Opinion | Insurers can respond to covid-19 by relaxing norms on claims and processes4 min read . Updated: 30 Mar 2020, 12:55 AM IST
The insurance industry can respond by accepting Covid-19 claims, fully or partially, by considering pandemics a named hazard, even though they are not contractually bound to do so
Many insurers have responded to the Covid-19 pandemic by introducing specific coronavirus products. This is useful but does not address the most important issues. Much more is needed. And fast.
Thousands of Indian travellers are stranded overseas trying to find their way home. This is expensive. A friend’s son had to advance his return from Canada. He lost ₹35,000 in cancelling a flight and paid ₹75,000 to book an earlier one. Another person got back from Europe, but had to first fly to Bangkok and then get to Delhi. Indians who are being quarantined overseas will incur testing, living and medical costs. Many of these expenses are excluded in their current overseas travel insurance. Flight cancellation costs are covered for specific named hazards and pandemics are sometimes not one of them. In some policies, quarantine and living costs are not payable. The industry can respond by accepting such Covid-19 claims, fully or partially, by considering pandemics a named hazard, even though they are not contractually bound to do so. New travel insurance plans should include this.
Senior citizens, particularly those with pre-existing conditions, are most vulnerable. The coronavirus products introduced so far do not cover this age group. We should cross-subsidize these plans for senior citizens by charging more from younger persons. That will fully leverage insurance’s ability to distribute risk.
Covid-19 testing in India has been limited but free. This may change over the next few months as the symptoms become widespread and testing extends to private labs. Existing health insurance plans do not cover testing costs if the diagnosis is negative. Here, too, insurers could make an exception and cover costs if the test has been prescribed by a doctor. Similarly, the benefits in both existing and future health insurance policies can be expanded to cover quarantine costs in some way. For example, according to newspaper reports, private quarantine in Delhi is possible in select hotels at about ₹3,000 per day. This is uninsured.
There are broader issues as well. Individuals and companies are under severe financial stress. Companies are scaling down, people are losing jobs and payments are being deferred. Work from home has left companies unprepared even for the most routine banking activities. In such an adverse environment, renewing insurance is difficult, either because people and companies do not have the money to pay or are not able to complete the various renewal processes in time. The current quarter, which is also the financial year end, has the maximum amount of insurance renewals. The regulator has responded to this crisis by extending the grace period on life insurance by 30 days and condoning health insurance renewal delays up to 30 days. This is necessary. They should also consider allowing policyholders to extend their existing insurance by three months simply by paying a pro-rata three-month premium. The priority has to be that policyholders should, under no circumstance, be left uninsured. Because of the various lockdowns, even those who want to make an insurance payment will not be able to do so. Here, the sector should consider a waiver to Section 64VB of the Insurance Act that requires insurance premium to be paid before a cover is effective. Insurers, with approval from the regulator, could allow insurance plans to be renewed and the premium to follow a week or fortnight later.
There are about 100,000 claims made every day. As an industry, we must take steps to continue the claims payment and make the process easier. Consider the basic health insurance reimbursement claim. The process requires physical copies and original bills to be delivered to the insurer before claims can be processed. This requirement can be waived, so that scanned copies are accepted for a month or two. Claim intimation period should be increased from 7-14 days to three months. Similarly, the process of surrendering a life insurance can waive the need to submit original policy copies. About half of health insurance claims are cashless, which means that payments to hospitals are made directly by the insurer. One hurdle to increasing the proportion of cashless claims is that the hospitals where patients are treated are not on the insurer panel. Can the proportion of cashless treatment be significantly increased by temporarily treating all licensed hospitals as empanelled or can the various third-party administrators (TPAs) and insurers collaborate to provide cashless claim if a hospital is empanelled with any one insurer or TPA? Motor claims and most commercial claims require surveyors to investigate and claims to be filed within a certain time. These restrictions should be eased.
Implementing such actions requires a deep assessment of risk, extensive collaboration and, in some cases, relaxation of regulations. These specific actions can only be taken by the insurance industry and will go a long way in easing the difficulties that our policyholders are already facing. We must step up.
Kapil Mehta is co-founder, Securenow. in