Hospitalisation cases on rise even post-COVID. Do you have a health insurance policy?

Post-COVID, insurance companies have witnessed a surge in elective surgeries which were put on hold for a long time due to the risk of catching infection in a hospital, but, recently, apart from elective surgeries, frequency of even regular medical and critical cases has increased. 

“The trend we are seeing is that, apart from electives, frequency for normal medical cases, may be just infections, has increased.  Even for ailments like cancer, we are seeing a higher frequency than what we used to see pre-COVID. Now, is there something that COVID has done which is driving this? Or is there something that has happened in terms of people preferring to go to the hospital just for even minor fever, because they're concerned about whether it could be serious or not, that is to study…In terms of people falling sick and going to hospital, that percentage has gone up,” says Bhargav Dasgupta, MD and CEO, ICICI Lombard General Insurance.

Prasun Sikdar, MD and CEO, ManipalCigna Health Insurance, agrees: “The claim ratios, while being stable in the 1st two quarters of the calendar year 2022, subsequently have seen a steep increase starting September onwards. The increase is due to high incidence rates across certain sets of ailments, especially planned surgeries and critical ailments. The patterns have been observed across all geographies and for the entire industry.  As of date, the steep surge has lowered down as compared to the last couple of months, however overall claim ratios continue to be high for the industry as a whole.” 

Motilal Oswal report also states that claims for health insurance companies and health insurance segment of multi-line players had seen a sequential increase in 2QFY23, primarily driven by elevated number of incidences of monsoon-related ailments, such as Dengue, Malaria, and H1N1. Going forward the report states that while claim frequency is expected to reduce in 3Q (2023), severity may remain on the higher side. 

There has also been a rise in elective surgeries as most people did not get these done during the pandemic period. Most people had postponed any form of treatment if they could. Hence, there has been an influx in elective surgeries now, as Covid-19 cases have reduced. “We are definitely seeing a trend change. One trend change is that post COVID we are seeing higher frequency of elective surgeries. There could be some kind of a bunching up because people were not going to the hospital for sometime,” says Dasgupta.

Will high claim ratio lead to increase in premium rates?

Premium revisions are predominantly linked with medical inflation, which, in turn, is a function of several factors like rising costs, new advances in medical treatments, technologies, etc. "These factors are ever present in a growing economy like India and hence will continue to impact the health insurance premiums as every insurer revises the price periodically for each product.  However, a pandemic like COVID has brought about multitude of changes in the treatment protocols which in turn have also impacted the costs. If these changes are permanent, then these factors could also impact the premiums in the long run. Insurers carry out premium pricing or repricing basis the overall sustainability of the premium rates subject to insurance regulations issued by the IRDAI,” says Sikdar. 

Apart from the rise in claims, another issue which is bigger challenge for the industry, is that the medical inflation or the cost of treatment has gone up significantly. 

“Let us remember one thing, if you look at the COVID period, as an industry we had not priced for COVID because none of us anticipated. In spite of that, the industry paid close to Rs 30,000 crore of claims. The industry didn't go back to the government asking for support like some of the other industries did. In the future, if there's a consistent increase in healthcare costs in the country, the healthcare inflation, or, if more people going to the hospital because of [issues like] long COVID or maybe because of the fear psychosis, then naturally the premium will have to work,” says Dasgupta. 

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