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‘No need for covid-specific policy, we require comprehensive health plans’

With insurance awareness at an all-time high, it’s a good time to offer affordable, comprehensive health products

Krishnan Ramachandran, managing director and chief executive officer of Max Bupa Health Insurance Co. Ltd, has spent over two decades in the insurance sector. Before this, he was the CEO of Apollo Munich Health Insurance, is now HDFC Ergo Health. In a conversation with Mint, he talks about how the pandemic has affected the demand for health insurance and the problems with having a standard covid-19-specific product. Edited excerpts:

How many covid-19 claims have you received and how many have you settled? How has your experience been with these claims?

As of 23 June, we’ve received around 700 claims and settled about 500. The average claim size that we have received is around 2 lakh. Of all the claims that have come in, 4-5% have been fraudulent.

Krishnan Ramachandran, MD and CEO, Max Bupa Health Insurance Co. Ltd.
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Krishnan Ramachandran, MD and CEO, Max Bupa Health Insurance Co. Ltd.

The cost of treatment for infectious diseases is about 35,000-40,000, which is not the case with covid-19, as the length of the stay is much longer, a higher number of patients require critical care and the need for personal protective equipment (PPE) adds to the cost. A dialogue between the insurers and providers on a set of clinical pathways for treating and some amount of standard costs is necessary.

Further, there needs to be better transparency between healthcare providers and insurers. There’s a need for a regulator for healthcare providers because if health financers (insurers) and the premiums they can charge are regulated, then the delivery of healthcare services and what they can charge should also be in sync. There is a huge disconnect that regulations can correct.

The regulator has proposed mandatory standard policies for covid-19. Is there a need for these products when regular health insurance covers the costs for the disease?

The regulator has been proactive in terms of serving customer interest during this pandemic. As far as a covid-19 product is concerned, we don’t need one. Insurance awareness is at an all-time high. This is a very good time to offer an affordable and comprehensive health insurance product.

We have a good product called Arogya Sanjeevani, which is one of the most affordable plans in the market. We must work at something that’s long term and sustainable using awareness that covid-19 has brought in. We need insurance for a wide range of reasons. Covid-19 is a fantastic hook to introduce customers to a product that’ll benefit them in the long run.

The proposed covid-19 standard indemnity policy shall pay for PPEs as well. Is there a need to have an add-on with regular health policies as well?

Not really. In the existing policies, there are new treatment forms that emerge and insurers take a view and pay for them within the policy construct. In terms of consumables, we pay for whatever is reasonable. It’s not like every time something new comes up, you add a new rider to deal with it. You look at it within the overall policy construct and see what is the reasonable amount to compensate for.

Treatment methods are continuously changing so adding riders for every change is a complex way of dealing with this. All health policies cover costs for covid-19 treatment and even for PPEs. Introducing a policy that specifically covers PPE costs may not be the right response. Standardization has become a challenge as there is no standard treatment but even within that, we know that there are two-three pathways for treatment so some standardization, which exists in some parts of the world, can be applied.

Health insurance premiums hit a record high in May and covid-19 is the biggest reason. Do you see the trend continuing in the long term?

When demonetization happened, the volume of digital payments shot up, but after a while, it came down but settled at a higher level (than before). I think something similar will happen with health insurance because what’s happened in the last few weeks will be imprinted in the minds of this generation.

Typically, inquiry to sale would entail two-three conversations and the product was a discretionary spend, but today we are seeing one conversation is enough for people to make a decision. I think the demand for health insurance will settle at a new normal compared with what it was before covid-19. We are seeing a good conversion rate but if the overall economic situation deteriorates, then this product will fall in the overall hierarchy of consumers’ needs.

What are the current challenges for health insurance and what has covid-19 changed for the industry?

In terms of challenges, adapting to a completely different way of working has happened. In a very short span of time, we’ve had to move all our employees to a work-from-home environment. Initially, there was a challenge with reimbursement claims because the documents used to reach us via courier but then we allowed policyholders to upload the documents online and processed the claims based on that.

In April, the industry saw de-growth as the whole challenge was how to sell digitally and everyone was still figuring out distribution through digital channels. But from May, the distribution channel has adjusted to new ways of working. The journey has been about converting challenges into opportunities.

What has changed is consumer awareness and demand. We are also going to see some changes in the operating model. We are now deciding on the roles in which individuals really need to come to office, especially in cities like Mumbai and Delhi where daily commute can take really long. We will have to find the right balance because there are social advantages of coming to the office.

Finally, the digitization of processes is a big change.

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