On the insistence of the regulator, and directions issued by the apex body of non-life insurers – General Insurance Council – the insurance companies are working on a standardised insurance product for Covid treatment, with sum assured ranging between Rs 1 lakh and 5 lakh. The product needs to be offered mandatorily from June 15 onwards and the insurers have been given time till June 4 to come up with recommendations on the product, said sources aware of the development.
In view of disparity of claims for Covid treatment, recently, the Insurance Regulatory and Development Authority of India (IRDAI) asked the General Insurance Council (GI Council), to come up with ideas for standard cover for the pandemic.
While the council is yet to submit its views to the regulator, industry sources say insurers are proposing the cover for people in the age group of 18 to 65. Unlike other health insurance policies, which mostly covers hospitalisation expenses alone, the specialised cover is likely to include the cost of treatment during quarantine and payment of cash for incidental expenses.
“The standard cover for covid 19 can have two add on covers — Quarantine cover, and hospital daily cash. If the insured person is quarantined due to diagnosis or suspected infection of Covid-19 then the company will pay 1 per cent of sum insured per day subject to maximum up to Rs 3000/day”, the draft guidelines said which was reviewed by Business Standard. Similarly, the insurance company will pay 0.5 per cent of sum insured per day for every completed 24 hours of hospitalization for treatment of Covid-19 on positive diagnosis of disease.
Things like isolation of patients in hotels are not normally covered under the normal health policies. Now, that covid demands such line of preventive measures, so Irdai has asked us to include such things in the standard covid product, said a public sector insurance executive.
According to the draft, room, boarding and nursing expenses will be capped at Rs 5,000 per day and costs of intensive care unit expenses will be capped at Rs 10,000 per day while ambulance charges will have a maximum limit of Rs 2,000 per hospitalisation.
A GI council official said,” The regulator wants to give more clarity to the policyholders so a standard product helps in clearly spelling out what is covered and what are the conditions under which the ailment is covered”.
The product may remain in force for one or two years and will have some added features which will make the product more attractive while being cheaper than other comprehensive health policies as it will be covering issues pertaining to the Covid 19 virus only. Despite being a standard product, the insurers will be free to price it according to their underwriting understands.
“If we have to popularise the policy, the premium has to be kept less. This will be one of the options given to the policyholders especially to those who do not have a health cover as there are high chances of catching the virus now. Compared to other health policies, the premium for the standard health policy will be less,” the official from GI council added.
Notably, insurers are seeing a gradual decline in the average claim payout for Covid treatment. Initially, when claims started trickling in, the average claim size was in the range of Rs 2-3 lakhs.
However, now it has come down to around Rs1.5 lakh. Despite that, many private hospitals still charge high rates as there is no standardisation. Insurers have been calling for standardization of rates when it comes to covid treatment. But in the absence of any health regulator, the ball lies in the government’s court to standardize rates.
“There is a general feeling that many hospitals are taking advantage of the situation and overbilling the patients. Insurance companies are required to pay this bill. Also, as directed by the finance ministry, insurance companies, especially public sector ones, cannot refuse these claims. They are required to settle them at the earliest. A standardised product helps, especially in case of patients from hospitals which are not listed as non-PPN (Preferred Provider Network) ones,” said a head of a general insurance company.
Many insurance firms have already come out with specialized Covid products. Standardisation will help bring more parity in the existing products as well.
“There are separate Covid products that various insurance companies have come up with but this is an effort to bring a standard product so that the policyholders get a clear sense of what is covered and what is not covered in a Covid only product. The whole idea is to have a Covid only product that also has some extra elements which are normally not there in a typical health insurance policy like quarantine add on cover,” said Sanjay Datta, ICICI Lombard General Insurance.