Following the Covid outbreak in 2020, the demand for health insurance picked up significantly. Even as there has been some tapering off following a decline in Covid cases now, Anup Rau, MD & CEO, Future Generali India Insurance, told Sandeep Singh that as far as demand for insurance products is concerned, the change is permanent. He added while premiums should have gone down with an increase in penetration of health insurance, it hasn’t happened. Edited excerpts:
How do you see the demand for health products to sustain?
Covid has created awareness, a distribution ecosystem and convenience for customers to buy. Though the fear has gone, I think the demand will still be there. I think this change is permanent as far as demand for insurance products is concerned. But, yes, there has been some tapering off after Covid seems to have subsided.
It seems the hospital charges that were raised during Covid, have not come down. What is your view?
Yes, the cost of most of the other procedures has gone up. While Covid treatment charges were initially very high, they later moderated thanks to awareness and regulatory and government intervention.
However, the cost has gone up across treatment protocols and procedures, maybe hospitals found it difficult to maintain the costs at existing rates because of the pandemic. Unfortunately, for the customer or patient, rate changes usually end up being sticky.
There is also a supply mismatch — there are far few quality hospitals compared to the requirements. This got cruelly exposed during the pandemic, too. For costs to come down, health infrastructure needs to be commensurate with demand.
Isn’t that the case with health insurance premiums too?
The entire ecosystem has resulted in the health premiums going up — products that are being filed or repriced will have to take cognisance of the (new) cost of treatment procedures and the reinsurance rates too.
Usually higher penetration drives costs down. We have a unique situation here: where the health insurance penetration has significantly increased in a relatively short period of time, but hasn’t led to costs to customers going down.
While in Covid times, other ailments took a back-seat, are those patients coming back now?
We have noticed that some of the scheduled surgeries, which doctors had recommended and that got deferred because of Covid, stand cancelled. I think in these cases, aggressive, and maybe expensive interventions recommended by the doctors probably proved to be unnecessary, in hindsight.
Have you seen an uptick in insurance demand from small businesses, following the pandemic?
While several SMEs got shut, I would say that small businesses have become more sensitive to insurance now. Lot of retail outlets, mom and pop businesses and outfits, godowns, small restaurants, professionals such as doctors are taking insurance. In my opinion, there are 3 factors at play here — first, the pandemic has led to greater appreciation of the risks, not just around health or Covid; second, people really don’t have the appetite for risk now, they have experienced enough Covid introduced disruption, stress and unpredictability in their lives; and third, IRDA has also come with low sum insurance standardised product, which is proving to be popular.
While IRDA had launched mandatory Covid products,
we understand that many insurers were not selling it actively. What is your take
on that?
We filed those products and sold them. We can’t speak for others. There is enough data out there, anecdotal and otherwise, which one can refer to show that the industry largely participated in good faith. I think IRDAI’s intent was commendable, they wanted the population at large to be covered for a disease-specific product at an affordable rate. I do think that doing business is a privilege and one should participate in driving larger societal
imperatives.
