Health insurance claims due to Covid reported since April 1, 2021 are 57% of the claims filed in the year ended March 2021. Non-life insurance companies are seeing a sharp spike in claims, which could impact their balance sheets if the trend continues.
As of March 31, non-life companies including health insurers received 9.8 lakh claims for Rs 14,560 crore for treatment of Covid-19. This went up to 14.8 lakh as of May 14, 2021, for a total value of Rs 22,955 crore. This means that in the first 44 days, Covid claims amounted to Rs 8,385 crore which is 57% of the pandemic-related claims for FY21.
According to Atul Sahai, chairman,
the claims paid by his company are in the vicinity of Rs 2,200 crore. “Last year though we had claims, we were not worried about the impact on the balance sheet. This year it could reach a point where it does,” he said. He added that although the rising cases were resulting in losses on the Corona Kavach policies, the public sector insurers are not looking at a price revision.
Last year health insurers had the advantage of a revision in premium rates. They also saw lower claims in the first half on account of lockdown in the first half when health claims were low and most treatments were done in government facilities. “Last year although some elective procedures were postponed, the health insurance claims were still over the pre-covid trendline,” said MN Sarma, secretary-general, General Insurance Council.
The claims are higher despite there being several factors that are keeping costs under check. “What is different this time is that the average length of stay has come down from over nine days in the earlier part of the pandemic to around six days. One reason for this is that the treatment protocols have standardized. Hospitals are discharging earlier due to paucity of beds and recommending home isolation for remaining part of treatment” said Bhaskar Nerurkar, Head – Health Claims, Bajaj Allianz General Insurance.
Another trend observed by Bajaj Allianz is that an increasing number of claims are coming from tier II and tier III towns in the second wave which has seen a surge in numbers in April and May after a decline in April. Given the shortage in healthcare capacity and the need to avail private treatment, health insurance is turning out to be the only fallback for many. While the Insurance Regulatory and Development Authority of India has asked companies to offer `Corona Kavach’ policies until September, prospective buyers say that they have not been able to buy covers from company websites.
Also, an insurance policy does not automatically mean everything is covered as often insureds have to bear the costs in the first instance and seek reimbursement later. According to GI Council data, 8.5 lakh cases, which is 86% of the 9.8 lakh claims received, have been settled and 1.37 lakh claims are pending.