‘There is a case for the tenure of Covid-19 policies to be extended’

Given covid-19, the uptake for health insurance is quite evident. Standalone health insurers, in particular, saw a year-on-year 25.85% growth in August. What has been the driving force for Star Health?

We are a standalone health insurer with more than 50% market share. Even before covid-19, we were growing quite fast. But after the lockdown, people realized the requirement for health insurance and are initiating the purchase process rather than insurers pushing through agents or other channels. Given our large presence, we’ve been able to cater to demand across the country, including tier II and III cities.

How many covid-19 claims have you settled? Are you seeing a surge in non-covid claims as well now that planned surgeries have resumed?

There has been a surge in the number of covid-19 claims, especially in the last three months. Initially, most people were getting admitted in government facilities, but after June, private hospitals started taking in a significant number of covid-19 patients and the claims started coming in.

As of 18 September, we’ve received about 42,000 claims and settled close to 32,000 already. We received the highest number of claims given our market share. We haven’t really seen fraudulent claims but there are instances of overcharging by the health provider. We have arrived at a preferred network of hospitals (300 across India as of 18 September) and are encouraging our customers to get treated there. We have negotiated our own packages for covid for hospitalization as well as home treatment. We are negotiating to expand the network.

We are seeing a rise in the number of non-covid claims compared with the time of complete lockdown. But the number of non-covid claims is almost the same as last year.

How will rising covid claims and the resumption of non-covid claims impact the business? Do you see a big rise in premiums in the short- to medium-term?

I don’t think premiums will rise due to covid-19 because every year our claims go up by 20-30% over the previous year. Now, this increase is coming largely from covid-related treatment, but overall, it’s matching our expectations because the number of accident-related claims has gone down. Having said that, the size of covid claims is at least two times regular claims. That’s where the challenge lies. This is the reason why we are trying to negotiate with the hospitals to design packages to get a handle on the claim size.

We are hoping that in the next couple of months, as protocols become more defined and as the government comes up with stricter guidelines, hospitals will fall in line and things will settle down. There is a lot of discussion on getting all stakeholders on board and, sooner or later, there will be some consensus. Until then, more insurers with large exposure to health products may look at negotiating directly with healthcare providers to protect their bottom line.

The regulator is mulling extending the tenor of covid policies. What’s your view on this? Will insurers be able to cross-sell regular plans to those who’ve bought covid plans?

After the regulator launched the Arogya Sanjeevani and corona-specific policies, we have sold the most number of these products. There is a case for the tenure of the covid policies to be extended because coverage is required, at least for the next six months. For customers who picked up policies with shorter tenures of 3.5 and 6.5 months, the extension will make sense. There is also a case for allowing migration to another policy and continuity of benefits into a comprehensive plan. We are taking this up with the regulator.

We have sold more than 300,000 Corona Kavach policies but it is true that we’ll have to try and move these policyholders to a regular health insurance plan. The pandemic will eventually leave us but the importance of health insurance will not diminish.

Has the average size of covid claims dropped? What’s happening about standardizing of rates?

The rates are not standardized as yet and it depends on the city and the category of hospital. But the good thing now is that hospitals are willing to have a dialogue.

The average claim size for us is close to ₹1.1 lakh. In the initial months, the claim size was higher but that’s because most of them were ICU and critical care claims. Now even people who are asymptomatic are getting themselves hospitalized and insurers have to pay. Claim size has gone down because of such claims, but when you look at it on a category-to-category basis, it has not come down. For example, an ICU claim size is still the same as it was in March-April.

What challenges has covid posed for health insurers. What are the industry’s prospects in terms of growth and products?

There are two challenges. One, unless we have a greater understanding with network providers, the cost of hospitalization may remain uncontrolled. Claims are likely to go up so unless hospitals agree to play ball, the claim size will remain a challenge. Two, business transformation. Investing in technology and digitization has become important due to the pandemic. Unlike life and general insurance, we cannot delay settling claims because a big chunk is cashless. We were reasonably prepared on the tech front but speeding up of the processes is necessary.

In terms of outlook, there are studies which show that in the past, after pandemics such as SARS and MERS, the health insurance industry doubled growth for the next three-four years because of increased awareness. I foresee a similar trend. Customer expectation will change too so we will have to focus on developing products that are relevant such as disease-specific products like cancer and diabetes that cover people with pre-existing conditions. We are working on this and already have quite a few products for customers.