IRDAI revises  COVID-19 product draft, prescribes a fixed benefit cover

The product will be available from June 30 if the proposal is finalised in its current form

June 12, 2020 / 10:10 AM IST

You will be able to buy a standard COVID-19 health insurance policy from June 30 if the Insurance Regulatory and Development Authority of India’s (IRDAI) revised proposal is finalised in its current form.

Fresh product draft

Moneycontrol has a copy of the draft issued by the IRDAI to insurers. It will now be a benefit-based product, not an indemnity-based one as proposed earlier. A lump-sum amount – 100 per cent of the sum insured – will be paid to the policyholders if they are hospitalised after testing positive for the novel Corona Virus Disease (COVID-19). “The diagnosis has to be confirmed by authorised centres as declared by the Ministry of Health and Family Welfare, Government of India,” the draft guidelines state.

In addition, policyholders can also buy an optional add-on, which will hand out 50 per cent of the base sum-insured in case they are quarantined on the advice of medical practitioners, central or state government authorities. However, home quarantine or self-isolation will not be covered by the plan. “The total amount payable in respect of the base cover and add-on cover shall not exceed 100 per cent of the sum insured during a policy period,” the proposed norms add.

The product, which is to be compulsorily offered by general and standalone health insurers, will be available from June 30, 2020, if the proposal is finalised in its current form. It will come with a waiting period of 15 days – claims made within 15 days from policy purchase will not be honoured.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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Premiums to be decided by insurers

The base cover will range from Rs 50,000-Rs 5 lakh. Individuals between 18 and 65 years of age can buy this product. In case you choose a family floater plan, you can cover your spouse, dependent children, parents and parents-in-law. While the product structure will be standard across insurers, the premiums will be determined by the insurers.

The IRDAI revised some of the features in the original draft, after insurers expressed several reservations. "In our feedback to the first draft, we had suggested offering a fixed benefit product since we already have the standard Arogya Sanjeevani policy in place, which is an indemnity plan. Two products with the same underlying principle would have given rise to confusion," said a top official at a private general insurer, speaking on the condition of anonymity. In an indemnity plan, the insurer pays for actual hospitalisation expenses to the extent of the policy sum insured either through cashless or reimbursement modes.

However, even the revised draft is likely to see further changes if the IRDAI takes note of insurers' feedback. "The current upper limit of the sum insured, Rs 5 lakh, is too high for a benefit cover. We have also pointed out that a waiting period of merely 15 days is too short. There is a risk of anti-selection in such cases and the chances of frauds will be high," a senior executive at a private general insurance company said. No provision being made for zone-based pricing is another sticky issue. “The hospital rates in Mumbai, for example, will be far higher than charges in a tier-2 or tier-3 city. Therefore, ideally, insurers should be allowed to charge zone-wise premiums,” said a top official with another general insurer.
Preeti Kulkarni
first published: Jun 12, 2020 10:10 am

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