial protection.

The crisis has exposed the vulnerability of workers in the urorganised sector. What role can the insurance sector play?

The Centre has already sponsored the Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Pradhan Mantri Jan Arogya Yojana for life, personal accident, and health coverage for such people.

Many states and local bodies are also sponsoring insurance coverage to various vulnerable and low-income people. Micro-insurance products are available to address needs of this segment. Irdai has mandated all insurers to offer a standard health product Aarogya Sanjeevani, with affordable premium for coverage from Rs 1-5 lakh. It may be worthwhile for industry associations or state governments to consider offering group insurance policies to unorganised sector workers to enhance the level of protection.

Many health insurance firms are offering specialised cover for Covid-19. However, the premium is very high in a few cases. Should existing health policies be enough to cover such risks?

Regular policies cover Covid-19. To help those without a regular health policy and to provide additional coverage to existing policyholders, Irdai has advised insurers to come up with Covid-specific products. These products offer benefits exclusive to coronavirus. Such products are customised, unique to risk category, and people may use these policies to claim benefits without utilising their insurance benefits under a regular health policy. The premium will be quite affordable.

Irdai had earlier come up with a Sandbox mechanism for innovation in the sector. Can we expect Irdai to come up with similar initiatives?

Irdai has received an overwhelming response to the Regulatory Sandbox initiative, which is a mechanism created to foster innovation in the sector. We have already approved 73 proposals. This initiative will be continued.

What are your views on raising FDI in insurance? How has the experience in case of intermediaries been, where 100 per cent FDI was allowed?

Any change in the foreign investment limit for insurance firms would require amendment to the Insurance Act, 1938. The Centre had removed limits on foreign investment in insurance intermediaries, in the last Budget.

Accordingly, the authority has made necessary amendments to different insurance intermediary regulations. The Central government has also recently notified an amendment to Foreign Exchange Management (Non-debt Instruments) Rules, thus paving the way for foreign investment flows into insurance intermediaries.

The healthcare infra is under severe stress, particularly in Maharashtra. Do you see need for some specialised mechanism to support such crucial sectors?

Recent initiatives by the Centre and states to boost spending in public health care infrastructure, encouraging health care education facilities, and facilitating private investments into the sector, will help address needs.

We need to develop essential health infra with a greater emphasis on preventive and primary care, which will enhance wellness. Simultaneously, secondary and tertiary health infrastructure also need to be strengthened, for which the private sector can augment the role of the public sector.

This will require expansion of health education facilities, which will create additional employment opportunities.

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