Manas Deshpande, 47, a financial services professional who recovered from COVID-19 in the second week of April 2021, had to renew his health insurance policy a few days later.
Since he had already claimed for a few days of hospitalisation, he was aware that contacting the virus could become a bottleneck during the renewal process.
“As expected, my renewal premium was at least 20 percent higher because of my COVID-19 hospitalisation claim. But other family members like my sister or my elder brother who had made non- COVID-19 claims, saw a significantly lower hike in premium,” says Deshpande.
Amidst the second wave of COVID-19, patients who have turned the corner, are waging new battles in the insurance sector. On one hand, there is a rise in claim payment delays, while on the other, new policy sales are being restricted.
Add to it a new concern - health insurance renewals are getting tougher for patients who have recovered from COVID-19.
Insurance companies have declined to comment on such case studies, saying that they are not legally permitted to discuss policyholder matters.
However, company insiders say that the tougher restrictions since April are on account of rising claims costs, leading to a spike in loss ratios.
"Loss ratios have exceeded 110 percent. Hence, some steps are being taken to keep claims under control. The idea is that insurance is based on probability and not certainty. Recovered patients still have a higher chance of contacting infections and be prone to lung ailments, so pricing is as per one-year data," says the underwriting head at a private general insurer.
Loss ratio exceeding 110 percent means that for every Rs 100 collected as premium, Rs 110 is being paid out as claims.
As of April 28, there were 1.1 million COVID-19 health claims worth Rs 15,568 crore filed with insurers. Of these, 930,729 claims worth Rs 8,918.57 crore have been settled.
Under insurance rules, health insurance policies have lifelong renewability. This means that once a health insurance policy has been brought, and premium paid every year, no company can refuse to renew the policy, no matter what the claim situation is. The only tweaks that are permitted are changes in premiums or policy features.
For Audrey Lobo, an artist based in Goa, the premium hike was close to 25 percent. Lobo recovered from the virus in the last week of March 2021.
She thought that it would be a good idea to port her health insurance policy to a different company so that the restrictions come down.
"I contacted five different insurers and was told that since I have just recovered from COVID-19, the premium difference would continue to be steep. So, I had to continue with the same insurer," says Lobo.
When it comes to issuing new health policies, insurance firms follow their own underwriting policies, and can deny cover based on their risk-taking abilities.
"If we end up taking all recovered policyholders at the same costs, loss ratios will zoom. This will eventually lead to even non-COVID-19 policyholders being imposed a heavy price rise," explains the claims head at a state-run insurer.
So, an insurance company, which has faced maximum claims in the 40-50-year-old age group, may either go slow on issuing new policies or seek a detailed medical check-up (including CT scan) before issuing a policy.
CR Radhakrishnan, a 68-year-old retired teacher from Chennai, was advised to do seven different tests, including a detailed chest and lung inspection, before his policy could be renewed.
"The insurer only reimbursed 50 percent of the costs. My policy was finally renewed after the entire report was submitted. I felt that this was unnecessary because it has been more than a month that I had recovered," he points out.
At the time of renewal too, such medical check-ups could be made mandatory. A change in pricing also depends on a policyholder's health report.
"Insurers are now putting risk scores on recovered patients, depending on their medical reports, how severe their COVID-19 condition was and how their post COVID-19 symptoms are. While they cannot deny renewal, the terms imposed are harsh," said Mayank Dasari, founder of Dasari Insurance Consulting.
Moneycontrol had reported earlier that Finance Minister Nirmala Sitharaman has directed the Insurance Regulatory and Development Authority of India (IRDAI) to direct companies to prioritise COVID-19 claims.
At present, however, no such direction has been given on the issue of policy renewals for those who have recovered from the virus.