Corona Virus infection in Human beings, otherwise called as COVID 19 has become pandemic and spreading rapidly in most of the countries in the world. It is a great challenge to humans as many lacs of people are infected and more than a lac of deaths have been reported despite very strict isolations and medical management by all countries. Still the scenario is worsening as so far, no specific treatment and vaccine has been evolved to control the disease.
Covid 19 outbreak has a great impact on the Insurance Industry. Like other manufacturing and Service Industries, the Insurers have to work with minimum man power. As a disaster management, Insurers have provided options to customers to renew their policies online by providing customised software and hardware support to their employees who are expected to work from home.
It is unfortunate, that the outbreak started spreading all over the world during the last quarter of the Financial year 2019-20. Most of the property and Group Health policies fall due for renewal during this period. IRDAI, due to the extraordinary circumstances have relaxed the time limit of renewal of Health and Motor Act policies falling during this period by giving sufficient margin after the dates of Lockdown period imposed by the Government. Despite the fact that renewal is done on a later date with a considerable gap, IRDAI has advised insurers to grant continuation of cover during such gap to mitigate hardship to the customers. This is a partial modification of Sec 64 –Vb of Insurance Act.
Many have apprehension whether treatment for Corona Infection in the Hospitals qualify coverage under Health Insurance Policies. As per standard health Insurance policy, as long as Corona Infection is not pre-existing and does not fall under waiting period, it is covered. Some of the Insurers have clarified to this effect. The problem is that the treatment expenses are very high in most of the Private Hospitals and people are reluctant to go to government hospital either due to fear of lack of care or of proper facilities. IRDAI has advised Insurers to formulate policies specifically covering the risk. Some of the private Insurers in India have devised specific policies to cover Covid 19 Infection for a limited policy period in lines with Critical care policy.
Our Hon’ble Union Finance Minister announced that all Health workers will be covered with a compensation limit of Rs. 50 Lacs from 1.4.2020 to 30.06.2020 and M/s. The New India Assurance Co. Ltd have issued a Group policy to cover about 22 Lacs Health Workers for a Sum Insured of Rs. 50 Lacs each if death occurs due to Covid 19.
In future, there will be a huge demand for covering similar Epidemics and Pandemics in all health policies. However, Reinsurers are at present not willing to accept such risks due to lack of historical data and experience. Due to lock down, most of the Industries have encountered severe losses in manufacturing, service and other Industries who are pressurising Insurers to compensate their losses under their property policies by treating the situation as Business Interruption and also treating the risks as silent Risk. As we all know, there is no valid reason to consider their claims due to the fact that policies were issued with mutually agreed terms and conditions and these are beyond the scope of cover. However, there will be constant pressure from customers and intermediaries to cover similar risks in the days to come.
As the Govt. have greatly restricted the movement of Public and instructed Hospitals to admit patients only for emergency treatment and Surgeries, in most of the Hospitals there is a steep fall in admissions, especially planned Surgeries and Out Patients. Hence, there may be a considerable reduction in health insurance claims. Similarly, due to restriction in Vehicles movement, the number of accidents is negligible and Claims in Motor OD and TP claims are also expected to be minimum during this period.
After the countries imposing strict lock out and people movement, almost all the International and domestic Flights were cancelled. Hence, there is a steep fall in Overseas Mediclaim Policy (OMP) premium to Companies and a large number of cancellations of OMP policies took place. Similarly, marine premium income has also come to a standstill due to restrictions in transit of Goods. Future is uncertain. The Financial Results of most of the Insurance Companies for the year ending 2019-20 were not particularly affected by the pandemic as the lock down took place at the very end of the financial year but the financial year 2020-21 would be very stressful for the Insurers as the full impact of lockdown, the slowing down of manufacturing, service, aviation industry would have an impact on the premium income of the insurers. With Covid 19 health claims skyrocketing with India having a record number of cases in the world, the burden of care (claim) would be borne by the insurers. With almost three quarters of the year 2020-21 gone, figures of the insurers are not looking promising. Insurers, like other manufacturing and service sectors are likely to have long term effect of the pandemic. Recovery would depend on how soon the pandemic is controlled and how soon the economy revives.