The unprecedented times that human race is currently facing reminds me of an interesting statement from a dialogue in the movie “Sully” –
No one has ever trained for an incident like that. No one.
Yes, this is completely true! The situation we are in today has never been experienced by anyone ever before and undoubtedly, this pandemic will go down in the history as an event that altered the natural world order.
The outbreak of this pandemic has definitely led to high fear psychosis across the globe and even in India, where the virus has affected more than 2 million individuals, the fear of contracting the virus and availability of adequate healthcare looms large. In this piece, my attempt will be to introduce and discuss about the expenses associated with treatment/healthcare required for an individual diagnosed with Coronavirus and educate readers about efficient & timely planning for the same with insurance product(s) specifically designed for COVID-19 treatment.
Some facts about the insurance industry
The insurance sector in India accounts for a whopping $280 billion industry and was growing at a steady rate of 35% per annum before the pandemic. However, with unprecedented events unfolding and with countries across the world imposing lockdowns, the growth prospects look bleak in the near future. The automobile and travel industries have been hard hit and that has had an indirect impact on the auto and travel insurance segments. It is expected that the life insurance industry will see shortfall in premium collections since the lockdown has led to layoffs across the board.
For the insurance industry, the silver lining lies in the health insurance segment. Initially, the companies were reluctant on including claims related to COVID-19 in their health insurance policies. However, in April, the Insurance Regulatory and Development Authority of India (IRDAI) made it mandatory for health insurance companies to include expenses related to COVID-19 treatment as well. The health insurance policies would cover hospitalization expenses if a person tests positive for COVID-19 and has been hospitalized for more than 24 hours. However, the cost of PPE kits and other consumables used are not covered which form a major portion of the total treatment cost. Also, home quarantine and institutional quarantine costs are not covered unless the person tests positive.
Enter Corona Kavach and Corona Rakshak
Earlier this month, general and health insurance companies launched the standard indemnity-based COVID-19 policy i.e., Corona Kavach and the benefit-based policy i.e. Corona Rakshak. They are available with tenures of 3.5, 6.5 and 9.5 months.
The Corona Kavach policy covers a maximum amount of Rs. 5,00,000 and a minimum amount of Rs. 50,000. It can be sold on an individual basis as well as on a family floater basis. It has a waiting period of 15 days i.e. no claims will be entertained if a person tests positive within 15 days after taking up the insurance. The Kavach policy covers all hospitalization expenses (including PPE kits and other consumables) only if a patient is hospitalized for a continuous period of 24 hours or more.
Additionally, it also includes home care treatment expenses as well provided the conditions are met and the patient is able to provide a daily chart of the expenses. It also covers pre-hospitalization medical expenses for up to 15 days, and post-hospitalization treatment expenses for up to 30 days.
The Corona Rakshak is a fixed benefit plan which covers a minimum of Rs. 50,000 and a maximum of Rs. 2,50,000. It is only available on an individual basis. Like Corona Kavach, this too has a 15-day waiting period. Since it is a benefit plan, it pays the patient the lump sum amount when he tests positive provided the patient has been hospitalized for a continuous period of 72 hours irrespective of the actual expenses incurred. However, it is important to note that home care treatment expenses are not covered.
Although these two insurance policies can assure a significant amount of the expenses, it may still not be enough to pay for the treatment of the disease especially once hospitalized. State governments have been trying to cap the costs but in private hospitals, the costs can rise to as much as Rs 7-8 lakhs or even more. Hence, in my humble opinion, the insurance companies could also look at widening the coverage for these products and also build in higher flexibility so as to enable higher penetration of these products.
If you have any doubts/queries regarding these products, please feel free to mention those in the comments and we sure will take it up at the earliest!
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of any agency, organization, employer, or any company. Fintuned Co. LLP shall not be held responsible in any manner whatsover, for any decision/action taken by readers on the basis of the content mentioned in the article. Readers are requested to exercise their best judgement before taking any decision/action. Fintuned Co. LLP shall also not be held responsible for any copyright infringement committed by the author in the process of writing and/or publishing this article and in the event any such offence is found, cooperate with necessary authorities to take remedial action
Thank you Yuva members for organising such a fun and informative lecture. We enjoyed it a lot. Meeting and learning from Mihir Sir was really an amazing experience. And this is not only our feeling but all the students enjoyed his lecture very much and look forward to many such events.