CHENNAI: If Covid-19 infections continue to rise unabated, insurance companies may be forced to hike their premiums by as much as 15 per cent to deal with the parallely increasing number of Covid-related claims. Industry executives have noted over the past week that the rate of claim settlements are unsustainable for insurers unless the rate of growth in Covid-19 cases is arrested.
For instance, Max Bupa's Bhabatosh Mishra, Director Underwriting, Products and Claims, said last week that while how much premiums may be hiked depended on several factors, the current trend in terms of claims and settlements was unsustainable.
"We were adversely impacted even during the first wave. The second wave has been far more intense than the first one and claim ratios, which were already worse than planned, is under further strain. Whether or not and how much premium revision will be needed will depend on how the pandemic goes and how much can we absorb. One thing is for sure, the current trend is not sustainable," Mishra said.
Industry executives this publication spoke to confirm that there has been a sharp deterioration in the claims ratio due to the significant increase in Covid-19 cases. According to sources, in terms of value, Covid-related claims last fiscal year (FY21) were about a fifth of the total health insurance premiums collected. And while other claims have gone down since many patients have put off postponable procedures, the steady rise in Covid-19 cases and the subsequent claims, has put pressure on insurers' earnings.
Insurance regulator IRDAI, for its part, has again reiterated that insurers are to settle Covid-19 related claims in an expeditious manner. One analyst, who wished to remain unnamed, said that there is already movement towards reprising Covid insurance products and the next few weeks may see certain insurers approach the regulator to refile their products with a hike in premiums. "The claim requests being raised to insurers due to the second wave of Covid is bound to further impact the portfolio of insurance companies," Mishra had said.
IRDAI data shows that Covid-19 related claims stood at around Rs 17,000 crore in FY21. Out of the total number of claims filed, Covid claims were around 7 per cent, but this figure has seen a sharp increase during the first few weeks of April. Up to February 2021, health insurers collected a total premium of Rs 52,886.54 crore.
Younger population affected too
Unlike the first wave, which largely saw individuals over 60 needing hospitalisation, this time, even younger people have had to seek emergency medical help. For Max Bupa, the average claim paid for children was Rs 91,000 and, in some cases, it has gone up to Rs 12 lakh.