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Published in Livemint.
After the government allowed the private sector hospitals to treat covid-19 patients last week, insurers have begun getting health insurance claims. According to data compiled by the General Insurance Council, an industry body for non-life companies, as of 30th March, the insurance sector got a total of 34 claims, up from 22 claims as of 28th March, with a claim size of around Rs58.05 lakh. Of this, the industry has settled ten claims so far of Rs14.20 lakh placing the average claim at about Rs1.42 lakh.

Earlier when the government allowed private labs to test people for the virus, it recommended a cap of Rs4,500, but in the case of treatment, there doesn’t seem to be any cap. As per the data, the claims show huge variation: as little as Rs50,000 to as much as Rs4.3 lakh.
“Covid-19 is an infectious disease and only a small percentage of the population will need critical care. However, patients will need to be isolated with some baseline treatment being given. Hospitals have to earmark isolation wards for treatment and so this may come at a higher cost. Right now there isn’t any capping on the cost of covid-19 treatment as the cost could vary depending on the severity of the condition,” said Bhaskar Nerurkar, head- of health claims, Bajaj Allianz General Insurance Co. Ltd. City and hospital chose would also impact the cost. So far India has seen more than 1000 cases of covid-19 whereas the world over the tally has crossed 7 lakh.

Given the costs are not capped, and the private sector is now allowed to treat covid-19 patients, insurance companies are likely to see a surge in health insurance claims, but so far insurers remain positive given the lockdown. “Lockdown and aggressive testing may break the chain of transmission and this means we may contain the spread of the virus-like South Korea. Right now elective treatment may get deferred, but that’s still a cost we will have to incur at some point. The next two weeks are crucial to understanding the trends, but the measures taken so far inspire hope,” said Sanjay Datta, chief underwriting and claims, ICICI Lombard General Insurance Co. Ltd.

According to experts, the cost of treating covid-19 is expensive due to the antivirals, ventilators, personal protective equipment kits (PPE), and separate wards. “Covid-19 treatment is expensive in most cases, but the real worry for the insurance companies is going to be managing the volume. Even as the government has allowed the private sector to treat patients, it will have to step in to subsidize the cost else private treatment can become unaffordable for the uninsured,” said Kapil Mehta, co-founder, SecureNow Insurance Brokers Pvt Ltd. According to Mehta, insurers with a large group portfolio will feel the pinch and may have to revise prices upwards.

Most insurers that Mint spoke to say it’s very early days to comment on the impact of the virus on health insurance, as claims are only beginning to trickle in. “I pray that the maximum number of claims is not more than 15-20,000. More than thirty insurance companies are capable of absorbing the additional loss of a percent or two, which may not dent the books in a big way. What is more challenging for us, in the present circumstances, is to continue quickly reaching out to the customers to extend help,” said Atul Sahai, managing director, and chief executive officer, of New India Assurance Co. Ltd.

While reiterating that it may be too early to assess the impact on the insurance sector, Nayan C. Shah, managing director, of Paramount Health Services (TPA) said that the cost of treatment for Covid-19 has already been revised upwards. “Every incoming patient will have to be tested for Covid-19 and the hospital staff will need to take protective measures.
This will increase the costs and some hospitals have already revised their rate list upwards for Covid-19 treatment if the defensive protocols come into force, the cost may go up for all lines of treatment. While some elective treatments have been postponed but ultimately they will get done and the real impact on the insurance sector will be known. While opening to the private sector addresses capacity issues, the government should think about containing the costs,” he added.