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Published in Livemint
In a bid to offer better coverage to policyholders amid the covid-19 pandemic, the Insurance Regulatory and Development Authority of India (Irdai) has sent out draft guidelines to all general and health insurance companies, mandating them to offer standard indemnity and fixed-benefit plans for covid-19.
Life and general insurers have also been allowed to offer short-term health policies that specifically cover the disease. In a recent circular, the regulator said insurers can sell health products with a minimum term of three months and a maximum of 11 months.
“There are a few firms offering covid-specific products on a group basis. But given the situation, it is understandable why the regulator may think it is relevant to get companies to offer specific protection,” said Manik Nangia, chief operating officer, Bharti Enterprises-Financial Services.
Insurers will have to offer these products with a waiting period of 15 days as against the 30 days in regular health plans. Health insurance rules such as lifelong renewability, migration and portability shall not be applicable to these products. They can either be on an indemnity basis or on a fixed-benefit basis. Life insurers, however, can offer these products on a fixed-benefit basis only. “We believe the intention is to have as many carriers write the new risk and that’s a wise thing to do in the short term,” said Nangia.
Abhishek Bondia, managing director and principal officer, said life insurers offering fixed benefit plans will allow policyholders to opt for covid-19 plans as a supplementary plan to their existing regular health indemnity product. The regulator has said that optional covers that enhance the health insurance coverage are permitted to be offered with these short-term products. But in another sentence, it has said no add-ons are allowed.
“We are not sure about what that means. I think optional covers could mean something like the hospital cash cover, which the regulator has asked us to offer with the standard covid-19 indemnity product. But optional cover and add-ons are similar in nature. We are seeking clarification on this,” said Anand Roy, managing director of Star Health and Allied Insurance Co Ltd.
Pricing for the products has been left to insurers’ discretion and some are of the view that these products could be the short-term variants of the two standard covid-19 products that the regulator has mandated them to offer from July 15.
Final guidelines are still awaited. “The regulator has not mandated pricing in any format. That is the only way this can work. We must understand that the situation is unprecedented and there isn’t enough credible data on infection spread, which makes it very difficult to ascertain the frequency of occurrence and the potential severity of the claims,” said Nangia.
The short-term products can also be sold in the form of group insurance, and Nangia said group policies when bought by an employer or an association of people can turn out to be slightly cheaper.
As per insurers, Irdai is trying to persuade more and more people to buy health insurance as covid-19 treatment could burn a hole in the pocket if one is not covered under insurance. However, all the back and forth and introduction of more products could lead to confusion and may not encourage people to buy a comprehensive health policy.
“If a family or an individual can afford it, we recommend a comprehensive health plan. The current situation is such that not many people may be able to afford, so the regulator is trying to make as many options available to ensure people have some amount of coverage,” said Roy.
Insurers also said that once the pandemic settles down, they’ll have to work on ensuring that people who bought a covid-19 product are encouraged to buy a regular health insurance policy because a single disease-specific plan doesn’t really help in case you meet with an accident or require hospitalization due to other conditions.