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Insurers shouldn't pass burden of high COVID claims in one single year, say experts

Insurers shouldn't pass burden of high COVID claims in one single year, say experts

Premium rate for group health insurance has jumped upto 70 per cent for corporates offering health insurance to their employees.

Insurers shouldn't pass burden of high COVID claims in one single year, say experts Insurers shouldn't pass burden of high COVID claims in one single year, say experts

Premium rate for group health insurance has jumped upto 70 per cent for corporates offering health insurance to their employees. The jump has been on account of high loss ratio of around 180-190 per cent in group health insurance policies due to increased COVID claims. Experts, however, say that loss ratios need to be normalised in case of any catastrophic event and insurers should not put the entire burden in just one single year.  

“Wave two of COVID-19 was kind of a catastrophic event. And any kind of a catastrophic event has a return period. This means that it was like a one in 50 year event.

So, putting up the entire burden of the wave two in just one single year of experience is not a credible way of seeing the insurance kind of book. This is actually being similar to the fire insurance book that runs on 30 to 40 per cent loss ratio, but when large flood happens or a large earthquake happens, suddenly the loss ratio or the claims cost goes up. They need to be normalized if there is a catastrophic event happens,” says Yogesh Agarwal, Founder and CEO, Onsurity, an insurance-health tech startup.

Experts say that Micro, Small and Medium Enterprises (MSME) sector has also been affected by such sharp hikes that have just started looking for health insurance covers as awareness increased manifold after the pandemic hit the country.  

Agarwal adds,  “What has happened in the large corporate insurance program is that they their cost or their loss ratios for the financial year 21-22 has been upwards of 180 - 190 per cent. Now when their renewals are coming around their prices have been increased almost by 60 to 70 per cent. And now because of this same phenomenon, insurance companies are also asking the similar kind of price heights even for a completely underserved market which is the SME market.” 

Saransh Garg, co-founder and CEO of Nova Benefits, an employee wellness platform, agrees, “On the health insurance side, previously insurers were giving discounts on COVID claims when doing the pricing. You could make the argument to insurers saying that let's take away the COVID claims completely because these claims will not recur. And so companies were able to get a better pricing as a result. But now the discounts that are being applied are slightly lesser. For example, previously you could take away 70 per cent of the COVID claims. Now you can take only about like 20-30 per cent because there is still some risk that is there.”

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Published on: Feb 16, 2022, 7:43 PM IST
Posted by: Tarab Zaidi, Feb 16, 2022, 7:37 PM IST