July 28, 2021

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Insurers could face billions of dollars in fresh Covid-19 claims

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India’s health insurance sector could face billions of dollars in fresh Covid-19 claims over the coming months as the second wave of the virus takes caseloads to new daily records, particularly in Maharashtra.

As per data compiled by the General Insurance Council (GIC) and seen by ET, the insurance industry has registered 10.07 lakh (1 million) coronavirus claims worth ₹14,738 crore (~$2 billion) until April 7, 2021. Of these, insurers have settled 8.6 lakh claims worth ₹7,907 crore, GIC data showed.

Maharashtra recorded 36% of all registered claims followed by Gujarat (13%), Karnataka (7.5%), Tamil Nadu (7.4%) and Delhi (5.7%), data showed.

According to industry experts, the data is yet to reflect the sharp spike in cases since the onset of the second wave as new hospitalisations lag registered claims by two to three weeks.

“Initially, in the second wave, the number of Covid claims did not match the number of cases. But now, the pace at which it is growing is fast catching up with the trends we had seen in the first wave,” said Bhabatosh Mishra, director claims, underwriting and product at Max Bupa GI.

“The Covid claims have harmed our loss ratios in the first wave itself and the question is how long can we sustain it as we are now seeing higher incidents in the second wave also,” Mishra said.

In several cases, hospitals are also administering higher dosage of antibiotics, while network partners are refuting cashless claims on preset tariffs resulting in higher claim payouts by insurance companies, Mishra added.

“The number of active covid-19 cases has doubled within the last 30 days,” said the chief executive of a private insurer. “Insurance companies did not expect such a spike and with the virus showing no signs of slowing down, the new wave can lead to much greater payouts for insurers as the hospitalisations are greater than last year,” the person added, requesting anonymity.

Even as most cases of infections are being treated in home care facilities where the absolute treatment costs are lower, hospitalisations for severe cases have increased and such expenses borne by insurance companies are significantly higher.

“We are seeing a big impact of this second wave on the insurance sector. Although by now almost 81% of the cases are being treated under home isolation, 15% of the total cases require admission,” said Aathur Thakkar, co-founder at Alliance Insurance Broker.

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