Coronavirus-focussed health insurance policies offered by half a dozen general insurance companies are temporary in nature and can be withdrawn anytime in case coronavirus pandemic spreads far and wide in the country.
So far India that has put a 21-day nationwide lockdown is relatively unaffected with only 4,421 coronavirus infection cases with 114 death in a population of 130 crore. But the danger of a pandemic looms large as countries such as Italy, Spain and the US have seen lakhs of cases with thousands of deaths in a short period of time. China, where the infection first started, seems to have controlled new infections and deaths. This is a huge comforting factor for the insurance industry.
"We are offering a war-time insurance cover knowing very well the kind of casualty or hospitalisation a pandemic can create irrespective of the social strata or geography," says an insurer on condition of anonymity. But they also claim in private that the fear is running high that the cases may spike. And insurance companies do thrive on fear, uncertainty and the likely risk that a person perceives.
This new coronavirus policy provides a lumpsum benefit to the person who is hospitalised and diagnosed with the virus. The entire sum assured is paid irrespective of the hospitalisation. The existing medical policy also covers the hospitalisation, as directed by the insurance regulator, where the amount will be paid based on the hospitalisation expenses. But the idea of a coronavirus-specific policy is to cover those who don't have any medical insurance. In fact, majority of Indian population is without a medical policy.
The premium rates offered by the companies for coronavirus-specific policy are affordable. Take, for instance, the Star Health and Allied Insurance has piloted a policy with sum assured options of Rs 21,000 and Rs 42,000 at premium rates of Rs 459 and Rs 918, respectively. ICICI Lombard has priced its COVID-19 policy at an attractive premium of Rs 149 for a sum assured of Rs 25,000 including value added benefits such as tele consultation and ambulance assistance etc.
The coronavirus policy is a need-based cover available for a limited period of one year. To be fair to the general insurance industry, the COVID-19 policy should be sold when there is no pandemic. The very concept of insurance is that you buy it for covering future risk whether death, medical emergency or fire. "It is a huge risk that we are taking in our books. In a pandemic like coronavirus, you cannot model things like total estimated cases, spread and re-occurrence etc," says an insurer.
The temporary nature of the product is based on the individual strength of the company's balance sheet, the likely losses and the risk-taking ability of the insurers.