Post COVID-19 troubles: Recovered people find higher exclusions, rise in insurance denials

Insurance companies are facing a flood of claims. So far, 9,80,000 COVID-19 health claims worth Rs 14,000 crore have been filed with general insurers in India of which 54% have been settled, data from the General Insurance Council shows.

The number of claims is rising in step with the steep rise in infections in recent weeks while sale of term policies and health policies have increased 25% after the outbreak of the disease.

Insurance companies follow their own underwriting policies, and are allowed to deny cover based on their risk-taking abilities.

This could be the reason why many like Gupta are facing issues. Minakshi Goswami, a 34-year-old sales executive from Delhi who recovered from COVID-19 in March 2021 wanted to buy a health insurance policy since she felt that the Rs 5 lakh group medical insurance policy offered by her company was inadequate.

She tried three general insurance companies, both in the private and public sector. They either offered a cover at a very high premium (35 percent higher than market rate) or excluded lung infection from the coverage.

“The perception is that since I was COVID-19 positive, my lungs have been weakened. But after recovering I did a proper scan and the infection was clear. So why can’t I be issued a policy?” said Goswami.

She has now bought a policy from a standalone health insurer. However, there is a waiting period of one year for lung-related infections.

What are the issues?

Some individuals who have recovered from COVID-19 could have prolonged symptoms. This is referred to as ‘long-COVID’ and ‘post-COVID’. The common symptoms include muscle weakness, extreme fatigue, lung infection and mental health issues.

A study by the United States Centers for Disease Control and Prevention found that severely ill patients had a higher risk of pulmonary diffusion abnormality, fatigue or muscle weakness, and anxiety or depression. This is assessed six months after discharge.

Insurers have been relying on international studies to take policy calls because of inadequate data on long-COVID in India,

"We are in the insurance business which works on the basis of probability. If someone has just contracted COVID-19, what we know is that they are at a much higher risk of contacting some ailments including pneumonia or lung infection. Hence, the waiting period are longer," said the head of underwriting at a private general insurer.

He said if all customers were offered similar terms, then the loss ratios, or the difference between claims paid and the premium collected, in the health portfolio would exceed 100 percent.

If the loss ratio is 110 percent, it means that for every Rs 100 collected as premium, Rs 110 is paid out as claims.

When it comes to life insurance, a COVID-19 questionnaire has been followed for issuing term insurance policies. This questionnaire would involve detailed video interviews with customers done by medical practitioners to understand their health conditions.

Here, those who have contracted COVID-19 would have aggressive underwriting norms including details of their illness, infections and medicines prescribed.

Jason Monteiro, a 37-year-old advertising executive from Chennai had recovered from COVID-19 in January 2021. But he still finds it impossible to buy a term plan.

"I was in home quarantine with mild symptoms. When I tried buying an insurance cover, I was denied the cover by five companies citing the same reason of COVID-19. Looks like I will wait till mid-September before a policy can be issued," he said.

Monteiro is also of the view that he was truthful and disclosed that contracted the illness and that many others wouldn't give out these details.

However, insurers caution against lying on their policy proposal forms.

The chief actuary of a private life insurer said that COVID-19 customers could be subject to higher premiums and hence any misinformation could lead to claim rejections.

"It is not tough to find out if a person had COVID-19 since we could be allowed access to records. Someone who has not disclosed their COVID-19 condition would definitely face penalties including claims being repudiated," he added.

Is there a solution?

From May 1, everyone above the age of 18 years will be allowed to get COVID-19 vaccination. This, according to insurers, could help bring normalcy in the market.

"Since we don't know what are the exact health risks of COVID-19 recovered persons, those taking the full vaccination for the virus would find it easier to buy a product. However, premiums would stay elevated for now," said the head of sales at a bank-led life insurer.

The same would apply for general insurance policies too. Though it is not formal yet, insurers are working out a framework to seek vaccination certificates, especially from those COVID-19 recovered persons who have comorbidities.

This is true, especially since there have been multiple reports of recovered individuals testing positive for COVID-19 after a few months.

"There could be specific exclusions for multiple claims under COVID-19 or co-pay could also be introduced. The industry is working on a formal structure," said the CEO of a large health insurer.

On April 20, India reported 2,94,041 fresh COVID-19 cases and an all-time high death toll of 2,023 in a single day. So far, 130.1 million vaccine doses have been administered in the country.