Insurers are experiencing varied sizes of claims for covid-19 and are wanting some form of standardization. However, hospitals say it’s almost impossible to do this. What’s your view?
The situation around covid-19 is quite unprecedented, complex and ambiguous. We want to define it, but none of us have the experience.
There are some issues because treatment costs are open-ended and on a fee-for-service model. The situation, therefore, gives rise to some kind of standardized package rates with a defined cost capping.
I think the hospital sector and the insurance industry with the help of some industry bodies such as FICCI and CII are deliberating to come up with a structure to package costs, which will benefit customers.
The covid-19 treatment cost depends on age, immunity, underlying co-morbid conditions, stage of infection and others. Every case is different. We need to think from the hospital’s perspective too. The kind of infrastructure required for preparing an isolation ward adds to the cost.
We should have some kind of standardization of cost, but these are early days. There’s a lot of work happening to see what is possible to benefit all stakeholders.
More and more insurance companies are coming up with disease-specific policies, even for covid-19. What makes these policies lucrative for insurers?
The disease burden in India is increasing. Thus, some insurers have launched disease-specific products. But the uptake is low and that could be because of limited scope of coverage.
Purchasing a super top-up plan at an economical premium can be a wise thing to do, but given low insurance penetration, we may see uptake of disease-specific products in the near future, but they cannot substitute the basic or comprehensive health policy.
What will change for the industry in the post-covid era?
When a covid-like situation prevails, it makes us a lot more aware and we start valuing our lives more. Due to this shift in consumer mindset, health insurance has now become a necessity and I think this is good news for the industry. Once normalcy is back, I am sure that there will be a surge in demand for health insurance products.
The industry is at a tipping point and we’ll now have to address the challenges of affordability, predictability and simplicity. We’ll have to drive premiums down while ensuring we make enough profit.
We’ll also have to manage and develop technology to analyze fraud and abuse. We’ll have to make sure that the products we sell and the technology we use are in line with the shift in customer needs. The digital architecture of any company will play a big role in acquiring new customers.
Online purchases and processes will save distribution cost which could reflect in lower premiums.
The good news is that the regulator is quite proactive and the intervention that’s come through in the last six-seven weeks in handling the impact of covid-19 is pro customer.
We have a host of stand-alone and general insurers, so is there a case for life insurers to sell indemnity plans?
Globally, health insurance has always been a stand-alone subject because of the complexity it brings. It is a transaction-intensive business, where customer interaction is required to drive business. It also requires a better understanding of the entire healthcare ecosystem.
In the year 2000, the government of India approved the entry of private companies into the sector and it has worked wonderfully. General insurers too can sell health plans, both indemnity and defined, because their line of business is similar to ours.
Obviously, health insurance penetration is low and that calls for more entities to come in and I don’t have any issue with that, even if it is life insurers. But whoever comes in must have the right focus because health insurance is complex. If we allow anybody and everybody to enter the space, it could impact the sector negatively. Life insurance is a long-tail business and so if they want to enter the health space, they should float a different subsidiary.