Virus-spooked customers seek health, term insurance


Cogencis, Thursday, Apr 9

By Shreejit Nair

MUMBAI – The unprecedented impact of COVID-19 breakout on human lives and livelihood has sparked a rise in demand for health insurance and term insurance policies, as fatalities rise and individuals fret over their ability to handle hospitalisation costs.

The number of coronavirus cases in India touched 5,734 today and so far the disease, COVID-19, has claimed 166 lives in the country. Globally, the number of those infected has crossed 1.3 mln with nearly 80,000 deaths.


"Insurers have seen a jump in the number of inquiries on health insurance policies, with customers looking for protection against coronavirus that has already infected a lot of people around the world," said Mayank Bathwal, chief executive officer at Aditya Birla Sun Life Health Insurance Co Ltd.

The ongoing 21-day lockdown that began on Mar 25 in India, and the rising cases have led individuals to seek out their insurance agents and enquire on costs for such policies. This is because the constant flow of information on the pandemic has led people to revisit whether their existing insurance policies are adequate to fully cover medical and hospitalisation costs.

"Most Indians depend on their office insurance policies, especially for health needs. Those policies may not cover such specific cases, and it is always better to take a customised health insurance package that covers hospitalisation and medical needs for you and family," a senior official with a larger health insurance company said.

Non-life insurers reported a growth of 13% to 1.63 trln rupees in annualised premium equivalent for Apr-Feb, according to data by KPMG India. Of this, health and personal accident insurance rose 16% to 515.64 bln rupees.   


According to a report by KPMG India, there has been increase in awareness of health insurance products given current pandemic scenario, and while the nationwide lockdown continues, the demand for health products on digital mediums has risen. 

Bathwal added that the company has witnessed a steady rise in such policies in Jan-Mar, and that it sees a trend among customers buying health insurance and awareness about the products irrespective of coronavirus.

Several insurance companies have been involved with designing new products for coronavirus, while some acknowledge that the current policies cover such hospitalisation cost. "On COVID-19 cases, there have been some specific products in the market which has got introduced and for which we have seen interest," said Sanjay Datta, chief of underwriting and claims, at ICICI Lombard General Insurance Co Ltd.   

Kotak Institutional Equities in a note pointed out that whenever such a pandemic breaks out, there is trend of higher demand for health insurance policies. 

The brokerage firm noted that during the breakout of Severe Acute Respiratory Syndrome in China and Singapore in 2002, the China Life Insurance Co, witnessed a compounded annual growth rate of nearly 40% in short-term health insurance plans and nearly 34% in long-term health and term policies. This was much higher than the compounded annual growth rate of 3% and 10%, respectively, between 2004 and 2011.

Similarly, Saudi Arabia saw premium collection of its life insurance companies rise 7% and 15% in 2014 and 2015, respectively, due to the outbreak of Middle East Respiratory Syndrome Coronavirus that reportedly claimed 38 lives. Bupa Arabia for Co-operative Insurance Co, one of the largest health insurers in Saudi Arabia, reported 44% and 81% on year growth in premium collection in 2013 and 2014, respectively.

However, the continued volatility and current economic slowdown, along with the sudden rise in demand for health insurance, is expected to lead to a decline in demand for unit-linked insurance plans and savings product.

"Even as we expect tepid capital markets to bring down ULIP volumes in FY2021E, the Covid-19 pandemic will likely boost growth in term and health insurance in a relatively under-insured market," Kotak Institutional Equities said.

This has led to fear that insurance companies may report a decline in numbers for such products, which could lead to mismatch of product mix.


Some insurance companies have been quick to offer products specifically tailored to COVID-19 requirements, while others have communicated to customers that their existing policies cover this disease.

With the humanitarian aspect of the pandemic in focus, insurance companies have a thin line to walk on offering products and being seen as profiteering from a crisis.

Anjali Malhotra, chief customer, marketing, digital and information technology officer at Aviva India Health Insurance Ltd, points out that low insurance or lack of it, leads people to end up having to mortgage assets in a crisis, such as coronavirus hospitalisation.

"At unsettling times like the coronavirus outbreak, most people continue to bear their medical expenses out of their pocket and at times even end up mortgaging their assets due to a shortage of funds," Malhotra said.

This is why industry bodies and even the regulator has stepped in to assure customers and also to instruct insurance companies to clear coronavirus claims of customers.

The Insurance Regulatory and Development Authority of India had asked insurance companies to design products which cover the cost of treatment for coronavirus, while Life Insurance Council told them to not reject death claims.  End

Edited by Arshad Hussain

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