In early March, Digit, the new kid on India’s general insurance block, was among the first to launch a Covid-19-specific insurance policy. This was before the 21-day countrywide lockdown was imposed on 24 March. The retail policy premium cost Rs 299 ($4) for a Rs 25,000 ($328) cover. In a matter of three weeks, Digit hit the Rs 50 lakh ($65,637) premium limit set by India’s insurance regulator.

In a country where only 44% of the population has health insurance, the popularity of the Covid-19 policy is a testament to how worried the public is about the unfolding pandemic. Realising this, the Insurance Regulatory and Development Authority of India (IRDAI) encouraged encouraged Business Standard Provide Covid-19 cover in policies: IRDAI tells health insurance companies Read more insurers to consider offering Covid-specific insurance policies.

While Digit was one of the first to respond to this clarion call, it wasn’t the only. More established insurers like Star Health, Religare Health and ICICI Lombard also rolled out similar policies. Star Health hopes to sell close to 10,000 such policies in the next three months.

The promptness is understandable—the window to selling these policies is likely to be small. “We can’t sell Covid-specific coverage after 2-3 months,” said an executive at one of the health insurers. The executive requested anonymity as they were not authorised to speak with the media.

There is a strong demand for Covid-19 policies on platforms like digital wallet MobiKwik. The sachet products cost under Rs 500 for a fixed-benefit cover of about Rs 50,000. MobiKwik has tied up with Digit and sold close to 20,000 Covid-19 group policies in a week since it launched, according to co-founder Upasana Taku. Unlike its retail variant, IRDAI has not set a cap on the group Covid-19 policy.

Demand alone, though, doesn’t make for good, or even smart, business. “We are anticipating more claims this year,” said Dr S Prakash, managing director of Star Health, stoically. IRDAI said existing policies will cover coronavirus claims. As of 7 April, India’s largest standalone health insurer in terms of gross premium income already had 100 Covid-19 claims, in the last month. The average approved claim was Rs 75,000 ($984.6). The company’s average payout was Rs 41,000 ($538) last year. At ICICI Lombard, the average claim size has been between Rs 5-6 lakh ($6,563-$7,876.4).

This spike doesn’t bode well for insurers.

The sector works on estimates. When a new illness sneaks up, it throws insurers’ calculations into disarray. With Covid cases spiking rapidly—India reported its highest single-day rise in Covid-19 positive cases on 8 April, insurers are a worried lot. “The claims department is in a state of paranoia,” said a senior executive at one of the health insurers.

While Covid-19 is being treated for free in government hospitals, as the number of cases rise, private hospitals will increasingly come into play.


Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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