Response to Covid-19 in India

What Covid 19 products are in the market? What’s IRDAI’s guidance? What are some of the open questions?

InsurTechs launch Religare’s Group product

[1] [2]

Other InsurTechs respond too!

[3] [4]

Dedicated Covid-19 products launched by insurance co’s

[5] [6] [7]

IRDAI’s guidance

[8] [9] [10]

A review of IRDAI’s guidance

Action thus far

• Swift announcements (viz other regulators)
  • IRDAI’s 1^st guidance came out on 4^th March viz FCA (UK) on 19^th March

• Clarity on Covid-19 need-based insurance products (via IRDAI Sandbox)
  • Especially important given the protection gap in India.
  • Individuals & corporates might want a standalone product to avoid losing no-claims bonuses on existing schemes.

• Clarity on action life & health insurance co’s need to take.
  • Guidance on 23^rd March regarding claims handling

What might be needed next?

• Guidance for customers
  • E.g. FCA has issued guidance to insurance customers on 19^th March as to reasonable expectations from insurance co’s [b]
  • The IRDAI might also wish to consider this approach.

• Guidance beyond Life & Health insurance
  • e.g. commercial, motor etc – the FCA has provided such guidance on 19^th March [a]
  • Certain clauses of contracts against business interruption, property and employer’s liability might need review

The above suggestions in no way undermine the effort put in by the IRDAI or the FCA. There is a lack of clarity surrounding several clauses in commercial insurance contracts. The existence of numerous online debates suggests, to me, that the IRDAI must provide some guidance for commercial & non-life/health business.

Some points to remember

• The “Arogya Sanjeevani  Policy”(standardized health insurance) product is scheduled to be offered from 1^st April 2020 on-wards. [11]
  • Will this product contain an exclusion clause for Covid-19? Or, will insurers refuse to underwrite the same?
  • Would insurers be mandated to offer this product by the IRDAI?
• Low income segment customers with existing insurance products that cover hospitalization (might) be covered against Covid-19. (e.g. Toffee’s Kamai Bachao Yojna) *
• Existing health insurance (might) reimburse hospitalization expenses due to Covid-19 and life insurance (should) honour death claims due to Covid-19. *

*Please check with your agent/broker/insurer regarding the specifics of your policy documents; e.g. Bajaj Allianz Life has clarified that death claims will be honored and SBI General has clarified its health product covers Covid-19. [a]

Open questions regarding Covid-19

1. Will commercial motor Loss Ratio’s see abnormal trends? [12]
   • Much lower for MaaS companies (e.g. Ola, Uber etc due to trip volumes declining by > 50% and reduced claims severity due to ride-sharing being halted temporarily)
   • Much higher for e-commerce/food delivery companies (e.g. Amazon, Flipkart, Zomato etc due to e-commerce being classified as essential services in lockdown [13])
2. What are the WFH implications on commercial cyber policies?
3. What are the WFH implications on employer’s liability policies?
4. How severe will the impact be on insurance co’s financial performance
   • Higher than anticipated claims frequency in Life & Health; not reserved for.
   • Reinsurance contracts may not trigger; pandemic exclusions
   • Material drop in equity & bond prices

Support for the vulnerable

• Omidyar Network has pledged $1M towards technology solutions to help daily wage workers in India [14]
  • A focus area is “improved economic resilience of NHB workers and small businesses whose livelihoods are impacted due to Covid-19”

• The Govt of India has announced ₹50,00,000 coverage for all medical workers in India responding to the Covid-19 situation. [15]   

(This news was announced at 13:00 on 26/03)

Disclaimer

Views expressed in this article are my own and do not represent those of Accenture, its management, its employees or its affiliates.

This article does not constitute investment or any other form advice. The author bears no responsibility in the event of financial or other loss arising from actions taken by the reader or any related party on the basis of information represented in this article. The author does not have any financial interest in any firm mentioned in the article above; this article is produced for educational purposes.

For any further queries or complaints, kindly email me at rahul.j.mathur@gmail.com or r.d.mathur@accenture.com

The AIP Team discussed this topic in their News Roundup. Find the episode here.

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