Many insurers have been refusing to renew Corona Kavach and Corona Rakshak insurance policies (the special COVID-19 policies) launched in 2020 to provide a cover for hospital treatment. Taking a serious note of the refusals by insurers, the Insurance Regulatory and Development Authority of India (IRDAI) has asked them to continue renewal or issuance of Corona Armor Policy till 30 September 2021. Earlier, insurers were expecting that IRDAI will not extend the policy renewal and sale after 31 March 2021.
People from across the country are requiring hospitalisation and death counts have increased manifold amid the second COVID-19 wave. The COVID-19 policy offers hospital cover at a very low premium and anyone aged 18 to 65 can purchase COVID-19 health insurance.
This has led to a surge in number of claims and explains the reluctance and hesitation of the insurance companies to renew or sell the products.
In a letter to insurance companies, the IRDAI says, “In the wake of rising infection rates due to the second wave of the COVID-19, the insurable public require appropriate health insurance coverage and it is not correct to deny such coverage to the customers in this crucial time. All insurers are advised to ensure that wherever corona specific standard products have been filed and approved by the Authority, the same should be offered to the customers according to the insurer’s underwriting policy.”
“Similarly, where the underlying corona specific product enables the insured to renew the policy as specified in the above referred circular dated 13 October 2020, insurers are advised to renew such policies subject to the underwriting policy of respective insurers. As the pandemic has accentuated the need for health insurance, all insurers are advised to actively promote protection through health insurance to develop the much-needed trust and goodwill of the general public,” the insurance regulator says.
However, despite IRDAI’s pressure on insurers to renew COVID-19 claims, insurance companies are looking for unique strategies to evade following the order. For example, many have stopped offering COVID-19 insurance online, and are only selling it offline while some have stopped offering incentives to their insurance agents for the sale and renewal of COVID-19 insurances.
Insurers say they have paid more in settlements and claims than they had earned via premiums from policyholders. As of now, 4.3 million people have been insured under 2.5 million Corona Kavach insurances while over 74,000 people have claimed benefits under the policy.
While insurers have received Rs580 crore in premium they say they have paid Rs570 crore in claims and settlements.
As per the COVID insurance policy, insured people are offered basic health insurance ranging from Rs50,000 to Rs5 lakh. The cover is valid for three and a half months, six and a half months or nine and a half months, depending on the policy you apply for. New policies have a 15-day waiting period.