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Go for Corona Rakshak if you already have health insurance

July 23, 2020

Most insurance companies have started offering the regulator-mandated standard indemnity health policy, Corona Kavach, for covid-19, but only a few have launched the standard benefit-based policy, Corona Rakshak. Though both these products target claims for covid-19, it’s not mandatory for insurers to offer Rakshak. Since the Insurance Regulatory and Development Authority of India (Irdai) has not mandated it, but only Kavach, should you buy Rakshak?

What does it offer?

Like Corona Kavach, Corona Rakshak too offers three policy tenures—105, 195 and 285 days or 3.5, 6.5 and 9.5 months, respectively. The minimum entry age is 18 and the upper age limit, according to Irdai, shall not be less than 65, and there’s a 15-day waiting period. You can opt for a sum insured between ₹50,000 and ₹2.5 lakh in multiples of ₹50,000.

The policy will pay 100% of the sum insured if the policyholder is hospitalized for 72 hours on positive diagnosis for covid-19 from a government-authorized diagnostic centre. Once the sum insured is paid, the policy will terminate and there is no renewal option. You also don’t have the option to migrate or port the policy from one insurer to another. The policy is available on an individual basis only and does not have the floater option.

How much does it cost?

Only a few insurers are offering Corona Rakshak. Among insurers who shared their rates with Mint, premiums for Future Generali India Insurance Co. Ltd’s Rakshak policy are on the lower end of the spectrum compared to those for Star Health and Allied Insurance Co. Ltd (see graph). “The rate of infection is only increasing and on testing positive, we’ll have to pay the full sum insured. One can get hospitalized even for mild symptoms and once that happens we’ll have to settle the claim. The fact that we are a stand-alone health insurer means that we’ll have more claims coming our way. We’ve priced the product considering all these aspects," said S. Prakash, managing director, Star Health and Allied Insurance. Note that depending on the pre-existing diseases and co-morbidities, the insurer may choose to increase the premium or choose to not sell the policy to you.

Should you buy?

Understand that it may not be right to compare the Corona Kavach with Corona Rakshak because both the products have different purposes. While the Kavach policy (indemnity) will pay for your hospitalization expenses, Rakshak (defined benefit) is meant for income replacement. Mahavir Chopra, founder,, an independent research platform for insurance buyers, said people who have a policy with a lower sum insured or with any room rent limits could consider the Corona Kavach policy. Sub-limits could result in proportionate deductions and Kavach does not have any sub-limits. “If you have pre-existing diseases and are lucky to get a policy, it could work in your favour as you will be covered after a 15-day waiting period," he said. Corona Rakshak could suit you if you already have a health insurance policy but feel that a positive diagnosis for covid-19 could result in loss of income. “It works for people looking at income replacement due to hospitalization. Also, any deduction that happens on the health insurance claim can be supplemented with this benefit-based policy. In regular health policies, sometimes PPEs (personal protection equipment) and other consumables may not be covered. This is where Rakshak could help," added Mahavir. The premiums of Rakshak are only around 1-2% of the sum insured in the case of most insurers. But it’s important to note that one must get hospitalized for 72 hours to be eligible for a claim.

Naval Goel, CEO and founder, PolicyX, an online insurance aggregator, said if you have a regular indemnity-based policy, you should buy Corona Rakshak to avail benefits of fixed cost or if you’re the sole breadwinner in the household. “Don’t forget that most indemnity-based policies cover coronavirus. If you do not have any health insurance coverage, then you should look at buying the Corona Kavach policy. Corona Rakshak is ideal if your hospitalization may impact the household’s financial situation." Chopra said from a policyholder standpoint, a 72 hours hospitalization period is reasonable. The only thing that one must compare is the premiums because the product is standard across insurers but the cost could vary largely. Also, keep in mind that in case of individuals with underlying conditions, buying these policies may not be easy but if you’re already covered under a health insurance plan, there isn’t too much to worry about because all regular health insurance plans cover covid-19.


Amazon now sells Auto Insurance in India

July 23, 2020

Amazon’s India business said on Thursday it has begun offering auto insurance to cover two and four-wheelers in the country, marking the American giant’s first foray into this financial services category globally. The e-commerce giant said it had inked a deal with Mumbai-headquartered Acko General Insurance to offer customers car and motor-bike insurance. Amazon is also an investor in Acko.

Mahendra Nerurkar, chief executive and director of Amazon Pay in India, said on Wednesday evening at a fintech conference that the company was planning to expand its insurance service to offer coverage on health, flight and cabs. The auto insurance is available to customers through Amazon Pay on the e-commerce giant’s website and app. The company said buying insurance will take less than two minutes and requires no paperwork.

“This coupled with services like hassle-free claims with zero paperwork, one-hour pick-up, 3-day assured claim servicing and 1 year repair warranty – in select cities, as well as an option for instant cash settlements for low value claims, making it beneficial for customers,” it added. Customers who have subscribed to Amazon Prime, the company’s loyalty program that costs about $13 a year in India, will be able to access additional benefits and discounts, Amazon said without identifying those benefits.

India’s insurance market is the latest financial services sector that has attracted the attention of local and international tech giants. Paytm, India’s most valued startup, and its chief executive Vijay Shekhar Sharma, acquired insurance firm Raheja QBE for a sum of $76 million earlier this month. In India, only a fraction of the nation’s 1.3 billion people currently have access to insurance, and some analysts say that digital firms could prove crucial in bringing these services to the masses.

According to rating agency ICRA, insurance products had reached less than 3% of the population as of 2017. An average Indian makes about $2,100 a year, according to the World Bank. Of those Indians who had purchased an insurance product, they were spending less than $50 on it in 2017, ICRA estimated. “Our vision is to make Amazon Pay the most trusted, convenient and rewarding way to pay for our customers. Delighted by this experience, there has been a growing demand for more services. In line with this need, we are excited to launch an auto insurance product that is affordable, convenient, and provides a seamless claims experience,” said Vikas Bansal, director and head of financial services at Amazon Pay in India, in a statement.

Though Amazon Pay is available in several markets, the payments service’s offering in India remains unmatched. The company has used the world’s second largest internet market, where it has invested more than $6.5 billion to date, as a testbed to explore various unique opportunities. The Amazon Pay app in India, for instance, also sells movie and flight tickets.


Pricing a Covid insurance policy is a big challenge for insurers, say experts

July 22, 2020

Reinsurers’ hesitance to underwrite risk, too, posing a key hurdle Pricing insurance products that cover treatment of Covid-19 is turning out to be a major challenge, especially for private players, given the lack of support by reinsurers, according to experts speaking at the Global Fintech Fest.

“Pricing that kind of a catastrophe... you’re looking at a very big game. And is it really the private insurers’ remit to cover every Indian? We are in the commercial business. We need to be able to price risk, we have shareholders, we also need to just do justice to the policyholders,” said Vibha Padalkar, Managing Director & CEO, HDFC Life.

“Today, there is not a single reinsurer that is willing to underwrite risk for us in terms of corona policy. So, why not ask those reinsurers as well that “guys, why aren’t you in this business?” And a lot of them are global reinsurers. For the high probability of policies, we will be retaining every single rupee of that risk on our balance sheet,” she added.

The session on ‘Insurance: Stepping up to the Covid-19 challenge’ was moderated by Radhika Merwin, Associate Editor, BusinessLine. “Protection against death, disease or disability is a highly underbought segment,” said Yashish Dahiya, Co-Founder & Group CEO, PolicyBazaar. “I think the customer also needs to take responsibility. I believe the customer’s responsibility is buying insurance in time, not after a catastrophe has happened. Specifically, in the Covid situation, we have seen a lot of that,” he said. Dahiya further said that only 45 million customers in the country purchase an insurance policy on their own and the amount is not sufficient for Covid-19 treatment.

Tapping digital space
One way to leverage the “opportunity” posed by the pandemic is to digitise the business and manage expenses accordingly. “It is a bit of a conundrum that you are faced with a lot of headwinds. Here, it is the mother of all unknown. At the same time it is an opportunity. You don’t want to tear down your expenses to such an extent that it starts hurting. You do want to invest in technology because that’s a way of reaching your target customers,” Padalkar said.

According to Dahiya, health insurance has also gone hundred per cent telemedical. In life insurance, that number has jumped from about 30 per cent to about 60 per cent, he said. This huge shift to digital can be further accelerated and better service can be provided to consumers using data, according to Dahiya. Digital platforms account for 50 per cent of term insurance and 25 per cent of fresh business in health insurance, according to the PolicyBazaar CEO.


Insurers likely to witness spike in claims from commercial businesses in FY21

July 17, 2020

Insurance companies are likely to witness a spike in claims from the commercial business this fiscal, primarily from fire and related accidents in plants and stocks in godowns. The increase in claims could be primarily because of the lack of maintenance in factories and plants, which have been shut for a long time due to the lockdown in the wake of the Covid-19 pandemic across the country.

Moral hazard
According to industry experts, insurers typically witness a spike in claims from commercial business when there is an economic slowdown. While lack of maintenance could be one of the reasons for the rise in accidents, however, the possibility of a ‘moral hazard’ (where the owner or promoter himself sets the plant or godown on fire to raise claims), cannot be completely ruled out.

“When economy slows down there is a spike in claims. While on one hand the incident could have been caused due to a genuine lack of maintenance or less focus on risk management due to tough economic situation, on the other hand, there is the possibility that there could be certain amount of moral hazard. It is difficult to distinguish the two but we always check,” Sanjay Datta, Chief Underwriting, Claims & Reinsurance, ICICI Lombard General Insurance, told BusinessLine.

Higher premiums
Fire accounts for the largest chunk in the commercial business. As on March 2020, the non-life insurance industry witnessed a 35 per cent growth in premium collections from fire at around ₹15,800 crore on the back of a near 25 per cent hike in fire insurance rates mandated by the General Insurance Corporation of India. According to Rajive Kumaraswami, MD and CEO, Magma HDI General Insurance, while the price hike last year was undertaken in certain identified occupancies, the rates are expected to be at least 25 to 30 per cent higher across the segment this year. This would push up premium collections to close to ₹20,000 crore by FY21. While the overall premium collections from fire are likely to be higher mainly because of the price hike, the risk loss will also be “huge”.

As per estimates, India has witnessed close to 35 to 40 instances of industrial mishaps as factories resumed operations after more than a month of nationwide lockdown. A majority of these incidents happened at chemical and textile units and shopping malls, among others. “While the price hike on fire insurance would bring in some benefits, however, based on early trends, there is a feeling that the risk loss is going to be huge. A lot will depend on how well an insurer is able to assess the underlying risk,” said Kumaraswami.

Lack of skilled manpower
Apart from the fact that there is expected to be some ‘deterioration’ due to lack of maintenance at plants due to the lockdown and cash flow issues, the availability of skilled manpower to run and supervise these plants could also pose elevated risks. “There is an absolute shortage of skilled labourers, and that is going to heighten risk and those risks will cause some accidents. Some of the recent mishaps that have happened could well be because there was no adequate availability of skilled labourers and they must have tried to restart the plant without following the standard operating procedure. This is a clear danger,” said P Nandgopal, Founder and Chief Mentor, Insurance Inbox.

Nandgopal also feels there is also a risk of moral hazard. “Having worked in the insurance industry for so many years, I have seen that if people are pushed to the wall they try to take advantage,” he said.

Impact on business
The rise in claims is likely to hit insurance companies hard, particularly at a time like this when the overall growth in business has been slow. As per IRDAI data, the gross direct premium underwritten by general insurance companies up to June 2020 decreased by nearly four per cent to ₹39,330 crore (₹41,072 crore). “Current run rate of business of insurance companies has taken a hit. If your run rate is higher and you are continuously earning money in new business, then your ability to finance your old claims is better, but your run rate has come down and your expenses continue to remain the same, and then suddenly you have the issue of heightened claims then it could pose some problems,” said Nandgopal. Insurance companies have to explore the possibility of digitising their operations, reducing their administrative costs so as to be able to tide over the crisis, he added.


‘Corona Kavach’, ‘Corona Rakshak’ insurance policies on offer from today: Premium, tenure, benefits

July 10, 2020

All general and standalone health insurers will offer standard health policy for coronavirus disease (Covid-19), the Corona Kavach Policy, from Friday.

The Insurance Regulatory Development Authority of India (IRDAI) has made it mandatory for general and health insurers to provide the reimbursement-based standard Covid-19 product and the benefit-based product as optional. Insurance companies will offer ‘Corona Kavach’ and ‘Corona Rakshak’ from Friday. The regulator has said that despite being a coronavirus-specific policy, the standard indemnity-based Covid-19 policy, ‘Corona Kavach’, will cover the cost of treatment of any co-morbid conditions, including pre-existing conditions, along with the treatment for the coronavirus infection or disease. Its tenure will range from 3.5 months to 9.5 months. Under an indemnity plan, a policyholder is reimbursed the hospitalisation expenses actually incurred by the policyholder to the extent of the sum insured.

All life, general and health insurance companies have been encouraged to offer standard benefit-based policy, ‘Corona Rakshak’, which hands out a pre-agreed lump-sum upon diagnosis. IRDAI has said that the premium under both the products shall be the pan-India basis and no geographic location or zone-based pricing will be allowed. The minimum sum insured for the Corona Kavach Policy will be Rs 50,000 and the maximum sum insured would be Rs 5 lakh, according to the IRDAI guidelines. There is also a 5% discount for healthcare workers. However, for Corona Rakshak Policy, the minimum sum insured would be Rs 50,000 and the maximum limit is set at Rs 2.5 lakh.

Corona Kavach policy will be an indemnity-based policy but optional cover shall be made available on a benefit basis. The base cover will offer hospitalisation expenses like room and boarding charges along with PPE kits, gloves, masks and such other similar expenses and even AYUSH treatment. Corona Kavach will also cover home care treatment expenses of up to 14 days, if it involves an active line of treatment and is done on a medical practitioner’s advice, among other conditions. The cost of pulse oximeter, oxygen cylinder and nebulisers will also be covered under this policy.

Corona Rakshak, the single-premium plan, will pay out 100% of the sum insured as lump-sum if the policyholder is hospitalised, at least for 72 hours, after testing positive for Covid-19. The sums insured under the product will range from Rs 50,000 to Rs 2.5 lakh. The policy will cease to exist once the claim is paid out. There is no option to pay premiums in instalments for both these products. Both policies will come with 15 days waiting period, during which no claim will be accepted. Policyholders can avail of the services on a cashless basis, which shall be arranged by the insurer through network providers.

The minimum entry age for both the policies will be 18 years and the maximum 65. Dependent children shall be covered from the age of three months to 25 years. However, only the indemnity policy comes with the family floater option. The policy tenure could be 3.5 months, 6.5 months or 9.5 months, including the waiting period, and health insurance rules such as lifelong renewability, migration, and portability shall not be applicable to these products.


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