QUOTE OF THE WEEK

“When a person really desires

something, all the universe conspires to help that person to

realize his dream.“

Paulo Coelho

INSIDE THE ISSUE

Insurance Industry 2 Insurance Regulation 6 Life Insurance 8 General Insurance 13 Health Insurance 24 Motor Insurance 52 Crop Insurance 57 Survey 59 Pension 61 IRDAI Circular 67 Global News 68

INSUNEWS Weekly e-Newsletter

4th – 10th July 2020

Issue No. 2020/27

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INSURANCE TERM FOR THE WEEK

Funds for Future Appropriation

Definition: These are funds from the policyholder's accounts that are not allocated among them for reasons like delays in approvals etc.

Description: Generally, the act of keeping some part of earnings aside as funds is called appropriation. The undistributed profits are similarly kept aside for specific purposes.

The undistributed profits from the account of policyholders which have not been allocated to them form the funds for future appropriation. These funds are incorporated while ascertaining solvency margins.

INSURANCE INDUSTRY

Local insurance firms, pension funds may power Fund-of-funds - The Economic Times – 8th July 2020

If all goes as planned, state-run insurers and pension funds may get the nod to invest in government-backed startup-focused fund-of-funds.

Currently, talks are on between various government agencies, such as the Department for Promotion of Industry and Internal Trade (DPIIT), and industry regulators including the Insurance Regulatory and Development Authority of India (IRDAI) and Securities and Exchange Board of India (Sebi) to make this a reality.

The move comes at a time when there is a pressing need to create large pools of domestic capital, given recent changes to India’s foreign

direct investment norms, which are anticipated to severely restrict Chinese-origin funding into the country’s startup ecosystem.

“There is a critical need to replace that anticipated shortfall in capital. The government needs to get Indian investors to start investing…There is now a clarion call to start relying more on India’s domestic financial institutions, or domestic pools of capital, and ensure they participate in a significant manner. Otherwise, actions don’t follow the words,” a person with knowledge of the development said.

According to multiple sources, a meeting was held between the stakeholders about two weeks ago to discuss the creation of alternative investment strategies, such as setting up AIF-registered sister funds that will allow insurance companies to invest in multiple fund-of-funds that are being set up and backed by the government.

“Statistically, it has been proven that there’s not that much risk, but soon after the Covid-19 pandemic broke out, the discussions went on a back-burner…We have restarted talks with the IRDAI, and have

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asked them to figure out risk mitigation measures, and other possibilities,” a government official told ET on condition of anonymity as the talks are still at an early stage.

"We can ask insurance firms to invest 1% of the overall premiums they receive from the public in a year, or 1% of the investment the public makes in provident funds over a 12-month period, and this can then, maybe, be invested in AIFs that back startups," he added. IRDAI and DPIIT did not respond to emails seeking comment till the time of going to press.

India’s insurance companies, particularly Life Insurance Corporation and General Insurance Corporation, have for long been seen as massively untapped resources for the country’s risk capital players. The life insurance industry recorded premium income of Rs 5.08 lakh crore in financial year 2019 against Rs 4.58 lakh crore in financial year 2018, of which LIC's premium income alone was Rs 3.37 lakh crore in FY19 and Rs 3.18 lakh crore in FY18.

Total investment for the insurance sector stood at Rs 38.47 lakh crore in FY19 against Rs 34.57 lakh crore in FY18, according to the latest IRDAI annual report. Insurance companies’ investment norms are regulated by IRDAI through the Insurance Act of 1938. The bulk of investable assets of insurers are parked in government and state securities, approved categories of equity investments and in housing or infrastructure-based investments.

The law allows a small portion of the investment in ‘other’ categories, including Sebi-approved AIFs. However, the current norms also clearly state that insurers are not allowed to invest in any fund-of-funds, foreign incorporated entities or have direct exposure in any unlisted company. As per two insurance industry sources, the sector regulator recently received representations from both general and life insurance companies to ease these norms so that they could invest in startups relevant to the broader insurance ecosystem.

“The regulations are guided by some element of conservatism as between shareholders’ dividends and policyholders’ money, the regulator’s priority is to protect the latter,” the CEO of a private sector insurer said. “However, there have been ongoing discussions between IRDAI and insurers on the feasibility of allowing investments in some of these companies in dire need of capital due to the ongoing Covid-19 crisis.” The government has announced multiple fund-of-funds that will focus on specific sectors, ranging from infrastructure to small and medium businesses and startups.

In May, ET reported that the Ministry of Information Technology (MeitY) was fast-tracking its ambitious Rs 5,000 crore fund-of-funds targeted at deploying much-needed domestic capital into India’s software products ecosystem, as the government looks to reopen the economy in a phased manner after a two-month lockdown.

“There are global pension funds and insurance companies that are investing in local AIFs and startups, and yet the Indian players continue to miss out. If foreign pension funds and insurance companies are comfortable investing in India, why aren’t Indian insu rance companies doing the same?” another source told ET.

(The writers are Biswarup Gooptu & Alnoor Peermohamed.)

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Importance of insurance sector makes case for independent supervisor – Live Mint – 4th July 2020

Insurance is a federal subject as it is listed in the Indian Constitution under the 'Union List'. This means that insurance can be legislated only by the central government. In 1993, with the beginning of liberalisation of the Indian economy, the then government set up a committee under the chairmanship of RN Malhotra, former governor of RBI, to propose recommendations for reforms in the insurance sector. The committee recommended that the private sector be permitted to enter the insurance industry and

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that foreign companies be permitted to participate, preferably through joint venture with Indian partners. Following the recommendations of the committee in 1999, the Insurance Regulatory and

Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry.

The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market.

Indian insurance sector The total number of insurance companies in India are just 58, of which 24 are life insurers and the rest non-life insurers. The other stakeholders in the Indian insurance market include agents (individual and corporate), brokers, surveyors and third-party administrators servicing health insurance claims. FDI up to 49% is allowed in insurance companies while 100% FDI is allowed in insurance intermediaries.

The measure of insurance penetration and density reflects the level of development of the sector. While insurance penetration is measured as the percentage of the insurance premium to GDP, insurance density is calculated as the ratio of premium (in US $) to the total population (per capita premium).

Insurance penetration in India is only 3.7%, compared to a global average of 6%. The life insurance penetration level is only around 2.75% in India, whereas the non-life insurance penetration is less than 1%. Compared to advanced economies, India lags in terms of density. The global average of density is $682 compared to $74 in India; the highest density in the world is in Hong Kong with $8,863.

Indian demographic aspects of the rising middle class, increasing awareness of the need for protection and a young insurable population will drive insurance sector growth over the next many years.

With the formal opening of this sector only 20 years ago, most of the learnings and business assumptions are from the public sector enterprise. While they have served consumers for long before the sector opened up, it would be fair to mention that they served the consumers when it was “licence raj" and pricing & product choice was determined by the government. The concept of inclusion started only when the sector started having competition and more product choices developed. Also this sector historically built the sector as combination of ‘Protection’ product and ‘investment’ product. This issue of treating and even selling insurance products as “investment product" is not a correct one and the industry needs to understand that the concept of insurance is “to protect". Some of these have led to challenges of mistrust between consumers and the industry.

Functions and duties of IRDA: The critical regulatory & supervisory functions of IRDA, amongst many objectives it is tasked under the IRDA Act of 1999, are: -protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance -calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business -regulating investment of funds by insurance companies -regulating maintenance of solvency margins

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Philosophy of supervision The regulatory role is to develop any legislation to address the objectives of rule-making for the sector, including promoting innovation in the industry to address consumer needs. Whereas, the supervisory role is to ensure compliance with rules & regulations and to taking punitive action against any breaches.

A well-run supervision should contribute to the wider financial stability. As more issues keep cropping up about the irregularities in the sector or consumer-trust issues, the need for stronger vigilance and supervision is needed.

Due to the complexity of insurance entities and the nature of long-term monies that they handle, it is important to maintain a tight watch over anything that could bring in a systemic impact to the insurance market. Risk-based supervision might help in this need for early warning system of flagging off potential issues. For an efficient and unbiased Insurance supervision, the supervisory body should be empowered with adequate powers; including the ability to revoke licences and / or merge a weak entity with a stronger one, the ability to change key management of an entity.

An insurance supervisory body should have executive independence and should be seen by the stakeholders as a truly independent and fair entity. Without this, the confidence in the sector consumers seeking redressal and the industry entities wanting to share their learnings would drastically reduce. Also for a good supervisory body, the ability to take punitive action is critical. In short, the stakeholders should see the supervisory body as having authority and the willingness to take bold decisions; which in turn, builds their credibility and reputation.

Supervisory independence: As a best practice, in case of unified regulatory & supervisory bodies, the teams that handle supervision (which is almost an audit function) are not involved in rule-making function. A strong sense of collaboration between the supervisory and regulatory functions is prime.

Supervisory independence is the core idea for any independent financial supervisor. And to achieve its role, it needs to safeguard the integrity of the supervisory function. An insurance supervisor should be independent in deciding enforcement actions based on rules-based interventions, and for this, statutory protection of supervisors should be established. Supervisory independence should have adequate legal protection for the supervisory cadre and also from political and industry persecution, to ensure that they can take action without fear of legal action being taken.

Case for new-age talent & new-look supervision From regulatory body’s institutional vintage perspective, IRDA is quite young and has done tremendous work in the short time. It’s also short-staffed to handle the size of potential consumer grievances, given the wide geographic reach, volume of insurance holders and the complexity of this specialised sector.

It is but natural, in early stages of its presence, for a regulatory & supervisory body, to have a large amount of expertise available from those experts, who built this sector as part of the state owned entities. As the industry expands , it would need more openness, in learning from across the industry players and to building additional capability in supervision. The supervisory body needs to invest in latest digital technologies and to keep pace with the industry players. It needs to have global connectedness with insurance regulators around the world as India allows more foreign players to invest into the insurance sector.

This is a good time to bring the concept of separate supervision vertical or to outsource supervision to outside entity owned by the government, when the insurance sector is set to increase its business volumes and the assets under management of its premiums collected. It would be easier to make the switch now when the industry is at the cusp of growth. With bulk of the insurance companies based out of the commercial capital of the country, it might also be efficient to have the supervisory teams located out of Mumbai. A good supervision is not just routine inspection but also advance indications, which being based in commercial capital could help with market inputs and chatter.

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The Human Resource initiatives and capacity building generally takes a long time to be efficient, if it is organic way of nurturing those skill sets. IRDA should invest in enhancing its bench strength. Being a regulator and supervisor of a critical sector that is essential part of the Indian financial stability, it is critical to have sufficient number of experts from various functions in its talent pool. It cannot afford to have lesser than requisite talent. Institutionally it might be the right time to allow for lateral hires to bring in requisite skill-set that are unique and contemporary. It has been observed that cross-pollination of talent between regulatory bodies & industry entities, has added value across the sector, as long as nepotism is not allowed.

A recent example of separate regulation and supervision done by separate entities is that of RBI regulating housing finance sector while the National Housing Bank (NHB) supervising the industry. IRDA might want to explore such an idea as an alternate to the option of having policy development vertical separate from supervisory inspection vertical.

To having an independent approach to supervision and regulation, to addressing growing complexities, size and inter-connectedness of larger financial system, and dealing more effectively with potential systemic risks that could arise due to possible supervisory arbitrage and information asymmetry, it might be prudent to have a separate insurance supervisory organisation.

(The writer is Srinath Sridharan.) TOP

INSURANCE REGULATION

IRDA constitutes working group to explore a Pandemic Risk Pool - The Economic Times – 8th July 2020

Insurance Regulatory and Development Authority (IRDA) on Tuesday announced that it has constituted a working group to study the possibility of creating a ‘pandemic risk pool’ to come up with a long term solution to deal with economic fallouts of a future such pandemic.

“There is a need to examine long-term solutions to address the various risks which have been triggered by the current pandemic and offer protection in case of a future similar crisis,” IRDA said in a statement.

The nine-member working group is headed by IRDA’s executive director Suresh Mathur and has representatives from regulators, reinsurers and insurance companies.

The insurance regulator said that such a risk pool in the future could offer protection for business interruption without material damage, loss of income and livelihood and other related pandemic related losses currently not insured in India.

These losses could be huge and beyond the capacity of the government, insurance companies or even reinsurers to support on its own. Therefore, said IRDA, “there is a need to explore the possibility of addressing these risks and any other related risks arising out of a Pandemic through the mechanism of a “Pandemic Risk Pool”.”

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The working group has been asked to submit its recommendation in eight weeks and among other terms have also been asked to detail the structure and operation of such a pandemic risk pool.

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Is COVID-19 changing the way you think about financial stability? – CNBC – 7th July 2020

The ongoing COVID-19 pandemic and its economic impact have taken a major toll on businesses, jobs and incomes all across the globe, forcing people to reconsider their financial situation and shift their priorities. This change is also being reflected in the way people are spending, saving and investing their money.

There are many surveys being conducted which show that people are worried about their financial future, focusing more on saving and turning to

instruments that promise financial security at the time of utter crises.

In the last three months, people have become more conservative when it comes to their financial priorities, with discretionary spending falling, and saving, investing rising to the top of the list.

Spending habits of consumers The economic costs of the lockdown have been significant and people have become more careful about their spending. With ‘Unlock 1.0’ underway, and things slowly starting to limp back to normalcy, there is expected to be an uptick in the consumption of goods and services. Impulse purchases will fall, discretionary spending will get low, and people will try to save more to tide over the uncertainties.

The risk of income means that families have learned to cut back on a lot of expenses. Incurring no expense on eating out, entertainment, travel, clothes, furniture and home decor, will be the new norm. Beyond grocery and utility bills, most households are postponing their expenses.

Term and health insurance plans gain traction The COVID-19 pandemic has drastically changed the health and life insurance landscape in India in many ways. People have now started to take health insurance much more seriously and ever before, and are preferring term life insurance plans over all other life insurance products on offer. The new trends that have surfaced in the last couple of months are expected to continue even in the post-COVID world.

Health Insurance The sheer fear of getting infected by the deadly coronavirus has now pushed people to realize the importance of having adequate health insurance. The adoption of health insurance has seen a significant jump in the last 3 months.

Today, people are looking to buy a policy with higher sum insured as before COVID-19, people were happy with a sum insured of Rs 5 lakh- Rs 10 lakh as they were not sure of the treatment cost, but now people are going for a cover of up to Rs 30 lakh – Rs 40 lakh to stay adequately protected.

While some are even opting for Rs 1 crore cover as there are insurers who are offering such products at highly affordable prices.

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Term life insurance Just like health insurance, there is a considerable shift in the demand of term life insurance plans as well, which are pure protection products. The industry has witnessed a surge in the term life insurance market and the insurers believe the trend is here to stay for long.

For most life insurers, pure protection policies have made for 50 percent of their total business in the last 3 months. There are two major reasons why the term plans have picked during this global pandemic. First, the fear that COVID-19 has brought with it, especially for individuals with financial dependents. This has resulted in more demand for term plans. Secondly, the fact that people want to keep away from traditional life insurance plans. Moreover, it’s the sheer uncertainty around income that has pushed people towards guaranteed products.

Invest in products that guarantees capital There are enough statistics to prove that whenever there has been a pandemic and the market has fallen down, the rebound has been massive and much stronger. Even during the ongoing corona crises, the Sensex which was hovering at 26,000 points during the month of March has successfully managed to climb back to almost 35,000 points. Therefore, it may be correct to say that events like these are the right time to invest your money in equity markets either directly or through ULIPs and mutual funds.

Investing your money while prices are down can be a smart move so that you can get good returns when prices rise. One of the best available options to invest in amidst the current market situation is Capital Guarantee Solution plans – a combination of ULIP and Traditional Products.

Under such plans, as per the policy terms, the premium that you pay throughout the policy term is 100 percent guaranteed. Meaning, no matter how worse the market may get, the premiums paid towards the policy remain 100 percent secured.

Take note During times like these, it is important to understand people’s outlook towards personal finances, investment and spending. The market trends clearly point towards both term life and health insurance starting to become a cornerstone of personal financial planning in times of the COVID-19.

The pandemic has definitely accelerated awareness about insurance in India where insurance penetration remains low even today. The fact that people are investing even if the trends are not as pronounced as western markets indicate that on average the Indian population has improved its literacy and knowledge of such instruments and trends. In the past, those who invested in downturns made good returns and the expectation continues to be the same this time around.

(The writer is Vaidyanathan Ramani.)

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LIFE INSURANCE

New business premiums of life insurance firms decline by 10% in June - Business Standard – 10th July 2020

While the new business premiums (NBP) of life insurance companies contracted 10.46 per cent year-on-year (YoY) in June, it is, however, indicative of recovery signs after the government decided to gradually unlock. Life insurers had seen their NBP decline 32.6 per cent and 25.4 per cent in April and May, respectively.

In June, life insurers earned NBP to the tune of Rs 28,868.68 crore, compared to Rs 32,241.33 crore in the same period a year ago. NBP is the premium acquired from new policies for a particular year.

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In the first quarter (Q1) of the current financial year (2020-21, or FY21), life insurers saw their NBP decline 18.46 per cent to Rs 49,335.43 crore versus Rs 60,637.22 crore in Q1 of 2019-20 (FY20), owing to

a strict lockdown enforced by the authorities to contain the spread of the contagion. State-owned insurance behemoth — Life Insurance Corporation (LIC) of India — also saw its NBP contract 12.65 per cent in June to Rs 22,736.84 crore, but in the previous months, the extent of decline was far severe.

LIC saw its NBP fall 31 per cent YoY in March, 32 per cent in April, and 24 per cent in May. In Q1FY21, its NBP figures have seen a decline of 18.45 per cent to Rs 36,530 crore, compared to Rs 44,974.78 crore. It was, however, expecting to post positive growth in June.

The private insurers, on the other hand, have done well. Their NBP contracted just 1.27 per

cent in June to Rs 6,131.84 crore. In Q1FY21, the NBP of private insurers — 23 in total — declined 19.17 per cent to Rs 12,805.41 crore, compared to Rs 15,842.44 crore in Q1FY20.

(The writer is Subrata Panda.)

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How much life insurance do you need? – Live Mint – 9th July 2020

Do not go by any thumb rules to calculate your life insurance cover if you do not want your dependents to suffer in your absence. It is always better to estimate a sum which ensures you do not leave behind any financial obligation for your loved ones.

Here we will discuss two common methods to calculate life insurance cover to ensure the same standard of living for your dependents. You can sit with a pen and paper to do the calculations.

Income replacement method Multiply your annual income by the number of years you would want to provide for the financial needs of your family. You can subtract the amount of savings and investments from this sum if they are not aligned to any specific goals. This method simply aims to replace your income in your absence.

Expense method Here you can make note of your household expenses and your non-negotiable goals. You can then multiply your annual household expenses by the number of years you would want to provide for your loved ones. You can exclude any major expense that is incurred on yourself. You can also inflate your household expenditure to factor in the rise in expenses over the years.

Suppose your annual household expenditure is ₹5 lakh, you may not wish to remove the portion spent on yourself to take care of inflation. And if you want to provide for 10 years, you can simply multiply ₹5 lakh by 10 years that equals ₹50 lakh.

Next, you need to add outstanding loans like car loan, home loan, education loan to this amount. Suppose you have an outstanding car loan worth ₹7 lakh, add it to the earlier arrived figure. It totals to ₹57 lakh.

Add to this the value of your unavoidable goals. Suppose you have to pay for your child’s higher education worth ₹20 lakh, you can add this amount to the earlier figure of ₹57 lakh. The total sum now becomes ₹77 lakh.

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From this amount, you can subtract your existing savings and investments. Suppose you have mutual fund investments worth ₹5 lakh, a second house worth ₹25 lakh and cash of ₹2 lakh.

Your calculation goes like: ₹77 lakh - ₹5 lakh - ₹25 lakh - ₹2 lakh = ₹45 lakh.

So, given the above illustration, you would need a life cover of ₹45 lakh to take care of financial needs of your family for 10 years. This is not a fixed formula but it will help you to get an idea about your life insurance needs. You can also use human life value calculator to estimate your life cover. Most insurance companies have such calculators on their websites. A general piece of advise is to be conservative while doing the calculations. A little higher cover will not hurt.

(The writer is Avneet Kaur.) TOP

All healthcare workers given life insurance cover: HC told – The Hindu – 9th July 2020

Life insurance cover has been provided to all healthcare workers in private and government hospitals, Mumbai’s Commissioner of Health Services informed the Bombay High Court on Wednesday. This cover includes ASHA workers, anganwadi sevikas and other healthcare providers working at Central, State or autonomous hospitals. The information was stated by Dr. Sadhana M. Tayde, director, office of Commissioner of Health Services, Mumbai, in an affidavit filed in response

to a public interest litigation (PIL) by former journalist Ketan Tirodkar.

The PIL had sought that medical fraternity members succumbing to COVID-19 in the line of duty be pronounced martyrs, and awarded a worthy compensation package. It also sought to waive off the post-graduate examination in Medicine and Surgery for M.D. and M.S. degrees. The affidavit filed by Dr. Tayde stated that the issue of exams does not come within the ambit of the Public Health Department. It said the M.D. and M.S. degrees are awarded as per provision in Medical Postgraduate Regulation 2000 of the Medical Council of India, so the Council should be added as a respondent to the plea.

With respect to declaring medical practitioners as martyrs, it said the issue does not come under the purview of the State Government. The affidavit also said, “Pradhan Mantri Garib Kalyan Package Insurance Scheme for Health Workers fighting COVID-19, was launched on March 30 for a period of 90 days by the Central government through the department of Health and Family Welfare.”

This was brought to notice of all those concerned on March 11 by the Principal Secretary of the Public Health Department. Those falling under the ambit of the scheme include healthcare providers working in private and government hospitals. Retired healthcare workers, contractual, daily wage and outsourced workers in all Central, State and autonomous hospitals can also avail the scheme. So can ASHA workers and anganwadi sevikas. Dr. Tayde said the Centre had informed that the scheme would be extended for another 90 days, in a letter dated June 26 marked to all additional chief secretaries, principal secretaries, and secretaries from the health department of every State and Union Territory.

(The writer is Sonam Saigal.)

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J&K plans insurance cover for rural local body members – The Indian Express – 7th July 2020

The Jammu and Kashmir government is considering insurance cover for all members of rural local bodies in view of militant attacks on panches and sarpanches and demands for security cover due to threat perception.

While the extent of the insurance cover is yet to be finalised, official sources said that the Rural Development Department has started collecting Aadhaar and other details of all the rural local body members.

“We had received directions from the Civil Secretariat to provide Aadhaar and other

details of all the elected rural local body members, including chairpersons of the Block Development Councils,” a senior officer said.

“The matter is under consideration,” said Sheetal Nanda, Commissioner-Secretary of the Rural Development Department, adding that details will be worked out during discussions with the insurance company. “We are, at present, collecting Aadhaar card and other family details of the rural local body members,” she said, adding that “a proposal will be submitted to the UT government”.

This comes after the death of Ajay Pandita, the first sarpanch from the Kashmiri Pandit community to be killed by militants, in South Kashmir on June 8. Chairman of Buffliaz Block Development Council, Shafiq Mir, who also happens to be the chairperson of All J&K Panchayat Conference, an organisation of elected rural local body members in the UT, asked the government to ensure protection of the elected members, saying that “we want to live” instead of getting insurance cover.

Anil Sharma, president of the J&K Panchayat Conference, accused the administration of being non-responsive. “Our delegation at a meeting with Home Minister Amit Shah in September last year had demanded insurance cover of Rs 25 lakh for every elected rural local body member so that their families get some financial aid in the event of any untoward incident,” he said, adding that successive state governments had not given ex-gratia relief to the families of the panches and sarpanches killed so far.

Sharma said the demand for security cover remains and is a different issue altogether. He said police protection should be provided to at least those panches and sarpanches who have sought the same.

There are nearly 30,000 panches, sarpanches and BDC chairperson. After the Panchayat elections were held in J&K after a gap of 23 years in 2011, 19 panches and sarpanches have been killed in Kashmir — all from the Muslim community barring Pandita.

(The writer is Arun Sharma.)

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Should you buy term life insurance with staggered payout option in case of death? – The Economic Times – 6th July 2020

Most people are judicious when it comes to deciding the amount of life insurance cover they need and while selecting nominees. However, what if the nominees are not financially savvy? They may be taken for a ride by unscrupulous elements. So how do you ensure your money stays secure?

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Staggered payout options If you feel that your nominee may not be able to handle a huge corpus on his own or may be misled by others, you could consider the staggered payout options offered by most term insurance plans. However, financial planners are sceptical about these. “I don’t recommend staggered payout plans because the return—based on IRR—is very low for these products,” says Sharad C. Mohan, Founder & CEO, and Calibre Investments. If the return generated on the corpus received is very low, it amounts to a loss for the recipients. So, the loss in interest component needs to be factored in while deciding whether to go for staggered payout plans or not.

Since insurance companies get to keep the corpus for a longer period under the staggered payout option, the premiums are low for these plans. But low premiums should not be the deciding factor. Let us consider the example of Max Life Insurance – the simplest option available in the table below. The same premium of Rs 4,811 can buy a cover of Rs 28.12 lakh with immediate payout from the same insurer. If your nominee invests Rs 28.12 lakh and earns a post-tax return of 5.25% per annum (given in table as IRR), she can withdraw a monthly sum of Rs 30,000 for the next 10 years. If the returns earned are higher than 5.25%, she can withdraw a higher amount every month.

Should you settle for low returns? Yes, if you think your nominees will not be able to manage the corpus themselves or with the help of an adviser. “Though staggered payout plans are suboptimal, there is some merit in using it because you can protect your nominees from potential leeches,” says Deepesh Raghaw, Founder, Personal Finance Plan.

Decide the time frame Once you decide to go with a staggered pay-out plan, determine how long you want your nominees to get regular income for. This depends on the individual’s life stage. For example, you may prefer a long duration if the nominee is young. This decision is also important for selecting the insurance provider because these are not standard plans. Since insurance companies offer several variants, you should go with the insurance company that offers your duration requirement.

Choose payout option based on family needs The one-time payout in the staggered option takes care of the family’s immediate requirements.

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Don’t ignore immediate needs The family may have several immediate requirements, some of them related to the demise of the policyholder like hospitalisation expenses that need to be paid off. Then there may be several approaching goals.

Paying off liabilities like outstanding home loan can be another priority. Several plans offer options that are a mix of immediate and staggered payments (see table). Some money is given lump sum on death and the remaining as monthly payments. You can also take two separate plans. “Use the lump sum money to pay off debt and also to invest for immediate goals and use the staggered payouts for meeting regular expenses,” says Raghaw.

Alternatives before buyers If you are not comfortable with the low returns offered by staggered payout plans, you need to think of viable alternatives. First (and the best) step is to work at making your family members more financially aware. “You need to involve all family members, especially ladies, in family finance and teach them how to manage the corpus,” says Shilpa Wagh, Sebi -registered investment adviser.

The second option is to designate a person who can guide the nominees. This can be friend, family member or financial adviser. The person should be someone who has the ability to manage finances and also someone you trust. If you are going for an adviser, find one as early as possible to allow him to understand the family’s needs.

The third option is to leave detailed instructions about where the money should be invested. “It is better you write down how you want your money to be used in your absence” says Raghaw. It might entail putting some portion that pertains to a child’s education in FDs, some in options like SCSS and PMVVY to take care of the regular needs of parents or buying annuity plans.

(The writer is Narendra Nathan.)

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GENERAL INSURANCE

The tide turns? General insurance sector sees positive premium growth after 3 months – CNBC – 10th July 2020

After witnessing a drop in premium collection for the last three months, the general insurance sector finally got a reason to cheer in the month of June. The sector which comprises 25 general insurance and 7 standalone health insurance companies grew 7.8 percent in June when compared to the same month last year.

The standalone health insurance companies also showed a strong growth rate of almost 43 percent in total premiums collected in the month of June.

ICICI Lombard’s premium collection in the month of June grew by 19.6 percent when compared on a year on year basis and 16 percent on a month on month basis. The insurer also gained market share by 136 bps in Q1FY21.

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The total premium collection for New India Assurance in June grew 5 percent on a year on year basis and 45 percent on a month on month basis. Market share for New India Assurance grew by 5 percent in Q1FY21.

June premium collection for SBI General grew 92 percent when compared to the same period last year. The insurer saw a dip of 53 bps in market share in Q1FY21.

Bajaj Allianz General continued to see a downward trend in its premium collection. Premiums for the insurer in the month of June dropped by over 16 percent. The insurer also lost market share by 99 bps in Q1FY21

(The writer is Yash Jain.) TOP

Non-life insurers see positive premium growth in June but Q1 sees 4% drop - Business Standard – 10th July 2020

After witnessing a drop in premiums for two consecutive months in April and May, non-life insurers have seen positive growth of 7.82 per cent in gross premiums in June. But the first quarter (Q1) of the current financial year (2020-21, or FY21) saw premiums of non-life insurers decline 4.24 per cent year-on-year (YoY) owing to the lockdown.

In June, non-life insurers — general insurers, standalone health insurers, and specialised public sector (PSU) insurers — recorded gross premiums to the tune of Rs 13,961.25 crore, compared to Rs 12,947.89 crore last year in the same month. In Q1FY21 though, premiums collected by insurers stood at Rs 39,329.62 crore versus Rs 41,072.14 crore — a drop of more than 4 per cent.

The non-life insurance industry has 25 general insurers (including four state-owned general insurers), five standalone private health insurers, and two specialised PSU insurers.

The general insurers reported 4.11 per cent growth in premiums in June, with premiums to the tune of Rs 12,375.67 crore, compared to Rs 11,886.17 crore. For Q1 of 2019-20 (FY20), general insurers collected Rs 35,667.60 crore as premiums, compared to Rs 37,934.61 crore in the same period last financial year, witnessing a drop of almost 6 per cent YoY.

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Among the top general insurers, which command a sizeable market share, state-owned The New India Assurance reported 5.29 per cent growth YoY in Q1, followed by another state-owned insurer United India Insurance, with 8.34 per cent growth in premiums. The large private sector insurers, such as ICICI Lombard, Bajaj Allianz General, HDFC Ergo, and Reliance General Insurance, registered a drop in premium collection in Q1FY20.

On the other hand, standalone private health insurers reported an impressive 42 per cent growth in premiums for June at Rs 1,311.31 crore, and for the quarter, they recorded 15 per cent growth, with premiums collected to the tune of Rs 3,232 crore. Due to the pandemic, the retail health portfolio has seen good growth, as consumers have felt the need to get protection in these uncertain times.

“The industry was de-growing and that has stopped now.

But from here on, growth will be somewhat scattered. The motor segment is a problem for the industry. As long as we don’t see a pick-up in car sales, there will not be any incremental premiums coming in for the industry from that segment. Moreover, last year’s business will also see some depreciation, as the age of vehicles will play a factor,” said a senior private sector insurer.

The drag in non-life insurer’s performance, in terms of premiums, has been mainly driven by the motor and the crop segments. Lack of purchase of new vehicles has hit the motor segment hard, along with no hike in third party rates this year, as the regulator has put on hold the hike announced.

In the crop segment, more and more private insurers are shying away from it or becoming more conservative in underwriting such policies due to lack of better reinsurance support. But retail health has been one of the bright spots in non-life insurer’s portfolio, with increased awareness of health insurance in these uncertain times.

(The writer is Subrata Panda.) TOP

Divestment seen behind scrapping of general insurers’ merger - National Herald India – 9th July 2020

While employees of the three public sector non-life insurers are baffled at the Centre's U turn by scrapping the proposal to merge them, a labour leader termed the decision as a step towards disinvestment.

"The government had in 2018 announced the plan to merge three insurers - National Insurance Company, Oriental Insurance Company and United India Insurance Company. Subsequently, all the necessary steps towards the merger were taken," K. Govindan, General Secretary, General Insurance Employees All India Association, told IANS.

"The government appointed EY as consultant to give recommendations on various aspects of the merger. The boards of three companies passed resolutions enabling the merger," Govindan said.

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On Wednesday, the cabinet, chaired by Prime Minister Narendra Modi, approved the Rs 12,450 crore capital infusion, which included Rs 2,500 crore given in FY20, in the three insurers. Of this, Rs 3,475 crore is to be infused immediately and the rest Rs 6,475 crore later. The cabinet also approved increase in authorised share capital of National Insurance Company to Rs 7,500 crore and that of United India and Oriental Insurance to Rs 5,000 crore each to give effect to the capital infusion.

To ensure optimum use of the new capital, it issued guidelines in the form of KPIs (key performance indicators) for raising business efficiency and profitable growth. The government also blocked the merger process and shifted the focus on their solvency and profitable growth. "There is nothing wrong in infusing capital and going ahead with merger. All employees are for merger. While in the banking sector the government went ahead with the merger despite the opposition from employees, here employees want the merger and the government is against it," Govindan said.

"Perhaps, the government wants to divest its stake after capital infusion and boosting the three firms' solvency ratio. There is no other plausible reason for the U turn," he said. He also fears the unhealthy under-cutting of the premium rates would continue between them, defeating the rationale of capital infusion.

Agreeing with Govindan on divestment, a senior industry official told IANS, "May be the government is not going ahead with the merger of insurers. It may go for divestment after beefing up their solvency margins." A former Chairman-cum-Managing Director of a PSU non-life insurer said, "Merger of insurance companies are not as easy as that of companies in other sectors. While adding up of assets of the merger candidates is easy, to arrive at a valuation, which is basically actuarial calculations, is the difficult task."

According to him, the merged entity may not get an attractive valuation against valuation on the standalone basis. "Even if the three companies are merged the solvency ratio would not increase, necessitating capital infusion," he said. According to him, the merger announcement in 2018 had surprised the players, calling off of the merger is not a surprise as the situation has changed. Industry officials also recalled Finance Minister Nirmala Sitharaman's announcement in May that the government would come out with a public sector enterprise (PSE) policy for a new and self-reliant India.

Sitharaman said the government would notify the strategic sectors requiring presence of PSEs. There would be at least one PSE in the strategic sector, she said. In other sectors, the PSEs would be privatised, she added. "To minimise wasteful administrative costs, number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatised/merged/brought under holding companies," Sitharaman said.

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Government halts merger of 3 PSU general insurers; to infuse Rs 12,450 crore - The Economic Times – 9th July 2020

The union cabinet has decided to put on hold the proposed merger of the three state-run general insurers even as it approved ₹12,450 crore in capital infusion.

It cleared the extension of the scheme to provide free food under the Pradhan Mantri Garib Kalyan Ann Yojana till November and other elements of the Atmanirbhar package announced earlier.

The government had in the budget for FY19 announced its decision to merge three general insurance companies – Oriental Insurance Company Limited (OlCL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL).

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The cabinet also cleared an increase in the authorised capital of these companies to allow capital infusion and enable them to raise funds.

In a statement after the cabinet meeting, the government said “given the current scenario, the process of merger has been ceased so far and instead, focus shall be on their solvency and profitable growth, post capital infusion.” The ₹12,450 crore capital infusion includes ₹2,500 crore provided in FY20. The insurers will be provided ₹3,475 crore immediately while the balance ₹6,475 crore will be infused later.

“The re-capitalisation will make them more stable,” union minister Prakash Javdekar said at the cabinet briefing on Wednesday. The boards of three firms have already approved the merger in January, but the process slowed subsequently. The government said it has issued guidelines aimed at bringing business efficiency and profitable growth while ensuring optimum utilisation of the capital being provided.

Affordable Rental Houses The cabinet has also given approval for developing affordable rental housing complexes (ARHC) for

urban migrants and poor as a sub-scheme under Pradhan Mantri Awas Yojana – Urban.

It is estimated that 1.08 lakh such houses are ready to be rented out across 107 cities and the government aims to develop 3.5 lakh of them over the next few years. Under the scheme, the existing vacant

government-funded housing complexes will be converted in ARHCs through concession agreements for 25 years.

Besides, special incentives like use permission, 50% additional FAR/FSI, concessional loan at priority sector lending rate and tax reliefs at par with affordable housing will be offered to private and public entities to develop ARHCs on their own available vacant land for 25 years.

Other decisions The cabinet also cleared a number of already announced decisions such as extension of free food scheme and the extension of government contribution of 12% each of the employees’ and employers’ to the provident fund accounts for June-August under Pradhan Mantri Garib Kalyan Yojana.

Free cooking gas will be provided for another three months beginning July 1 under the scheme for the poor and vulnerable. The cabinet has approved the scheme for agriculture infrastructure fund to provide debt financing for investment in viable projects for post-harvest management infrastructure and community farming assets.

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Fish farmers will be given Rs 5 lakh insurance cover free of cost under PMMSY: Haryana Min – UNI – 7th July 2020

Haryana, Agriculture, and Farmers’ Welfare, Animal Husbandry and Dairying and Fisheries Minister Jai Prakash Dalal said that under the ‘Pradhan Mantri Matsya Sampada Yojana’, fishermen and fish farmers of the state will be given an insurance cover of Rs five lakh free of cost and no premium will be charged for this scheme as will act as a protective umbrella for the fishermen and their families.

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Corporates, small biz rush to up cyber insurance cover limit – The Times of India – 7th July 2020

Working from home is exposing systems and networks to cyber attacks as companies rush in to write more for cyber insurance.

Tata AIG General Insurance has sold 14 cyber insurance policies with sum assured from Rs 5 crore onwards in April, 2020, double of what they sold last April.

“Besides large IT companies, we see growing demand for cyber insurance policies from smaller companies and mini-factories who see the need to get

covered against cyberattacks now. More customers request for coverage on their employee’s laptop (under bring your own device) and third-party service providers as organizations move their IT applications and databases to cloud platforms. We also see requests to increase the limit of cyber cover, like one of our clients, a large IT company has increased its limit from $50 million to $75 million as they fear higher risk,” its deputy VP, Najm Bilgrami said.

Cyber Insurance policies offers protection for both individual and corporate customers, with a sum assured ranging from Rs 50,000 to Rs 5 crore. The cover protects against the loss of sensitive personal and corporate information caused by theft or altering of data, virus or malware, denial of service, and also reputational damage in terms of both the reputation of the business and that of the senior executives. It also covers policyholders from law suits and also losses arising out of virus attacks.

Bajaj Allianz General Insurance has also seen a 20 increase from the average monthly sales of cyber insurance policies compared to the previous year. Its chief technical officer TA Ramalingam said “With the rising number of cyberattacks reported across sectors, we see uptake in demand among companies from the ITES sector, with higher exposure due to lockdown. Enquiries have increased by 50, with 20 higher conversion rate compared to FY19.”

With IT companies requesting to increase the limit of coverage, insurers also fear higher risk. Ramalingam said “Unlike motor insurance where the higher frequency of claims is an issue, whereas it is based on severity of the issue for cyber insurance. One large claim can wipe out the entire profit made in a year. This leads to revision in premium price by 10-20, as the risk exposure has increased and expected to further go up in 2020.” Bajaj Allianz General Insurance reports loss claim ratio for cyber insurance products at less than 50 in FY20, with renewal of cyber insurance policy at 95.

ICICI Lombard General Insurance has registered a 30 growth in the number of policies underwritten in the last few months. Sanjay Datta, chief — underwriting, at the insurer said “Enquiries on cyber insurance covers were driven by BFSI & IT/ITES companies, while we see traction from companies in the hospitality, educational, manufacturing sectors, including SMEs.” It has also recently launched a retail cyber insurance policy which provides coverage to the entire family, including children for a duration of one year. The premium ranges from Rs 2,300 -Rs 24,000 per year, with a sum insured between the range of Rs 50,000-Rs 1 crore, as opted by the policyholder.

(The writer is Mamtha Asokan.) TOP

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Insurers discuss growing need for policy to claim Covid-19 losses - Business Standard – 6th July 2020

Insurers are discussing the growing need for a policy that covers business interruption losses due to a pandemic.

Currently, such a loss is not covered by insurance companies as it does not involve damage to property. However, given the extent of disruption the Covid-19 has caused to businesses, insurers have had discussions on the feasibility of such a product and on the broad contours on how such a product can be developed.

The discussions are at an initial stage and no timeline has been fixed on when such a product will come out. Insurers are suggesting that there is a need to create a pool as

individually it is very difficult for the companies to provide coverage for such risks with limited capital.

“There is a reference that has come to the General Insurance Council and this has to be evolved like an industrywide approach. Discussions are on with stakeholders. It is a process and will take us some time,” said chief executive of a private non-life insurer. “As the rates could be slightly on the higher side for reinsurers when they take cover to protect their balance sheet, discussions are taking place on a government level for creating a pandemic pool. And, insurance regulator is discussing with insurers and reinsurers on the same,” said a source.

Business interruption losses are covered under property damage policy. Hence, only if there is damage to property, “loss of profit” policy gets triggered. These include cases such as fire, breakdown of machinery due to riots, terrorist activities, or natural events like floods, cyclone, and earthquake.

The current business interruption policies for commercial establishments do not offer any cover for epidemic or pandemic declared by the World Health Organization or the government. Generally, major industries, hotels, and big shops take business loss policy along with property insurance wherein any claims arising due to physical damage from any of the insured peril is admissible.

“The only way business interruption losses can be taken care of in a pandemic situation is if a pandemic pool is formed because the basic difference in case of catastrophe and a pandemic is in the latter, the entire economy goes for a toss versus terrorism incident or a catastrophic incident where losses come in a from a particular place but it is not pan India,” said a senior insurance executive at private insurance firm.

Experts say a pool or some kind of government support is essential for such a cover till insurers are able to collect enough premium to do it on their own. At this stage, insurers need to collect huge amounts of premium to sustain this amongst themselves. “This will require the Indian insurance market, the international reinsurance market, and government to come together because the size of capital required is enormous and it needs to be structured like a pool,” said Sanjay Kedia, country head & chief executive of Marsh India Insurance Brokers.

“How the cover needs to be structured is very important: Whether it will cover only the wages of employees, or gross profit or other expenses, who needs to fund the premium and if the losses incurred is beyond the capability of insurance market, there needs to be a stop-gap arrangement from the government,” he said.

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The onus of the product is on the insurance companies and the regulator as the companies have to file the product. “As a reinsurer, we are standing firm behind our seeders, especially in the cases where we are leaders in the treaties. The support will depend on what the product looks like because we still do not know when this situation will end," said an executive at GIC Re.

(The writer is Subrata Panda.) TOP

Covid-19: Demand soars for cyber insurance – The Times of India – 4th July 2020

With the increased time spent working from home (WFH) thanks to Covid-19 providing cybercrooks a window of opportunity to mount cyber attacks, individuals and companies are seeing the value in taking cyber insurance cover.

As a result, not just a higher number of companies cutting across sectors but even individuals are making enquiries as well as buying cyber insurance products, multiple insurers confirmed.

With digital dependence rising, general insurance companies are expecting a higher demand for such cyber covers in the coming days.

TA Ramalingam, chief technical officer, Bajaj Allianz General Insurance, said that they are not just experiencing a surge in inquiries but many companies are going ahead and increasing the limit of their existing cyber cover as they see a higher risk now. He pointed out that 2015 onwards, there has been an increase in the uptake of cyber insurance products by corporates, but in last two years more companies are showing interest.

Sanjay Datta, chief (underwriting, claims & reinsurance) ICICI Lombard, said earlier the company used to get enquiries mainly from BFSI & IT/ITES companies but now it has been receiving enquiries even from sectors such as hospitality, education, manufacturing and SMEs as well. “The demand from enterprises has been on the rise, especially due to targeted cyber-attacks being carried out on a large scale – especially phishing and ransomware attacks like Petya, NotPetya, WannaCry and the most recent Maze ransomware attack,” Deepak Sankar, vice-president, speciality lines & AIG combined, at Tata AIG General Insurance Company, said.

Sankar pointed out that factors such as evolving data privacy regulations (GDPR, CCPA and India’s PDPB) have played a key role in creating awareness about the need for cyber insurance.

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GI Council wants standard Covid treatment rates for easier claim settlement - Business Standard – 4th July 2020

The General Insurance Council (GI Council) has come up with an indicative rate chart for treatment of Covid-19 patients to guide insurance companies during the claim settlement process. The rates will be reviewed every month. For cases where the rates charged are more than the indicative rates because of various medical exigencies, insurance companies will consider them while processing claims on a case-to-case basis.

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Insurance experts said it may be difficult to set a tariff or fixed rates for Covid-19 treatment, hence an indicative rate chart has been proposed. Without this, in the event of exorbitant charges being levied by

hospitals, the medical cost payable as insurance claims would go up. This would ultimately result in premia going up.

“Covid-19 is a new illness with no established protocols and standardised treatment costs. This may at times result in an insurance company raising questions on the amount spent on the Covid-19 treatment. This creates a huge uncertainty in the minds of unsuspecting Covid-19 patients," the GI Council said.

In the absence of any standardised rates for Covid-19 treatment, it has been seen that hospitals, in some cases, were charging a lot for Covid-19 treatment, forcing insurance companies to question the claims.

“The GI Council has taken an overall view and has standardised the Covid-19 treatment costs, in consultation with insurers. This will benefit both customers and insurers. Insurers have a negotiated agreement with hospitals and these rates will act as the upper limit to the rates negotiated with hospitals," said Bhaskar Nerurkar, head- health claims, Bajaj Allianz General Insurance.

“Initially, claim amounts were a bit high and now we are seeing them stabilise. The average claim amount may not come down any further but it (the GI Council's move) will help standardise the claims and act as a deterrent to hospitals asking exorbitant charges," he said.

The average claim amount for Covid-19 treatment is Rs 1.2-1.5 lakh. But in metro cites, it may be even higher. So far, insurers have received Covid-related claims to the tune of over Rs 300 crore.

“It (the indicative rate chart) will quicken the process of claim settlement," said Amit Chhabra, business head-health, Policybazaar.com.

“If the rates announced by the GI Council are implemented properly, policyholders will be benefitted the most. This may become a milestone in standardising treatment cost,” said Dr S Prakash, MD, Star Health and Allied Insurance.

The council has proposed creating a consensus on billing pattern for Covid patients on a per-day basis, based on criteria such as type of stay and treatment, city or district hospital, and type of hospital. Accordingly, hospitals have been segregated as National Accreditation Board for Hospitals & Healthcare (NABH)-accredited hospitals and non-NABH hospitals.

As far as NABH-accredited hospitals are concerned, they can charge up to Rs 10,000, including the cost of PPE, isolation bed and supportive care, and oxygen, in case of moderate sickness. In case of ICU beds without a ventilator, accredited hospitals can charge up to Rs 15,000 (including the PPE cost) and for ICU with ventilator, they can charge up to Rs 18,000 (including the PPE cost).

Non-accredited hospitals for isolation beds can charge up to Rs 8,000 for isolation beds, Rs 13,000 for ICU beds without a ventilator and Rs 15,000 for ICU beds with a ventilator. The proposed hospital cost per day will include consultation, nursing charges, coronavirus testing, PPE, drugs, and other consumables. However, it excludes treatment of any co-morbidity conditions, for which Rs 5,000 will be charged.

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Metropolitan hospitals can charge up to 100 per cent of the ceiling rates per day, while state hospitals can go up to 90 per cent of the ceiling rates and hospitals in the rest of the country can go up to 75 per cent of the proposed rates. Also depending on the type of the hospital and the number of beds, the GI Council has proposed rates for hospitals treating Covid-19.

“The GI Council's proposed Covid-19 treatment rates should be adopted by insurance companies so that patients get some relief from the financial burden of Covid treatment. Insurance companies should also reduce the waiting period and extend the ceiling for patients suffering from co-morbidities," said Abhishek Kapoor, executive director, Regency Healthcare.

“The standard rates proposed by GI Council will bring transparency in the settlement of Covid-19 related insurance claims. The inclusion of PPE and coronavirus testing charges will help in the faster settlement of claims," said Abhijit Chatterjee, EVP and head-claims, IFFCO Tokio General Insurance.

Differing with insurers, Dr Kousar A Shah, group COO, Aakash Healthcare & Super Speciality Hospitals, Dwarka said: "Mandating one particular price for all type of hospitals, irrespective of their size, facilities, clinical specialists, infrastructure, etc, appears to be a decision taken in a hurry. A nursing home, which has its ACPB (average cost per bed) cut short due to its practices (asking patients to buy their meals and medicines) cannot be compared with a tertiary care, five-star hospital."

"This difference could have been minimised by creating a different type of price capping in a laddering form, based facilities and type of care a hospital provides," Shah added.

(The writers are Subrata Panda and Sohini Das.)

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Hike in cybercrimes: Insurance firms eye to cover more individuals - The Week – 3rd July 2020

With remote working in place due to the COVID-19 crisis, there has also been an unprecedented hike in cybercrime cases. The rise in the number of cybercrimes could be attributed to increased digitisation and e-commerce transactions. The risk of falling a victim to such fraudulent activities necessitated the need to have cybercrime insurance.

ICICI Lombard General Insurance, Bajaj Allianz General Insurance and HDFC ERGO are some of the prominent players who are offering cybercrime insurance in

India, with specialised products. Bajaj Allianz General Insurance was one of the first firms to introduce it for individuals in the country.

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“A lot more people need to buy this insurance policy; it is under-penetrated in the country. It needs to see more traction as cybercrimes are increasing in recent times. Meanwhile, it has seen good traction in the corporate segment, but not in the individual space. Individual cybercrime cover insurance products need to be marketed more in the country to see traction in the future. Many individuals do not even know about such products,” Oorjitha Lath, independent consultant and trainer, specialty insurance, and additional director, JK Risk Insurance, told THE WEEK.

Very recently, ICICI Lombard General Insurance had announced the launch of its Retail Cyber Liability Insurance policy. This policy gives cover to individuals and their families against any cyber frauds or digital risks that could result in a financial loss and taint in reputation. The retail cyber insurance product is a form of insurance that protects individuals against losses due to various factors, including online theft and unauthorised transactions.

This product includes protection against identity theft, cyber bullying, cyber extortion, malware intrusion, financial loss due to unauthorised and fraudulent use of bank account, credit card and mobile wallet frauds, and legal expenses arising out of any covered risk.

ICICI Lombard has also included claims for newer threats such as damage to reputation and restoring digital reputation which would involve removal of the harmful publication from the internet. Besides, it covers individual losses, including the wage a person may have earned if not for the cybercrime which one may have faced.

This policy can be purchased for a premium that ranges from Rs 6.5 per day to Rs 65 per day. The sum insured for the cover ranges from Rs 50,000 to Rs 1 crore. The policy provides coverage to the entire family, including children for a duration of one year.

“We are living in a digital world where data is being engendered, transmitted and deposited every nanosecond. Today, data is gold. And, to protect it is paramount. While we live a digital life, the risks of cyber attacks have also grown exponentially. We have introduced this product at a time when everybody is working remotely, using social media and net banking and is digitally active,” said Sanjay Datta, chief, Claims, Underwriting and Reinsurance, at ICICI Lombard General Insurance.

HDFC ERGO has introduced E@Secure that offers protection against cyber risks and frauds carried out from any device and from any location worldwide. Different cyber risks, such as unauthorised online transactions, phishing and email spoofing, e-extortion, identity theft, damage to e-reputation and cyber bullying are covered in the policy. The policy also pays for legal cost and expenses and legal advice sought by the insured in case of a legal dispute arising out of specified risks covered in the policy.

This policy also covers the entire family as children are also increasingly present on social media and susceptible to online stalking or harassment. The policy covers the expenses incurred on counselling sessions with a psychologist due to the stress one may undergo as a result of cyber bullying or harassment. The sum assured for the cover ranges from Rs 50,000 to Rs 1 crore.

The Bajaj Allianz Individual Cyber Safe Insurance Policy provides insurance cover to an individual to pay for losses that could arise due to cyber attacks and covers aspects such as identity theft, cyber stalking, IT theft, malware, phishing, and e-mail spoofing among others. Any person above the age of 18 can buy this policy and the plans usually start from Rs 1 lakh to Rs 1 crore.

In case a cybercrime is discovered, the insured person has to give a notice to the company within seven days of the event and not later than 14 days. Additionally, one will need to fill in a claims form and submit a copy of a FIR from the police and the cyber cell along with transaction details in case of correspondence with a financial institution, besides other documents as per the requirement of the insurance company.

(The writer is Abhinav Singh.) TOP

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HEALTH INSURANCE

Lockdown blues: Health insurance excludes major costs in treating mental health – Moneycontrol – 10th July 2020

The pandemic and the lockdowns have brought in more than just an economic slowdown. When I speak to friends and relatives, I realise that the lockdown has led to a deterioration in what is called work-life balance, instead of improving it. Hectic working conditions, coupled with uncertainty, may have resulted in increased pressure, stress, and anxiety, causing a significant imbalance in mental health. No wonder health apps are reporting 2-3 times rise in patients consulting for psychological disorders.

Mental health cases abound A whopping 197 million in India are reported to be suffering from mental illnesses. India is the depression capital of the world. At this scale, we should have had a flourishing, well-developed mental healthcare ecosystem in the country, providing affordable counselling and treatment. But the truth is that mental health requirements in India remain under-served. The demand-supply gap results in therapy sessions being expensive – ranging from Rs 800 to Rs 5,000 per session. The requirement of therapy is said to be between six and 20 sessions, depending on the complexity and severity of the condition. In addition, a chronic patient could require medicines, clinical tests, and occasional hospitalisation.

These are expensive and inaccessible for the larger population in the country. No wonder, the treatment gap ranges from 70 to 90 per cent, depending on the type of disorder. India is sitting on a mental health crisis time bomb. There is an urgent need for a financing mechanism to support this treatment gap.

Traditionally, health insurance policies excluded psychiatric disorders from their scope of coverage. However, here's the new mandate under the Mental Healthcare Act 2017: “Every insurer shall make provision for medical insurance for treatment of mental illness on the same basis as is available for the treatment of physical illness.” IRDAI issued a circular in this regard in August 2018.

Let’s understand the coverages, limitations, and hurdles with respect to the available coverage.

Coverage Most insurers followed the circular and removed the exclusion from their policy document. But hold your horses before you celebrate. It's important for you to first understand that health insurance is primarily a hospitalisation cover. The policy generally excludes coverage for routine medical expenses, such as preventive medical tests, routine medication costs and doctor consultations. Now, since the Act as well the IRDAI circular requires the coverage to be applicable on the “same basis,” health insurance for mental illness will essentially end up providing cover only for hospitalisation. People suffering from mental illness very rarely (0.6 per cent cases) need hospitalisation. Their major expenses are on therapy, medicines and tests, which still won't get covered under health insurance.

Underwriting Since this is the first time mental health is being covered in the country, insurers have called out the lack of local data available for them to be able to price this coverage. Although insurers may not hike their premiums, they are likely to follow stringent underwriting guidelines to protect themselves from anti-selection. This will most likely impact people who already suffer from mental illness.

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Waiting period People with pre-existing mental illness, who do get an insurance policy after due declaration in the proposal form will be required to go through the four-year waiting period before they can make a claim for hospitalisation expenses related to mental illness. People with pre-existing mental illness who were already insured before the IRDAI notification in August 2018 are likely to be covered four years after the date of issuance of the first policy. People who were diagnosed with mental illness after the issuance of their health insurance policy will be covered for mental illness without any waiting periods.

Lack of active treatment Mental illness hospitalisation may be prescribed only for monitoring and stabilising a patient, and may not require active treatment. Since health insurance only covers the active line of treatment, there can be disputes with respect to hospitalisation claims in the future.

Because of the lack of local data, reinsurance support and a formal mental healthcare ecosystem, it is still a long way to go before the regular costs of mental illness can be covered effectively through insurance.

It is a proven fact that a significant amount of mental illness is induced by work. Employers, common interest groups such as trade associations, local communities can come together and fund an affordable, technology-leveraged mental healthcare system for their employees or members at affordable costs. This could have a great return on investment (ROI), given that research suggests four times profit increase from the improvement in productivity by spending once on the mental healthcare of its employees.

(The writer is Mahavir Chopra.)

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Three changes in health insurance from Oct 1 that will help policy holders - The Economic Times – 10th July 2020

The Insurance Regulatory and Development Authority of India (IRDAI), issued three new guidelines in June 2020 to insurers offering health insurance products. These guidelines require insurers to make three changes in their policies and functioning to make health insurance more consumer-friendly. These changes are:

1. Standardisation of important product clauses in their policies so that customers can understand them easily and can compare products across insurers.

2. Ensuring insurance coverage for telemedicine, which is important in these times of physical distancing.

3. To provide more rational and customer-friendly claim deductions.

The first set of guidelines asks insurers to standardise the general terms and clauses in their indemnity-based health insurance policy contracts.

These standardised clauses are to be incorporated in the new products filed by insurers on or after October 1, 2020, and for existing products which are due for renewal from April 1, 2021. Insurers have been asked to use the prescribed standard wordings provided by IRDAI. Additional terms and clauses are allowed to be used to ensure a more informed choice to insurance prospects.

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The standard terms and clauses mentioned cover various important items in the policy documentation, such as the material facts that are required to be disclosed by the insured at the time of policy issuance, terms and conditions required to be met by the insured for settlement of a claim, and other helpful items including those about policy cancellation, migration, porting, renewal and redressal of grievances. This standardisation and simplification will help to create better customer understanding of product offerings across insurers.

The second set of guidelines is on telemedicine. Since the Medical Council of India has issued guidelines in March 2020 enabling Registered Medical Practitioners to provide healthcare using telemedicine, insurers have been advised to allow claim settlement for telemedicine consultation wherever normal consultation with a medical practitioner is allowed in the terms and conditions of the policy contract.

The third set of guidelines is regarding norms on proportionate deductions in claims. This is useful for policy buyers who choose a higher category of hospital room than what is allowed by the capping on their insurance policy.

Let us say you have a Rs 5 lakh health insurance policy with a 1 per cent daily room rent capping. The maximum hospital room tariff that you are thus eligible for is Rs 5,000 per day. However, if you choose to occupy a room costing Rs 7,000 for your treatment (which is 40 per cent higher than your room rent capping), your insurer would typically deduct 40 per cent from your total claim, including room charges and other charges, which are often called associate medical expenses. This is because hospitals typically increase the billing on all your other chargeable items. For instance, increase in doctors’ consultation fees in proportion to the increase in your room tariff.

However, the new guidelines call for ‘associate medical expenses’ to be clearly defined in the policy contract, and disallows the costs of pharmacy and consumables, implants and medical devices, and diagnostics, to be considered in this category. Insurers are not to recover expenses towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims. Hence, the total deductions made on your claim will reduce, which is in your favour.

There are two further benefits for policyholders. Insurers are to ensure that proportionate deductions are not applied in respect of hospitals which do not follow differential billing, or for expenses where differential billing based on the room category are not followed. Finally, insurers are not permitted to apply proportionate deduction for ICU charges, as there usually aren’t different categories of ICUs.

Here too, the provisions of these guidelines shall apply to new health insurance products filed on or after October 1, 2020, while for existing health insurance products the modifications can be made with their renewal from April 1, 2021.

(The writer is Chandan D. S. Dang.)

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Should you go for Corona Kavach and Corona Rakshak policies? - The Hindu Business Line – 10th July 2020

The outbreak of Covid-19 pandemic has highlighted the importance of health insurance across all ages of the population in the country. To provide access to health insurance for all, especially at this time of financial distress due to the coronavirus pandemic, the insurance regulator IRDAI, recently mandated all general and standalone health insurers to offer standard health policy for corona to be known as Corona Kavach Policy. Further, the regulator has asked insurers also to offer a standard benefit policy as well for Covid-19, to be known as Corona Rakshak Policy.

Both policies are to be offered as standard policies, as per IRDAI requirements, which means, the coverages and exclusions across insurers (offering this product) will be the same, including the policy name. Today, July 10, being the deadline for launch of these policies, you could see announcements

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coming from players. Here is what you should know about the two standard Covid-19 policies and whether or not you should buy one.

Basics Both products, per guidelines, are to provide coverages only for treatment related to Covid-19. While Corona Kavach Policy is an indemnity plan (where the insurer reimburses/pays for medical expenses up to the sum insured (SI)), Corona Rakshak Policy is a benefit policy, wherein the insurer pays a lump-sum guaranteed amount up to the sum insured. This lump-sum benefit is payable upon the positive Covid diagnosis, requiring hospitalisation for a minimum continuous period of 72 hours. Do note that, the benefits under both policies shall be provided by the insurers after positive diagnosis of Covid from a Government authorised diagnostic centre.

While the Corona Kavach policy can be offered both on individual and family floater basis, Corona Rakshak is offered only on individual basis. Both policies can be availed for a period of 105 days (3.5 months), 195 days (6.5 months) and 285 days (9.5 months) and can be renewed in the same frequency to ensure the benefit of the policy continues. The minimum SI under both policies is ₹50,000; however, the maximum SI offered under Corona Kavach is ₹5 lakh and for Corona Rakshak ₹2.5 lakh. The minimum and maximum age of entry is 18 and 65 years respectively, and only single premium payment mode is allowed under both policies. The Corona Kavach policy also offers cashless facility to its policyholders, provided hospitalisation is from network hospitals. Purchase of both policies can be made from across all distribution channels digital or through agents.

What’s covered? As Corona Kavach is an indemnity policy, it covers both hospitalisation and homecare treatment expenses, up to the SI. However, the policy will cover hospitalisation expenses only if the policyholder is hospitalised for a period of 24 hours. Hospitalisation cover includes expenses such as room rent, boarding, nursing, ICU, ambulance service up to 2,000, medical practitioner and consultant fees, operation theatres, PPE kit, gloves, etc. In case of home care treatments, the policy will cover expenses up to a maximum of 14 days. This is provided a medical practitioner advises the insured to take treatment at home and regular monitoring is done by the medical practitioner. This policy covers for Ayush treatment (in-patient care) as well.

It also covers pre-hospitalisation expenses (for a period of 15 days) and post-hospitalisation expenses (for a period of 30 days). Cornoa Kavach also comes with an optional cover (rider) for additional premium hospital daily cash. The insurer will pay 0.5 percent of the SI per day up to 15 days, provided the policyholder is hospitalised for 24 continuous hours. In case of Corona Rakshak policy, the insurer will pay 100 percent SI upon positive diagnosis and the policy shall terminate thereafter.

Keep in mind Like any other health policies, the Corona covers too come with a waiting period of 15 days. These policies don’t have any deductibles and come with the option of portability for policyholders. Do note that the medical test requirement, that is, the process of on-boarding of customers, vary with insurers for both Covid policies. Corona Kavach offers discount of 5 percent on premium for healthcare workers. Both policies have certain exclusions to be kept in mind. Any unproven treatments will not be covered. Similarly both policies cease its coverage if the insured travels outside the country where travel restrictions are in place. Additionally, Corona Kavach offers no coverages on day care treatments and OPD (out-patient) expenses. Take note, expenses made for testing at government-authorised diagnostic centres are covered; expenses at any other centres are not covered.

Should you buy? Since coverages are the same across insurers, you can select corona policies based on the premium and services offered by an insurer of your choice. Do consider the claim settlement track record of the insurer as well. One of the advantages in Covid policies are that there is no zone-wise premium. That is, under a regular health policy, your premium amount depends on the medical costs prevailing in a particular city. Which means, those in rural or semi-urban areas could have lower premium compared to those residing in urban areas such as Delhi or Mumbai. But as per regulatory guidelines, these variations in the

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premium are not allowed to be charged in corona policies. If you have a comprehensive health policy with OPD (expenses on treatment in out-patient department), it will cover for home treatment expenses as well, so separate Corona Kavach may not be required. The benefit policy Corona Rakshak could be useful, particularly if your existing health policy doesn’t cover OPD expenses. As some people who are tested positive are home quarantined, this can come in handy to cover immediate medical expenses. As insurers may come up with these two policies from today watch out on premiums before you take a call to buy.

(The writer is Bavadharini KS.)

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How is covid-19 impacting health insurance for Indians – SW – 9th July 2020

The pandemic has already challenged our healthcare systems in various ways and the anxiety surrounding treatment and medical infrastructure in India is causing a lot of panic among citizens. The shortages of facilities and lack of management is more apparent than ever.

Keeping the situation in mind, the only hope turns to the health insurance policies of our country. Covid-19 seems to be changing the health insurance policies in a positive manner.

The way things worked earlier in the pre pandemic world was that health insurance policies required the patient to be admitted to a hospital for at least 24 hours for the insurer to cover the bill. But now since many Covid-19 patients are being asked to stay home, the requirement for hospitalization will not be there anymore.

One general insurance company rolled out home healthcare benefits recently where they allowed customers to get treated at their residence for any ailments. Some companies have also started covering home healthcare on a case-to-case basis. A lot of health experts look at this as a game changer which will hugely reduce the stress on hospitals that are grappling with huge numbers of patients and are unable to accommodate them.

Healthcare workers are finding it difficult to cope up with the exponential rise in cases. Therefore, this strategy will only encourage more people to opt for these insurance services. The Insurance Regulatory and Development Authority in India has come up with two standardised Covid-19 health insurance policies which all the non-life and health insurance companies have to mandatorily offer from July 10th.

One policy, called the Corona Kavach is a policy that covers the disease with a tenure ranging from 3.5 to 9.5 months. The other policy is an optional standard benefit cover which pays out a fixed amount. Lastly come the emergency covers. Earlier life insurance companies could sell only long term policies but the regulator has now directed both life and non-life insurers to introduce short-term Covid-19 health covers for a period of 3-11 months.

The point of this was to make these policies affordable for those who can simply not afford it or don’t have a health insurance cover. While the changes are pointing towards a positive step, whether these policies will remain a constant even after the pandemic or not, will be the real test.

(The writer is Surabhi Sundaram.) TOP

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Hospitals show resistance to standard rates for covid-19 treatment - Live Mint – 9th July 2020

With the aim to lower disputes between insurance companies and healthcare providers, the General Insurance Council (GIC) on Monday published a schedule of rates for the treatment of covid-19, a respiratory disease caused by the novel coronavirus. The rates are based on suggestions made by a Niti Aayog panel. However, hospitals do not seem to agree with the rates.

Covid treatment rates The proposed rates shall be applicable to both cashless and

reimbursement claims in all states where government authorities have not prescribed standard charges for covid-19 treatment.

The GIC has proposed different rates per day for NABH-accredited hospitals and non-NABH-accredited hospitals based on the severity of the case. For moderate sickness which requires isolation beds including supportive care and oxygen, hospitals are asked to charge ₹10,000 per day in a NABH-accredited hospital and ₹8,000 in a non-NABH accredited hospital. The rates include cost of personal protection equipment (PPE) at ₹1,200. For severe sickness which requires admission in an intensive care unit (ICU) without ventilator, hospitals are allowed to charge ₹15,000 and ₹13,000 respectively (including ₹2,000 for PPE costs). Finally, in case of very severe sickness where the patient requires ICU with ventilator care, hospitals can charge ₹18,000 (NABH-accredited) and ₹15,000 (non-NABH-accredited). These rates include the cost of consultation, nursing charges, room stay, and meals, covid testing, monitoring and investigations, biochem and imaging, physiotherapy, PPEs, drugs and medical

consumables, biochemical waste management, bedsides procedures like Ryle’s tube insertion and urinary tract catheterization.

However, interventional procedures such as central line insertion, chemoport insertion and

bronchoscopic procedures, and high-end drugs such as immunoglobulins and meropenem are not included in the prescribed rates. Such items shall be charged at MRP by the hospital. Further, high-end investigations such as MRI and PET scan will also not be included.

Hospitals in non-metro state capitals shall charge 90% of the prescribed rates whereas all other cities and towns shall charge 75% of the rates. According to the circular, metro cities include Delhi NCR, Mumbai Metropolitan Region, Kolkata Metropolitan Region and Chennai Metropolitan Region.

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Hospitals' view Hospitals, however, are not in agreement with the council.

Viren Shetty, executive director and group chief operating officer, Narayana Health, said the package rates are extremely low and won’t cover the cost of treatment. “Several state governments fixed the per day cost of covid treatment for below poverty line (BPL) patients which are also very low. Hospitals weren’t given a choice to refuse and were told to make up for the losses from cash and insured patients."

Hospitals, we spoke with are not in agreement with the rates suggested by GIC. “Hospitals aren’t in agreement with the general insurance cartel rates because they are trying to piggyback on the government enforced rates to pad up their profit margins," said Shetty.

Healthcare providers are of the view that GIC should’ve consulted them before fixing the rates and that the scheduled rates can only be managed in general wards with basic level of care, general medicines and minimal staff.

“They (GIC) should’ve discussed this with all stakeholders first. All of this could have been solved if they simply sat with the hospitals and agreed on a joint solution before unilaterally deciding that insured patients also get BPL rates," said Shetty.

Dr Raajiv Singhal, group CEO, Care Hospitals, said various bodies are trying to fix rates for the hospitals without understanding the cost of delivery of healthcare under the current circumstances.

He said fixing the rates is not a solution because the challenges are on multiple levels. “The infection control processes are different, air conditioning systems are changed, procurement cost and logistics cost are separate and the staff costs too are relatively high. All these things should be taken into account. Hospitals don’t want to make more money but we want to be able to pay the required salary and wages to the staff who are risking their lives," said Singhel. “Insurers must find a different way to deal with this. Each patient is different and requires a different degree of treatment based on co-morbid conditions and other requirements. Fixing certain costs such as bed and ventilator charges is okay but the rest can’t be pre-decided."

Insurers' take Insurers said attempts to standardize treatment costs have been made in the past for various procedures but it’s only on paper. Even for covid-19, a few states such as Maharashtra prescribed standard rates but insurers are not seeing any change in billing.

“We are seeing stories of people being asked to pay a huge sum as deposit. While fixing rates is a good starting point and is sending out a message that regulation is required, there’s a long way to go," said the chief underwriting officer of a general insurance company who didn’t want to be named.

In the absence of a regulator for healthcare providers, insurers aren’t very optimistic about hospitals adopting the standard rates.

If hospitals don’t agree with the prescribed rates, policyholders could lose as insurance companies will want to pay according to the package rates and hospitals may continue to bill as per their discretion, said the expert quoted above.

Joy deep K. Roy, partner and leader insurance, PwC India, said as a body of insurers, its GIC’s prerogative to decide how much they want to pay. “Normally in a health insurance policy, consumables such as PPE kits are not covered but now the council is asking insurers to pay for this. Therefore, policyholders stand to gain even if the PPEs are billed over ₹1,200. A lot of items that were excluded earlier are included in these rates," said Roy.

Insurers said standardizing costs, especially for cases that are mild to moderate, is fair and since there’s no historical data for covid-19, some hospitals are going overboard with the pricing. Fixing rates, however, could push more hospitals to deny cashless claims which require the insurer’s pre-approval. Policyholders may then have to check with the hospitals before admission.

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Sanjay Datta, chief, underwriting, claims and reinsurance, ICICI Lombard General Insurance, said having standard and rational rates will help policyholders protect the sum insured specifically in floater policies as multiple persons under one policy may be infected given the nature of the virus.

The council said it shall review the charges every month to ensure it does not cause any hardship to the policyholders.

How the standardization will pan out and whether hospitals will abide by these rates remains to be seen.

(The writer is Disha Sanghvi.) TOP

Why enhancing your health coverage should be your top priority – Live Mint – 9th July 2020

No conversation today is complete without the mention of Covid -19. Ever since the pandemic hit the world, our lives have turned around in one way or the other. Scrolling through news websites triggers anxiety, as the number of infected patients is rising by the day, and if there’s any light at the end of a dark tunnel, it is the wait for a vaccine that’ll put an end to this suffering.

If there’s one aspect that has come under the scanner, it is healthcare. Whether it is about building immunity or ensuring protection with a health insurance scheme,

much is being talked about today. Rising costs of healthcare are instilling fear and panic among the public, who are unable to cope with this expenditure.

According to a report, the average cost of treatment in private hospitals in Delhi in an isolation ward is ₹1,26,000, ICU with ventilator is ₹1,96,000, and ICU with ventilator is ₹2,31,000 (*charges inclusive of PPE).

The Covid conundrum Research suggests that a fourth of the hospital bills are spent on Personal Protective Equipment (PPE), especially during extended hospitalization. The infection is contagious, and to keep patients and staff protected, hospitals have made it mandatory for everyone to wear this protective gear. No wonder, this adds up in the hospital bills. Moreover, there is a rising demand for consumables and surgical accessories such as crepe bandage, tissue paper, foot covers, and masks, among other things.

This has put the spotlight on health insurance now more than ever. As per statistics, the total per capita healthcare spending by the government has doubled from ₹1,008 per person in 2015 to ₹1,944 in 2020, but is this enough? This might sound alarming, but the total expenditure by the central and state governments for 2020 was ₹2.6 trillion.

With healthcare costs rising by the day, health insurance is critical for both you and your family members. But there’s one thing to keep in mind - the amount of sum insured must be higher in these times; after all, it helps you stand in good stead, especially during a crisis.

Benefits of a good health insurance plan The Insurance Regulatory and Development Authority of India (IRDAI) wants non-life companies to mandatorily offer standard Covid-19 health insurance policies that pay for treatment. While there are

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several companies that are offering a temporary Covid plan, we must remember that health is a long-term investment rather than a short-term priority.

With a reputed company like Reliance General, you have health insurance plans that will safeguard you from all kinds of ailments. The premium you pay will be much lower when you’re young - for example, when you are 25, you can have a cover of Rs. 3 lacs at a premium of just Rs. 5,546. But as we grow old, we need a higher sum insured. If you buy a cover of Rs. 9 lacs at the age of 50, then the premium amount gets almost tripled i.e. Rs. 14,856.

In these times, it is anyway beneficial to have a higher sum insured, especially because it will keep you safe and sound from any health adversity that comes your way.

Think no more and insure yourself and your family in these times – as they say, ‘Health is wealth’!

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Looking for Covid-specific insurance? these policies could be of use - Business Standard – 9th July 2020

With the rise in Covid-19 cases across the country, the Insurance Regulatory and Development Authority of India (IRDAI) has asked all general insurance companies to mandatorily offer a standard benefit-based health insurance product by July 10, 2020. While these standard plans – Corona Kavach and Corona Rakshak – are yet to be launched, there are several other policies have been launched in the past few months to cover this dreaded illness.

Supriya Rathi, whole-time director and principal officer, Anand Rathi Insurance Brokers says: “We already have a few players in the market who are offering Covid-specific insurance products and with this recent directive, we can expect the

number of such offerings and benefits to only grow.” Corona Kavach and Rakshak: Insurers will offer two standard Covid-19 health insurance policies. Corona Kavach is a standard indemnity-based policy whereas Corona Rakshak is a fixed benefit plan.

Amit Chhabra, Health Business Head, Policybazaar.com says: “Many could not afford a comprehensive plan but still wanted coverage. These offerings are expected to cost around Rs 300 a month. On an average, a comprehensive medical policy costs around Rs 1,000 a month.”

As per IRDAI, Corona Kavach will cover the cost of treatment of any co-morbid conditions, including pre-existing conditions, along with the treatment for the coronavirus infection or disease with the tenure ranging from 3.5 months to 9.5 months. Under Corona Rakshak policy, if someone is diagnosed with Covid-19 and hospitalised for three days, a fixed amount (the sum insured) will be paid by the insurer. Vikas Mathur, head, health insurance, Universal Sompo General Insurance says: “If you have an aged member in the family without co-morbidity, a base policy is fine. But if senior citizens have co-morbidity and vulnerability is high, an additional policy through Corona-specific cover will help save the base policy for another line of treatment.”

Covid-specific policies: In April, when the virus started spreading in India, several insurers such as Star Health & Allied Insurance, Royal Sundaram General Insurance and Chola MS General Insurance launched policies to cover it. Chola’ policy offers lumpsum benefit equal to 100 percent of the sum insured as base cover, with the sum insured options in multiples of Rs 10,000 to Rs 50,000. Additional benefits are

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available for an extra premium such as daily cash benefit in multiples of Rs 250 till Rs 1,000. These benefits are over and above the base sum Insured. In case of a job loss, it is 50 percent of the base sum Insured for an additional cost. Star Health & Allied Insurance’s policy provides a lumpsum benefit of Rs 21,000, and Rs 42,000 if the insured is diagnosed with Coronavirus that requires hospitalisation. It comes with a 16-day waiting period and does not require pre-acceptance medical screening. Similarly, Royal Sundaram’s customers have the option to choose from two types of the sum insured Rs 25,000 and Rs 50,000. However, the benefits under this policy shall be excluded for the first 30 days from the policy inception date. Rathi doesn’t recommend these for individuals: “For individuals who already are covered under health plans, any treatment expenditure arising due to Covid-19 hospitalisation will be covered under their existing health insurance plans (as per directive by the IRDAI) and hence, buying a comprehensive plan would be more beneficial for an individual or their families.”

Currently, Covid- specific plans are available online for a few hundred rupees. And if you are someone who does not have a policy – personal or group cover – it might be a good idea to pick up one of these policies for the time being. Arogya Sanjeevani: It’s a fairly straightforward policy that comes with good coverage at a reasonable price. All insurance companies mandatorily offer a policy called Arogya Sanjeevani, with similar features and the differences are only in pricing or claims ratio.

Arogya Sanjeevani Health insurance policy covers Covid-19 and provides a decent health cover of Rs 1 lakh to Rs 5 lakh for health treatment of various illnesses. Your sum insured (excluding the bonus) will be increased by 5 percent for each claim-free

policy year as a cumulative bonus. If the customer cannot afford the comprehensive cover then the Covid-specific cover is a good option.

Comprehensive health policy: If you already have a basic health plan, know that all health plans cover the treatment and hospitalisation of all diseases, including Covid-19. But the figure of Rs 5-7 lakh sum insured may be insufficient for an average middle-class family in India in such challenging times. Then it makes sense to top up. Says Sanjay Datta, Chief Underwriting and Claims at ICICI Lombard General Insurance: “Corona Kavach can be used to cover those who do not have any insurance and can’t afford to buy Aarogya Sanjeevani or in situations in which your office or personal cover is insufficient. This can also work as an addition to a high-risk family member. If you are looking to buy new insurance and want something affordable, Arogya Sanjeevani makes sense.” If you can’t afford the above two, you may want to wait for Corona Kavach or Corona Rakshakas far as the Covid-specific policies go.

(The writer is Bindisha Sarang.) TOP

Andhra Pradesh Government brings Covid-19 treatment under Dr YSR Aarogyasri, State’s free healthcare scheme - The Hindu Business Line – 9th July 2020

In a significant move, the Andhra Pradesh Government has on Wednesday brought Covid-19 treatment under the purview of Dr YSR Aarogyasri, the flagship free healthcare scheme of the State. With this the treatment cost of Covid-19 patients will be borne by the State government. This facility also covers empanelled private hospitals.

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Detailed guidelines including the permissible cost of treatment under different categories has been released by the Government.

The private hospitals have been categorised into three types. While the first category of hospitals caters entirely to Covid-19 treatment, the second type will be treating both coronavirus and non-Covid-19 patients. The hospitals which will treat non-Covid-19 cases have been placed in the third category.

The Chief Executive Officer of Dr YSR Aarogyasri Trust has been entrusted with the responsibility of overseeing the smooth implementation of the scheme and relief to patients by Jawahar Reddy, Special Chief Secretary, Health and Family Welfare Department, according to a release.

(The writer is G Naga Sridhar.) TOP

Health insurers feel the brunt as Covid claim amounts triples to Rs 562 cr in a month - The Economic Times – 9th July 2020

India’s health insurance sector is feeling the financial brunt of the coronavirus pandemic, with claimed amounts more than tripling to ₹562 crore in less than a month, led by Maharashtra and Delhi.

The number of claims also tripled to 35,000 on July 3 from about 11,000 reported on June 8, according to data from the General Insurance Council, which ET accessed.

The total amount claimed by policyholders on account of various treatment costs rose from ₹178 crore on June 8, the data showed. Almost 23,000 claims worth ₹184 crore were settled as of July 3, according to the data.

Maharashtra, the state with the highest number of cases, alone reported 15,753 claims worth ₹195 crore, followed by Delhi, the worst-affected city, which submitted 5,909 claims worth ₹134 crore. Other states with a high number of claims include Tamil Nadu, Karnataka, Haryana and West Bengal.

While the average claim amount increased to ₹1.64 lakh in July from ₹1.56 lakh in June, the average settlement reduced to ₹80,427 from ₹90,118, indicating that policyholders were getting lower pay-outs even after Covid-19 treatment costs increased.

ET reported earlier that the variance between the amounts claimed and settled was largely due to disparities in the pricing of treatment by hospitals and the scope of coverage of standard health insurance policies. Most health policies cap room rents and do not cover costs of personal protection equipment and gloves used by hospital staff, which are included in patients’ bills.

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Industry executives told ET that the claims could run into “thousands of crores” if the rising trajectory of new cases is not arrested soon even though only an estimated 4% of the population in India have any sort of medical cover.

India had more than 742,000 Covid-19 cases as of Wednesday, of which almost 265,000 were active.

NEW PRODUCT Meanwhile, insurers selling health policies anticipate a further surge in claims after the regulator directed them to make a coronavirus specific insurance product available by July 10 to widen the availability of health insurance.

However, insurers are factoring in the sharp surge in claims to price the product and ET has learnt that most private insurers are yet to file their products with the Insurance Regulatory and Development Authority of India amid uncertainty about the trajectory of cases in the country.

“The big hurdle in the development of Covid-specific products is the fact that while there is no standard on pricing of treatments by hospitals and the costs differ from state to state, insurers cannot have state-specific premiums,” said the CEO of a private insurer. “The question is – how does an insurance company price for a pandemic that has still not peaked?”

The regulator’s standard Covid-19 cover guidelines mandate insurers to make available both a short-term indemnity-based cover and a fixed-benefit cover with a sum-assured limit of ₹5 lakh and ₹2.5 lakh, respectively, for hospitalisation on account of the coronavirus.

Life insurance companies including the Life Insurance Corporation of India have been allowed to sell the benefit cover to widen its reach.

“Health insurance penetration in India is less than 4% of the population,” said an industry executive. “The product has been designed largely to increase the coverage of health insurance.”

According to two insurance company executives, the premium could be in the range of ₹2,000 to ₹4,000, depending on the size of the cover and add-ons chosen by buyers.

(The writer is Ashwin Manikandan.)

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COVID cover: Cap set at Rs 18,000 per day for ICU with ventilators at accredited hospitals – The Indian Express – 8th July 2020

The General Insurance Council (GI Council) has come out with a schedule of rates for Covid-19 claims being filed with its member insurance companies, capping the ICU with ventilator care at Rs 18,000 per day in the case of ‘very severe sickness’ in hospitals accredited with National Accreditation Board for Hospitals & Healthcare Providers (NABH).

The new rates are being fixed after discussion with expert medical professionals employed by member

insurance companies in order to allay the fears of all insurance policyholders and bring complete clarity and transparency in the treatment of Covid-19 insurance claims, it said.

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In the case ‘moderate sickness’, NABH-accredited hospitals (including entry level) can charge Rs 10,000 per day (including Rs 1,200 for PPE) and for non-NABH accredited hospital) it would be Rs 8,000 (including including cost of PPE Rs 1,200).

In the case of ‘severe sickness’, for ICU without need for ventilator care in NABH accredited hospitals (including entry level) , the rates would be Rs 15,000 and for non-NABH accredited hospitals it would be Rs 13,000 (including cost of PPE Rs 2,000).

In the case of ‘very severe sickness’, in NABH-accredited hospitals, ICU with ventilator care (invasive/ noninvasive), the charges should be Rs 18,000 (including cost of PPE Rs 2,000) per day and in non-NABH accredited hospitals, the charges should be Rs 15,000 (including cost of PPE Rs 2000. These rates will cover consultation, nursing charges, room stay & meals, Covid testing, monitoring & investigations, biochem & imaging, physiotherapy, PPE, drugs and medical consumables, biochemical waste management & other protective gear, Bed side procedures like Ryles tube insertion, urinary tract catheterization. “These charges will be reviewed by the GI Council every month,” it said.

However, the exclusions per day will apply to interventional procedures like, but not limited to, central line insertion, chemoport insertion, bronchoscopic procedures, biopsies, ascitic and pleural tapping which may be charged at the rack rate as on December 31, 2019. High end drugs like Immunoglobulins, Meropenem, Parenteral Nutrition and Tocilizumab are to be charged at the minimum retail price (MRP). High-end investigations like MRI, PET scan will also be charged at rack rates of hospital as on December 31, 2019.

It said dead body storage and carriage at Rs 5000 and for treatment of any co-morbid conditions, an additional amount of up to Rs 5,000 would be allowed. Geographically, hospitals in metropolitan cities will be allowed 100 per cent of these rates while other state capitals and the rest of the country can charge 90 per cent and 75 per cent respectively, GI Council said.

GI Council said insurance companies will be guided by the treatment protocols prescribed by ICMR, GI Council said. The settlement under the Covid-19 insurance claims will be subject to the limits and terms of the policy of respective insurer. These rates are broadly based on the schedule of rates suggested for covid-19 treatment by Niti Ayog panel.

These rates will be applicable to both cashless and reimbursement Covid-19 claims in States, Union territories and cities where any government authority has not published standard charges for Covid-19 treatment. Wherever Covid-19 treatment charges have been published by any government authority, those charges will be applicable to insurance claims with member companies, it said. NABH is a constituent board of Quality Council of India (QCI), set up to establish and operate accreditation programme for healthcare organizations.

(The writer is George Mathew.)

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Insured coronavirus patients get a raw deal – Live Mint – 8th July 2020

Coronavirus patients in some parts of India have discovered to their chagrin that the cashless claim facility offered by their insurers may not be honoured by hospitals, adding to their distress at a time of crisis.

Family members have had to frantically arrange large sums of cash at short notice as critical patients waited to be treated because hospitals wouldn’t accept cashless settlement of hospital bills by the insurance provider.

Ahmedabad-based Parthiv Hitendrabhai Salot and his father contracted covid-19, the respiratory disease caused by the coronavirus. “My father required immediate hospitalization because his lungs were affected," Salot said in an interview, recounting their troubles after they tested positive on 8 June.

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“All private hospitals I reached out to said they will not entertain cashless claims for covid-19 patients. I had to arrange for money by borrowing from my relatives and friends overnight. I was asked to deposit ₹1 lakh at the time of admission," said Salot, 31, a chartered accountant.

Salot soon discovered that if hospitals refuse cashless facility, there isn’t much that the insurance company can do. On paper, insurance companies do have a network of hospitals that accept cashless admissions, but they have little control if the hospitals decide to stop the facility. For two days, Salot looked for private hospitals that would accept cashless claims without success.

Surat-based Tejas Jariwala, 34, faced a similar unpleasant situation when two family members tested positive for the

virus. “All 12 private hospitals we called for admission said they don’t have a provision for cashless claims," said Jariwala, research head at a stock markets consultant. Considering the situation, the family decided to check with the public health authorities and managed to get the patients admitted to a government hospital.

Private hospitals claim their hands are tied. Dr Bharat Gadhavi, president of Ahmedabad Hospitals and Nursing Homes Association (AHNA), said, “In many cases the insurers have not revised cashless agreement rates in the last four years, and given medical inflation, the old rates are untenable. Also, hospitals are cash-strapped and this further gets worsened by the fact that insurers don’t settle the claims on time," said Gadhavi.

Gadhavi said his association has come up with standard rates and if they are acceptable to insurance companies, hospitals would be very happy to process cashless treatment.

On 3 July, similar incidents were brought to light by Kirit Somaiya, a Bharatiya Janata Party Leader (BJP), on Twitter. Somaiya brought to the regulator’s notice that a few private hospitals in Mumbai were not providing cashless claims facility. “Hospital authorities insist the patient should first make payment to the hospital on completion of treatment and, thereafter, the hospital authority will pay them back after getting insurance money from the insurance firm," said Somaiya in his letter to the insurance regulator.

Dr. Sujit Chatterjee, chief executive of Dr LH Hiranandani Hospital and president of Mumbai Healthcare Providers Association, said he hasn’t heard of hospitals denying cashless claims. “We haven’t come across any instance of hospitals denying eligible cashless claims. But if cashless claims are being denied, one of the possible reasons could be that the insurance firm and the hospital are not in agreement over the rates for covid," he said.

Dr Girdhar Gyani, director general, Association of Healthcare Providers (India), said cashless claim denials may be few and far between. “For instance, Delhi, Haryana and Karnataka have prescribed covid treatment rates and this is what we take from uninsured patients. However, in case of insured patients, rates are as per agreements and so maybe if insurers insist on government rates, it could lead to a denial of cashless claim," he added.

Insurers said the denials is not widespread. “If the hospital is saying no to cashless claims, it’s not the insurer’s decision. In many cases, we wouldn’t even know," said Bhabatosh Mishra, director – underwriting, products and claims, Max Bupa Health Insurance Co. Ltd.

(The writers are Disha Sanghvi and Deepti Bhaskaran.) TOP

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Telangana: Private hospitals say no to treating patients under Aarogyasri – The Times of India – 8th July 2020

Private hospitals have rejected the possibility of treating Covid-19 patients having Aarogyasri cover. During a video-conference with governor Tamil Isai Soundararajan on Tuesday, the managements said that it won’t be feasible for them as they were not getting Aarogyasri scheme reimbursements from the government.

Sources told TOI that governor wanted the hospital representatives to come up with cost-effective Covid packages and offer services to the patients having the Aarogyasri cards. “But, the representatives refused her suggestion,” a source said.

Somesh Kumar and special CS, health, Santhi Kumari were also present. To a query from Soundararajan, the representatives said drugs like Remdesivir are prohibitively expensive and hence, the government should come up with a scheme to get these medicines at a concessional rate.

“Majority of the hospital bills are steep because of the high cost of medicines which is not included in the packages,” they pointed out. In response to the governor’s suggestion to create a plasma bank, they said the government should create the plasma bank and seek permission from ICMR on an ad hoc basis to treat patients. The governor also told the medical colleges affiliated with private hospitals to increase the bed strength in the wake of reports of shortage of beds. “I made it very clear to them that I want the best medical care provided to the patients all the time, especially in this extraordinary pandemic situation.”

The governor also told the private hospitals to give utmost importance to pregnant women infected with Covid-19. She also made suggestions like avoiding delay in test reports, beginning early treatment of the needy patients, having a common pool of beds, making it known to people so that they need not run from one hospital to another in search of beds and ensuring staff availability and augmenting the beds with oxygen and ventilator facilities to meet the surge in the positive cases.

The managements, it is learnt, had told her that they were facing shortage of staff and beds. “The availability of beds can be announced by the government by tracking data from all the hospitals,” a representative said.

(The writer is Sribala Vadlapatla.)

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Corona Kavach will be an affordable, well-defined cover - The Hindu Business Line – 7th July 2020

With growing concerns over the unabated rise in Covid-19 cases, insurance options are also getting more broad-based and well defined. Apart from general health cover policies that already cover the pandemic treatment costs, a first of its kind standard Corona insurance product, Corona Kavach, will be available in the next couple of days. Following a mandate from the Insurance Regulatory and Development Authority of India (IRDAI), all general insurers and standalone health insurance players have to offer this indemnity product compulsorily by July 10. According to sources, the regulator has already received many product filings from insurers and is ‘busy’ scrutinising them.

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The insurers are expecting a better response to Corona Kavach. ‘‘It’s a very good product which is beautifully designed to cover all specific aspects associated with Covid-19 such as testing and home treatment costs which help customers,’’ Bhaskar Nerurkar, Head, Claims, Bajaj Allianz General Insurance, said.

The indicative list of treatment costs brought out by the General Insurance Council (GIC) is also expected to have a positive impact on all corona-related claims. According to M N Sarma, Secretary-General, GIC, Covid-19 hospitalisation rates have been arrived at by the Council after taking into account the rates fixed by different State governments and after consultations with doctors.

Atul Sahai, CMD, New India Assurance and Chairman, GIC, said the general rates are high and the new rates would be about one-fourth of that. The move helps all stakeholders. “Now, the insurer will know how he has to pay to the hospital while a policyholder will have clarity on how much he will get from the insurer,’’ Nerurkar said. Insurers feel that the new Covid rates would also benefit smaller, private sector insurance companies who may not have tie-ups with a large network of hospitals. Significantly, PPE as well as Covid testing are included.

(The writers are G Naga Sridhar and Surabhi.)

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Covid Health Insurance Cover: To buy or not to buy – Financial Express – 7th July 2020

As India continues fairly in the race of increasing Covid-19 cases, globally, the IRDAI directive to mandatorily offer a standard health insurance policy for all policy holders, is much required. Provision for covering all hospitalisation expenses along with consumables like PPE, gloves, mask and other similar utilities, shall provide immense relief to consumers expending for treatment currently. The actual benefit of such covers can be eventually discovered as the situation subsides, cause as of now the world is still engrossed around the disease and the associated panic.

Inadvertently, extending the existing policy coverage to rope in such adverse situations was quintessential. Given that the disease specific coverage is limited to Covid-19, the price point shall be admittedly lower than any comprehensive health policy. As a note of caution, the specific cover in no way should be taken as a substitute for regular health covers.

Hereafter, consumers have an option to choose from the three primary available options. There have been previous announcements of extending coverage of ordinary policy to include Covid-19 expenses and that stands valid till date. So, the specific coverage announced could be an added supplement along with the normal policy or it could be purchased only for Covid-19 depending on affordability options, as the case maybe.

The driving idea recently has been to facilitate consumers in all possible means to battle against the stymie virus. As the country resumes in a staggered fashion, there has been increasing movement of people throughout. Considering the number of reported cases everyday, there is no hint of the curve flattening anytime soon. It appears that the virus is here to stay much beyond our anticipation. In the interest of the consumers, paying a single premium yielding fixed benefit is an extremely benefitting proposition.

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On the contrary the challenge lies on for the insurers to devise profitable pricing for the product. The general trend is that premiums are computed base on age bands, however, for the current data set there is not established age-wise trend as of now. The entire phenomenon is absolutely dependent on the contraction of the infection or the recovery rates.

Notably, the base cover will be offered on an indemnity basis while the optional cover ought to be made available on benefit basis. Being a standard product, insurers are having the open option of fix the prices based on their underwriting understanding, consequently, there being varied premiums across insurers. The indemnity policy has definitely ticked the right box aiding towards providing a dedicated financial cover. The much needed measures include including the specific requirements put forth by Covid-19 which is a miss in normal policy covers. The gleaming part of the story is that pre-existing co-morbid conditions have been considered under the purview of the new product.

The consumers have to wait till a condensed policy is circulated with clear directions regarding the underwriting process, whether or not it shall cater to the vulnerable populace, and how soon will there be access to the product online. The relative prices of such products are further looked up to compared with the regular short term covers available.

In a nutshell, the policy is definitely a go-to choice for someone not having a health insurance cover and is desperately looking for one to acquire the necessary protection owing to the ongoing crisis. In the absence of a regular policy, the short-term product can yield much benefits. Nevertheless, the wise choice would be to go for a regular policy as it would cater to treatment for covid as well as other ailments.

There is not much of a significant addition to the existing framework. On closer scrutiny of the provisions, it can be well said to be restrictive with a cap on the policy coverage. For a first time buyer it is rather advisable to have a broad perspective while choosing the policy cover, not merely focussing of Covid-19. Apart from the affordability issue, the new plan might be avoided in all probabilities. A disease specific health cover might not yield much in the long run. The intelligent option here would be to opt for a comprehensive policy to receive adequate coverage from all possible illnesses.

(The writer is Sonam Chandwani.)

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Covid-19 impact: Insurers get claims worth ₹350 crore - The Hindu Business Line – 7th July 2020

While the country is fighting the coronavirus (Covid-19) pandemic, insurers are battling the increasing quantum of claims arising out of it. The total claims registered with the insurers, mainly general and standalone health cover players, have reached a whopping ₹350 crore already, according to sources. With about 7.2 lakh cases in the country as of now, the claims are pouring in on the insurers. “Though this has been one of the fears for the industry right from the beginning, it has now come true. ₹350 crore is a huge amount and we are looking at our books as to how to deal with it,” a

top executive of a private general insurance company said on the condition of anonymity. Our enquiries with few insurers revealed that there has been a surge in claims in the last 45 days. “The spatial distribution of claims is in sync with the cities where we are witnessing rapid increase in numbers,” said

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a source adding that the customer base as shown by claims is showing an urban tilt given the relatively higher penetration of health insurance in cities. With over 21,000 deaths so far, even life insurers are not immune from the corona effect.

More to come A managing director of a private life insurance company said the initial concern for the industry was likely disruption in premium payment due to the impact of the lockdown and job-losses. “But now, we need to worry over increasing claims ratio too, and nothing is predictable on the pandemic as of now,” he said. With more and more cover options being made available to shield people from adverse financial impact of contracting the virus coupled with steady increase in number of cases, insures are worried over the financial hit they might take in the days to come. It is learnt that the regulator IRDAI is also keeping a close tab on the quantum of claims and its financial impact on the insurance companies.

(The writer is G Naga Sridhar.)

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Health Insurance: Why you should go for OPD health cover – Financial Express – 7th July 2020

Health insurance is inevitable in today’s inflation-hit age with medical costs rising at an unabated pace. But then, have you ever wondered what if your health insurance policy might just have a considerable gap? And even a comprehensive health insurance policy may not pay you for a tooth filling or for a few appointments with your doctor.

Unfortunately, the cost of dental treatment, diagnostic tests, periodic doctor consultation, preventive check-ups and medicines, collective called as ‘out-of-the-pocket’ expenses, can disturb your savings routine significantly as they are not covered under

most health insurance plans. Moreover, in India, out-of-pocket medical expenses roughly account for 62% of all healthcare costs.

What are OPD Expenses Thankfully, based on the changing consumer expectations and needs, health insurance policies are getting redesigned to include OPD (Out Patient Department) related expenses. Many latest health insurance plans offer wide coverage for customers that include day-care procedures and treatment for vector-borne diseases to maternity benefits and cover for OPD expenses, among others. Health insurance plans that offer OPD cover assist the insured to claim expenses other than that incurred during hospitalization. The term OPD refers to expenses incurred for a visit to a clinic or a hospital or an associated facility for diagnosis and treatment based on the advice of a medical practitioner. On these visits, the patient does not have to be admitted as day-care or in-patient. An OPD cover assists the insured to claim expenses other than that incurred during hospitalisation. Moreover, compared to regular health insurance policies, there are more tax benefits associated with these plans.

Types of OPD Cover Typically, there are two kinds of coverages available in the market to cover OPD expenses – Closed Network, and Open network OPD policies. Network specific OPD covers restricts customers to a specific network of OPD practitioners; whereas Open Network policies allow customers to go to any OPD

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practitioner and expenses are reimbursed. For a customer, Open network OPD policies are better as that gives flexibility to go anywhere for any OPD treatment.

Additionally, OPD coverages either come as a part of your base plan, or secondly, they can be bought as a separate rider. However, most health insurers offer coverage for inpatient, day-care hospitalisations and inpatient hospitalisation claim. In maximum cases, the policyholder gets OPD benefits such as medicines, consultations and diagnostic tests under pre-hospitalisation i.e. 30-90 days and post-hospitalisation i.e. 60-180 days. You may also get a separate defined OPD limit apart from OPD being covered under inpatient and pre and post-hospitalisations provided your policy allows the same. Though, policies with separate OPD coverage are relatively priced at a higher-end in comparison with policies giving coverage for basic inpatient hospitalisation expenses.

For instance, a health insurance plan with Rs 5 lakh sum insured for a 30-year-old individual with basic inpatient plan will cost around Rs 7,000 – Rs 10,000. Now, if someone opts for the OPD benefit up to Rs 10,000 along with the regular Rs 5 lakh sum insured health plan with the same parameters, the premium of this plan will come out around Rs 14,000 – Rs 17,000.

Who Should Buy OPD Cover OPD cover is for everyone who think they might incur healthcare costs which do not require in-patient hospitalisation. This covers minor medications like viral fever and in cases of some chronic conditions like diabetes, arthritis, or back pain. For any other chronic condition that requires regular visits to the hospital, OPD insurance remains a must buy. When looking for health insurance costs regarding doctor’s consultation fees, health check-ups, dental treatment, pharmacy bills, diagnostic tests, and others should not go disregarded to make the most of your health insurance cover.

OPD cover allows the policyholder to make claims for any expenses incurred, not including hospitalisation. However, one must learn that the OPD treatments are considered only in network clinics and hospitals. You can claim OPD expenses without an extensive wait and can make multiple claims within the same year until the limit is exhausted.

Options Available One of the most recent plans that provide comprehensive OPD cover within your base plan is Digit’s OPD Policy (Non-Network). The policy offers OPD cover up to Rs. 10,000 and is available in two variants – PB OPD Family and PB OPD 1 Adult. The policy covers you for major OPD expenses that include Professional Fees, Diagnostics, Surgical Treatment, Medication, Psychiatric Illness and expenses on Dental Treatment and Hearing Aids.

For now, the plan is available in two sum insured options – Min 5 Lakh and Max 10 lakh, you may choose any sum insured from R. 5 lakh to Rs. 10 Lakh. Some other plans offering OPD cover in the base plan include Max Bupa’s Heart Beat – a comprehensive individual/ family floater plan that offers a minimum sum insured worth Rs 15, 00,000. For OPD claims made under this policy, the maximum limit available for the policy holders is Rs 30,000.

Max Bupa’s GoActive plan offers cashless OPD coverage to the customers at affordable prices. The plan doesn’t require customers to self-finance for OPD or block their hard-earned money. It comes with OPD coverage built into the base premium. Customers buying the plan get up to 10 cashless/reimbursable OPD consultations with 10,000 doctors through Practo’s comprehensive doctor network. These could be consultations with general physicians, specialists, dentists, orthopaedics, paediatricians or with any other medical consultant as per the need of the customers. Religare Health Insurance offers OPD coverage under its Care plan wherein the OPD expenses are covered on reimbursement basis.

(The writer is Amit Chhabra.)

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Covid-19 treatment: What all to know from a health insurance perspective – The Indian Express – 7th July 2020

Recently, Delhi resident – Mr Sandeep Thakur got his 63-year-old father – Mr Sudhir Singh admitted to a prominent New Delhi hospital after his father tested positive for the novel coronavirus. Mr Singh was admitted on the morning of 26th May and was discharged on 7th June late evening. For his treatment – that went on for 13 days – the total hospital bill stood at Rs 3.33 Lakh.

Sandeep was quite relaxed as he had a family floater health insurance cover with Rs 20 Lakh sum insured which covered his father as well. He was sure that the entire hospital bill will be taken care of by the

insurer as there wasn’t any co-payment clause attached with the policy. However, while settling the claim with the insurer at the TPA desk of the hospital, Sandeep was shocked to hear that his insurer will only pay Rs. 2.01 Lakh of the entire bill amount as the remaining Rs. 1.32 Lakh i.e. almost 40 per cent was billed under ‘Medical Consumables.’

Unfortunately, just like many others, Sandeep was unaware of the fact that a health insurance policy generally does not covers the cost of most medical consumables used in the treatment of a specific disease or condition during hospitalisation. Medical consumables usually cost not more than 10 per cent or so of the total hospital bill, however, in case of COVID-19 it has been observed that just like in the case of Sandeep Thakur, the cost may go as high as 40 – 50 per cent of the total treatment cost. Under COVID-19, medical consumables or non-payable items include PPE kits, N-95 masks, face shields and shoe covers.

Rise in hospital bills Hospitalisation amidst the ongoing COVID-19 pandemic, even if a patient has not tested positive for the novel coronavirus may add several thousands of rupees in out-of-pocket expenses as insurers are unwilling to cover the costs of personal protective gear under the insurance policy as they fall in the list of non-payable items. COVID-19 positive patients could end up spending as much as half of their hospital bills and non-COVID patients a fourth of their hospital bills on personal protective equipment (PPE) during an extended hospitalization. This is because, considering the highly contagious nature of the deadly virus, hospitals have made it mandatory for their entire staff to wear protective gear, including bodysuits and face shields, which indirectly adds to the costs of patients.

However, it is not just the cost of PPE kits that is responsible for the steep rise in the hospital bill but there are other consumables as well included in the hospital bill. With the rise in the number of COVID-19 positive cases, the demand for consumables and surgical accessories like crepe bandage, tissue paper, slippers, gown, foot covers, disposable gloves, sheets, syringes, masks etc. has also gone up in the hospitals.

The mandated quarantine period of 14 days is also an important reason for the significant rise in the cost of consumables. Another critical reason for the increase in hospital bills for COVID-19 patients is the need for social distancing of patients. While earlier i.e. before the spread of coronavirus, in a hospital ward where there were 20 people who used to get treated, now the number has decreased to 10 people in a ward. In order to keep a check on your hospital bill, customers must always keep a check with the insurers about what all is covered under the health insurance plan and what all is not.

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Buy health insurance wisely As per the Insurance Regulatory and Development Authority of India (IRDAI), it is entirely the insurers prerogative to include or exclude consumables like PPE Kits in their health covers and charge premium accordingly. Though it has been observed that most of the health insurance policies where the premium is priced low usually will reasonably cover some of these consumables but if the policy is priced well and if it is a high-end policy, the insurer usually covers all types of accommodation and most of the consumables that are used at the time treatment during hospitalisation.

With the number of COVID-19 positive cases rising exponentially in India every day, even the regulatory body is putting in efforts to help the customers wherever possible. IRDAI in one of its guidelines issued in September last year directed the insurers that costs of room charges or procedure charges specified or costs of treatment (including costs of diagnostics) are to be covered under health insurance and claims shall be settled in accordance to the terms and conditions of the policy contract.

It is important for the insurers to put in place measures to ensure that items which are part of room/surgical procedure/treatment (including diagnostics) shall not be billed to the policyholders by the hospitals and every insurer shall inform or notify the same to the hospitals and the policyholders suitably. Items that need to be subsumed into procedure charges and cost of treatment include Gause Soft, Gauze, Surgical Drill, Eye Kit, Cotton Bandage, Apron, etc.

For people planning to buy a health insurance policy anytime soon or if your health insurance policy’s renewal date is nearby, it is advised to check with the insurer whether your policy covers such consumables or not. Currently, only very limited health insurance plans are available in the market that cover consumables used in the treatment of Covid-19 while processing a claim. It is important to check the detailed list of consumables in the policy document as the list of non-payable consumables varies from insurer to insurer.

(The writer is Amit Chhabra.) TOP

IRDAI removes ₹5 lakh cap on sum insured under Arogya Sanjeevani policies - The Hindu Business Line – 7th July 2020

The Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurers some flexibility in the norms on Arogya Sanjeevani, the standard health cover policy.

In modifications to the existing guidelines on the product notified on Tuesday, the regulator said health insurers can now offer minimum sum insured of less than ₹1 lakh and maximum of greater than ₹5 lakh.

Per the guidelines on ‘Standard Individual Health Insurance Product’,

general and health insurers were allowed to offer sum insured options ranging from minimum ₹1 lakh to a maximum of ₹5 lakh (in the multiples of ₹50,000) for Arogya Sanjeevani Policy. The norms have been modified to facilitate the general public, IRDAI said in a circular.

The regulator has mandated all insures to sell the basic standard health policy with uniformity since April with a view to make health cover affordable to all.

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Commenting on the modification of norms, Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance, said: “It is certainly a welcome move. I believe the more options a customers has to choose from, the better it is for them to opt for a cover which suits their requirement.”

The move will also allow insurers to offer wider range of sum insured starting from ₹50,000 and not limiting it to ₹5 lakh on higher side, he added.

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HC notice to IRDAI on plea for insurance for senior citizens at affordable rates – The Hindu – 7th July 2020

The High Court of Karnataka on Tuesday ordered issue of notices to the central and State governments and the Insurance Regulatory and Development Authority of India (IRDAI) on a PIL petition seeking measure for medical insurance for senior citizens either free of cost or at affordable rates, including for COVID-19 treatment.

A Division Bench comprising Chief Justice Abhay Shreeniwas Oka and Justice M. Nagaprasanna passed the order on the petition filed by Letzkit Foundation, Bengaluru. The

petitioner pointed out that a large number of senior citizens in the country, who are not covered under the Central Government Health Scheme (CGHS) and other health schemes aimed at economically weaker sections, either have no health insurance facility as they can’t afford it or are paying high annual premium to get health insurance coverage from public or private health insurance service providers.

Even in health insurances provided to senior citizens above 60 years after collecting high premium amount, the insurance companies impose several conditions to exclude pre-existing ailments and diseases and use these conditions to narrow down the claims, the petitioner said, while pointing out that CGHS and health schemes for the poor does not exclude pre-existing ailments and diseases from health coverage.

Pointing out that around 8 percent of the country’s population was above 60 years as per the 2011 census data, the petitioner said that shockingly, the IRDAI’s recent directive to insurance companies to provide COVID-19 health insurance excludes senior citizens aged above 65. The petitioner also pointed out that senior citizens, who are covered under health insurance, are not given benefits for COVID-19 for various reasons or were asked to pay additional premium. “It is not enough for authorities to just make available medical instance policies but such policies should affordable to every citizen irrespective of their place of living and avocation,” the petitioner contended.

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Instead of taking a large health cover, use top-ups to boost it – Live Mint – 7th July 2020

Insurers have seen a significant increase in the demand for health insurance ever since the covid-19 pandemic set in. It does make sense to have a health insurance, not just to cover yourself against the novel coronavirus, but for overall protection.

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Given the increasing medical costs, some insurers and aggregators such as Max Bupa, Religare Health and Policybazaar are recommending a ₹1 crore cover, with the rationale that a high-value cover would provision for treatment abroad, offer higher room category and cover all degrees of ailments or diseases. According to Policybazaar, a ₹1 crore cover on an average costs ₹30,000-35,000 for a 40-year-old individual.

But do you really need a ₹1 crore health cover? Ideal sum insured It’s imperative to take the future costs of treatment into account while buying insurance. An 8% medical inflation would mean the cost of a procedure will increase from, say, ₹6 lakh to about ₹13 lakh in 10 years.

“Younger families need a larger cover as they are likely to fall prey to chronic diseases later in life, by which time medical inflation will drive up costs. Also, new therapies

could be costly, and the difference between life and death will be the ability to fund clinical costs," said Joydeep K. Roy, partner and leader, insurance, PwC India.

However, this doesn’t mean you delay buying health insurance because as you age, insurers look at you as a high-risk proposition, resulting in stringent underwriting and higher premiums.

Typically, ₹1 crore covers are bought by high net-worth individuals because they either travel abroad for their healthcare needs or avail of services from high-end providers. If you’re buying a ₹1 crore cover while you’re still young, the premium may look attractive but there’s more to it than meets the eye.

“Taking a ₹1 crore floater cover can be a buy-it-forget-it strategy, insulating the family from future healthcare expenses. However, one must not buy these policies simply because of attractive premiums. Be aware of the fact that as you grow older, premiums can spike significantly. Insurers can also apply for a premium hike," said Mahavir Chopra, founder, Beshak.org, an independent research platform for insurance buyers.

Financial planners too don’t recommend going for a base policy with a high sum insured. “The premium increase will be huge as you grow older," said Melvin Joseph, a Sebi-registered investment adviser and founder of Finvin Financial Planners.

“In my opinion, given the healthcare inflation of around 7%, every adult in the family needs a hospitalization cover of ₹10 lakh-15 lakh. So if a family has two adults and two children, one must target holding a health insurance cover of ₹20 lakh-30 lakh, and of course utilize super top-ups," said Chopra.

According to Naval Goel, CEO and founder, PolicyX, for a 30-year-old male, a ₹1 crore base cover would cost about ₹30,000 annually. However, a ₹20 lakh base cover with ₹25 lakh top-up would cost about ₹20,000.

Affordable options Top-up plans serve as a great way to increase the cover but also keep the costs in check. A top-up is a regular indemnity plan that covers hospitalization costs but only after a threshold limit is crossed. This limit is called deductible. “Essentially, these are plans with a high deductible amount. They are affordable because the cost of medical treatment doesn’t go beyond ₹10 lakh very often. “If you buy a ₹50 lakh top-up cover with a deductible of ₹10 lakh, then the policy will kick in only if the cost goes beyond ₹10 lakh," said Goel. The cost up to ₹10 lakh has to be borne either by the policyholder or the base cover.

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Another option is to buy a family floater that provides health cover to the entire family unit in a single policy. Typically, if one member of the family makes a claim in a year, the cover reduces by that much on the entire unit or family for the remaining year. Some plans also restore the sum insured, but they could come at a slightly higher cost.

Premiums for family floaters are decided based on the oldest member covered under the plan. Lovaii Navlakhi, managing director and CEO, International Money Matters, said there are ways to bring down your costs by applying probabilities of all family members making a claim together. “The quantum between the base policy, floater and top-up will be determined by each individual differently, based on their estimate of costs, family history, probability of claim and budget."

If you have a family history of chronic illnesses, you could look at higher sum insured or buy a critical illness policy. These are defined benefit plans that pay a lump sum if a claim arises.

Mint’s take Even if policies with a high sum insured look affordable now, there’s no assurance they will continue to remain that way. “An insurer can increase the premium based on the claims experience. Only those who are ready for that should go for high base policies. Otherwise ₹25 lakh-30 lakh coverage through a base policy of ₹5 lakh-10 lakh and a super top-up is just fine," said Joseph.

Also, avoid plans that come with sub-limits on room rent because you could end up bearing a chunk of the hospital bill if you opt for a room that costs more than what your policy contract covers.

Uncertainty around health is only increasing given our lifestyles and now the pandemic. If you can’t spare too much, opt for a policy that fits your budget, but you must buy one.

(The writer is Disha Sanghvi.)

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International travel policies add caveats for Covid – The Times of India – 5th July 2020

Though international flights are yet to resume, several travel insurance companies have designed packages that cover medical and hospitalisation costs if a traveller tests positive for Covid-19. Insurance experts and travel agents, however, point to a clause in most of these policies that states “insurance will be covered for medical expenses that arise from contracting the disease overseas”, thus making ineligible travellers from India who test positive upon reaching another country.

Many countries, such as the UAE, Thailand, Sri Lanka and Malaysia, offer Covid-19 tests upon arrival at the airport. If a flier tests positive, he or she is admitted to a local hospital. In such a

situation, the travel insurance should cover cost of hospitalisation.

“However, the clause states insurance will be covered for medical expenses that arise from contracting the disease overseas. But in such cases it would be presumed the flier contracted the virus while in India and the service provider will not give the claim,” K Vijay Mohan, president of Tours and Travels Association of Andhra Pradesh told STOI.

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Travel associations are now in talks with service providers to change the clause so that fliers are insured even if they test positive upon arrival in another country.

Meanwhile, insurance companies have raised attention to the need to carry out rapid tests for travellers once international flights resume.

“For us, a Covid-19 negative certificate is a prerequisite. Only then will our product cover emergency hospitalisation expenses on being

tested Covid-19 positive on foreign soil,” said Dev Karvat, founder and CEO of India & Emerging Markets, TrawellTag Cover-More.

(The writer is Arpit Basu.)

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Can you be denied health insurance? – The Hindu – 5th July 2020 You may have heard that 'insurance is sold, not bought.’ This reluctance to buy insurance has a notable exception. Health insurance is much desired and available from general and health inssurers. Life insurers can issue benefit, not indemnity, policies covering health.

Yet, just because you want a health insurance policy, it does not mean you will get it. Renewal, too, can be denied. No insurer is obliged to issue you a health insurance policy. The premium, terms and conditions are also at his discretion. While the underwriting decision on a new policy lies with the insurance company, here is what the regulations say. Health insurance policies should allow age at entry of at least 65 years. Exceptions include maternity or certain group policies such as student policies. Also excluded are overseas hospitalisation and personal accident policies and pilot products.

(A pilot product, a concept that has come up in the last few years, is a close-ended new insurance policy to explore how to cover risks not covered until now or are exclusions in existing products.) On age grounds, your insurer cannot deny you a renewal or because you made a claim in the previous policy years. In other words, once you have a policy, you are entitled to life-long renewal in the normal course.

(The writer is K. Nitya Kalyani.)

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Towards ‘fair’ pricing of Covid treatment - The Hindu Business Line – 4th July 2020

Over the last several months, authorities in different parts of the country have capped testing and treatment charges for Covid-19, following patient complaints of being “fleeced”.

Hospital bills, in some cases, have run into several lakhs as patient-families say they are made to pay for personal protective equipment (PPE), for example, at prices that are more than the market price. The prices of laboratory tests too have been capped, hovering at about Rs. 2,000 per RT-PCR test. But it does not end there as patients may need two tests or more. This could extend to family members, if a person tests positive for Covid. The costs add up, as laboratory tests are just the beginning, with treatment costs, including hospitalisation, medicines, etc, set to follow. And, there’s the fact that lab costs are not covered by health insurance, though treatment is.

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Acknowledging how the costs stack up for patients, hospital and laboratory industry players, however, urge authorities to not take a “one size fits all” view. A more scientific approach to pricing, they say, will

protect consumers and not force healthcare institutions into an unviable corner.

Hospitals in Maharashtra, Rajasthan, Tamil Nadu, and Delhi, for instance, have capped treatment costs. “In Mumbai, hospitals have not increased prices since December last year,” says Gautam Khanna, Co-chair, FICCI Health Services Committee and Chief

Executive, Hinduja Hospital. Different hospitals have cost structures linked to the quality and services provided, he says, adding “fixing Covid treatment prices from a patient perspective is fine, but capping non-Covid services too is not appropriate.”

Caught between rising input costs (equipment, PPE costs, masks, etc) and capped overall treatment costs, he says, “There’s angst in hospitals”.

Industry hands point out that someone always foots the bill, be it patients through out-of-pocket payments or citizens through taxes paid towards running public utilities and hospitals. “Private hospitals are borrowing money to pay salaries to their staff, and that was in April/May,” he says, indicating that some could be facing closure. “If access is the focus, then it’s necessary to ensure that hospitals are open,” he says, and urges authorities to think through prices keeping industry costs also in the picture.

“Hospitals need to pay salaries to doctors, nurses and support staff,” he points out. Healthcare workers are getting demotivated as they are criticised for their actions, despite being at work every day at much risk to themselves and their families, he rues, adding, “Have a heart for people coming to work at the hospitals, because for every one incident that goes wrong, another 99 are okay.” On PPE billings, he says, “When PPEs are billed to a patient, it’s not that of just the doctor attending to the patient, but five other support staff also on the job, who the patient may not have noticed.”

Khanna urges Governments and organisations to make health insurance mandatory for people. Aspiring for free healthcare will require greater Government healthcare spends and more, to ensure top-quality services across healthcare institutions.

Testing times When it comes to diagnostic tests and out-patient treatments, health insurance does not cover them, points out Arindam Haldar, Chief Executive of SRL Diagnostics. Against the Covid backdrop, patient-centric price-caps are understandable, he says. The concern is when price-caps vary; for example, Chandigarh caps testing prices at Rs. 2,000, Delhi at Rs. 2,400, Maharashtra at Rs. 2,200 and Rs. 2,800 (with sample collection) and Tamil Nadu at Rs. 3,000 and Rs. 3,500 (with samples). Input costs are not capped and there’s GST payment, etc, leaving little room for them, when the end-price is capped as well. The industry is talking to multiple vendors to contain costs, he says, adding, “But there should be one scientific authority to approach to sort things out”.

While the Government does well on keeping prices in check, a collaborative approach works better even in patient interest, than an adversarial one, says an industry hand — something Governments may do well to keep in mind as rising Covid cases indicate there’s still much ground to cover.

(The writer is PT Jyothi Datta.) TOP

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Why the standard covid-19 health policy may not come cheap – Live Mint – 3rd July 2020

The Insurance Regulatory and Development Authority of India (Irdai) has mandated all general and standalone health insurance companies to offer the ‘Corona Kavach’ indemnity health insurance policy for covid-19 from 10 July. Other than this, insurers have also been encouraged to offer a standard fixed-benefit product as well as short-term covid-19-specific policy.

According to insurers, the intention behind mandating a product for covid-19 is to ensure that the uninsured population has

some amount of financial cushion. However, the price has a big role to play, and offering short-term products for covid-19 at affordable premiums may not be possible, said insurers.

“As an insurer, we’ve still not seen the peak rate for covid-19 and per day reported incidence is expected to increase. The higher the number of tests, the higher will be the incidence rate. These are some factors that insurers will have to take into account before deciding on the premiums," said Parag Ved, executive vice president and head-consumer lines, Tata AIG General Insurance Co Ltd.

Insurers are not allowed to have zone-based or geography-based pricing for the standard covid-19 products, and insurers believe this too will impact premiums. Further, the nature of these policies is short-term, which means insurers may end up seeing a spike in claims in a small period of time as against regular health plans where claims are spread across the year.

“We will be covering the peak risk period because we’re entering a phase where cases are increasing sharply. By the time the risk goes down, the policy period will end because it’s a short-term policy so the premium will have to be adjusted accordingly. The policies will be priced keeping in mind the expected incidence rate of the future and the demographic spread of the risk," said Ved.

The tenure of the policy could also have an impact on premiums. Insurers said premiums for a 3.5-month policy could be higher than a 9.5-month one.

The standard indemnity policy shall cover the cost of personal protective equipments (PPEs) and home treatment as well as any co-morbid conditions (even if they are pre-existing) arising out of covid-19. However, insurers we spoke with said that they may choose not to cover customers who are at a higher risk of contracting the infection or the premiums for such individuals could be significantly high.

Adarsh Agarwal, appointed actuary, Digit Insurance said, in April, the total testing-to-positive ratio was only about 4%, and now it’s about 10%. Agarwal said unless we have a vaccine, the number of cases by the end of the year will be very high.

“With the indemnity policy also paying for homecare expenses, the frequency of claims will go up but the size could be smaller for home treatment. However, in regular health policy, the claim is payable only on hospitalization and not all may end up being hospitalized. Given these factors, our view is that the premium for this policy could be higher than some of the affordable plans such as Arogya Sanjeevani," he added.

With hospitals running out of beds, homecare could see a rise, and to cater to demand, healthcare providers are coming out with packages for home treatment, and some insurers believe these packages may not come cheap.

The premiums for Arogya Sanjeevani, which also is a regulator-mandated health policy, vary from insurer to insurer. According to Policybazaar, for a 30-year-old, the premium charged by Raheja Health is ₹3,190 plus GST whereas the same policy from HDFC Ergo General Insurance costs ₹7,352 plus GST for a ₹5 lakh

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cover. An industry expert, who didn’t want to be named said premiums for Arogya Sanjeevani are decided based on the premiums of the insurer’s flagship product for the same sum insured.

Premiums for flagship products are generally on the higher end of the spectrum in terms of pricing. Religare Health’s flagship product for a ₹5 lakh sum insured costs ₹6,600 and the Arogya Sanjeevani policy costs about ₹6,000 whereas Raheja QBE’s flagship policy costs ₹4,700 and the Arogya Sanjeevani product costs ₹3,700.

“Though the features of the flagship policies may not be very different, depending on the claims ratio and how aggressive an insurer wants to be with the pricing, the premiums may be very different. The same could happen with standard products for covid-19 as well because insurers may want people to opt for their flagship products instead," said the spokesperson quoted above.

While these policies target covid-19, insurers estimate they may not come cheap. We will update the readers as pricing gets clarity.

(The writer is Disha Sanghvi.)

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COVID-19 health insurance: This policy will cover quarantine expenses as well – Live Mint – 3rd July 2020

In the wake of coronavirus pandemic, the Edelweiss General Insurance has extended their COVID-19 policy to those who are under quarantine in facilities identified the government. The coverage amount will be up to the sum insured under the policy, the company said in a statement. So, even if you are not diagnosed with COVID-19 and opt for any government-run quarantine centre for self-isolation, you will be able to get the benefits of Edelweiss health insurance policies.

For isolated patients, the health insurance policy will ensure coverage for the entire period of quarantine. Customers can also claim the amount being paid for coronavirus test. "For quarantined patients, the health policy ensures coverage for the entire period of quarantine with up to 100% of the claim amount being paid against quarantine and detection charges," the company said in a statement.

At a time when public transport is running in a limited manner, the Edelweiss Health Insurance plans to cover domiciliary hospitalisation cost as well. "In case any patient is in a remote location and is unable to reach the hospital during the quarantine period, Edelweiss Health Insurance will support domiciliary hospitalisation for the patient," the insurer said.

The policy holders may visit nearest hospital for immediate treatment and and the insurance company will reimburse the expenses later. "In case of cashless benefits, customers are requested to visit EGI’s Network hospital with their TPA card for any medical assistance," the company said.

"In an unfortunate situation of being detected and testing positive, or suspected and quarantined in a facility specified by the government, we have ensured that at least the cost burden is eased for our customers," said Shanai Ghosh, CEO, and Edelweiss General Insurance.

For COVID-19 cases, the insurance company has waived off the initial waiting period of 30 days after you buy the policy. "This approval will be applicable, both for Edelweiss Health Insurance and Edelweiss

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Group Health Insurance policies, till such time that the virus is declared as abated by the government and World Health Organisation," the company added.

(The writer is Anulekha Ray.)

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MOTOR INSURANCE

Car Insurance expired in Lockdown Period? Avoid These Common Mistakes while Renewing Car Insurance Online - The Hans – 9th July 2020

A lot of first-time insurance buyers tend to rush into renewing car insurance and in the bargain, commit a few silly mistakes, which in the long-run can prove costly. Read on to know more about the common mistakes you must avoid while renewing car insurance.

Today, as most insurance companies in India offer online services, buying and renewing car insurance has become easier than ever before. In the purview of the prevalent lockdown across the country, it is not possible to visit the insurance company to buy or renew your policy. But, that does not mean to stay without

an insurance; you can renew your policy online.

When you renew your policy online, you must take your time to research and find the best plan to suit your needs at the best price. Here are a few common mistakes that you must avoid.

Not exploring other options It is the general notion among people that you must renew the policy from the same insurer. However, when you renew the policy, you can choose a different insurance company. So, don't hesitate to explore different options; compare the plans from different insurers, and you may find a policy that offers better coverage than your current plan, and with an affordable premium.

Buying a policy with the cheapest premium Most first-time car insurance buyers in India tend to make their purchase decision based on the premium price alone. Considering the cost as the deciding factor is a big mistake. When you compare car insurance online, apart from the price, you must also take into account the coverage offered, claim process, etc. Additionally, low premium often means less cover. Underinsuring your car can prove by paying a low premium to be costly in the long run.

Buying third-party insurance As per the Motor Vehicles Act, all car owners in India must have valid third-party insurance, and many people buy this policy only to comply with the law. But, this can be a costly mistake if your car suffers damage due to an accident. A third-party insurance policy provides coverage only for the damages caused to the third-party.

If any damage occurs to your car or if you get injured in an accident, you must bear the repair and treatment expenses from your pocket. Hence, experts recommend buying a comprehensive policy as it covers both third-party liabilities as well as damages to your car.

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If you have a third-party only insurance, you can switch to a comprehensive policy at the time of renewal to get wider coverage and reduce your financial liability.

Not reading the policy documents Research suggests that nearly 89% of the insurance buyers buy car insurance online without reading the terms and conditions. The car insurance policy documents can be extensive, and most people do not have the patience to read through the pages. This can be a big mistake, as it is paramount that you understand each term mentioned in the document so that you do not face any legal issues during claim settlement. You must know about the IDV, deductibles, vehicle details, coverage mentioned in the policy documents.

Not buying the right add-ons A lot of first-time car insurance buyers under-estimate the importance of add-ons. Add-ons are additional coverage options that you can purchase to widen the scope of your regular insurance policy. While the add-ons may increase the premium price, it would come handy during the claim settlement process, as it helps in reducing the financial liability. Some of the most popular types of add-ons that you can consider buying, include – Zero-depreciation cover, Roadside Assistance cover, Engine Protection Cover, Personal Accident Cover, etc.

When you renew your policy, you can either purchase new add-ons or remove the ones that you purchased before as per your needs.

Now that you are aware of the common mistakes that people commit, make sure that you avoid these mistakes while you renew your car insurance policy online.

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'Pay as you drive' vs 'Pay as you use' motor insurance policy: Which can be more beneficial? - The Economic Times – 8th July 2020

You should know that these pay as you use or pay as you drive motor covers come under the sandbox regulations due to which the policies will have certain limitations. Therefore, your decision should not be based solely on how much it will cost.

(The writer is Navneet Dubey.)

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How to buy or renew car insurance policies during COVID times? These start-ups are showing the way – Moneycontrol – 8th July 2020

Home-grown Indian start-ups are trying to make buying and claiming insurance simpler by digitising asset inspections. Traditionally, they are done physically, which makes the claims process slow, and pushes up the chances of frauds, say industry insiders.

Can it be replaced with a complete snapshot of the asset clicked by the customer? Or a short 360-degree video? Entrepreneurs are saying yes and are utilising artificial intelligence.

Computer-vision platforms can generate reports by looking at images, segregate scratches, dents, assess damage and measure the extent of the problem. These reports can be used by insurance companies to assess assets and share their quotations.

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How does it work? Take the example of Inspektlabs, founded by former executives of McKinsey and Zomato, Devesh Trivedi and Sanchit. While it has started with car insurance in India and Japan, it has plans to scale up globally and expand to other assets like mobile phones, two-wheelers and eventually maybe real-estate.

“The biggest use is in issuing new insurance covers, renewal of insurance and even for FNOL,” Trivedi told Moneycontrol. FNOL stands for First Notice of Loss, which is the first notification given to the insurance company in case of damage or theft to the asset by the customer.

The early stage start-up currently has a seven-member team, all dedicated to products. Trivedi said that they would hire a few more in technology and sales. The New Delhi-based Inspektlabs recently raised $600,000 in a pre-series A round from a clutch of investors.

Ahmedabad-registered Wimwi Insurance is also trying to take vehicle insurance remote. Having started in 2018, the start-up is trying to use computer vision software to leverage customers’ mobile phones to replace the physical inspection leg. The company claims to reduce the inspection process from a few hours to around 15 minutes.

“We are currently pitching this product to insurance companies and intermediaries, who want to provide a self-initiated inspection process to customers purchasing a policy for their vehicles. Eventually, we will expand our technology expertise to provide instant inspection of assets like mobile phones, household items etc,” said Ravinder Kumar, chief executive of WIMWIsure. Kumar had previously worked at cab aggregator Ola.

Now, with the Insurance Regulatory and Development Authority of India (IRDAI) relaxing the self-declaration limits in the case of claims up to Rs 75,000 for motor insurance and Rs 1.5 lakh for non-motor claims, Kumar said that platforms like his will have more acceptance.

WIMWIsure said that it has processed more than 2 lakh claims and inspections already. A customer gets a link from the insurer on his or her verified mobile number. Through the link, they can download the app or use a web app to click pictures as well as shoot a video of the car and submit it online.

The company, at the back-end, looks at the pictures and submits the report. Not only third-party players, but new-age insurance companies themselves are also trying to take the inspection process digital.

Animesh Das, who heads products at Acko, told Moneycontrol that the Bengaluru-based start-up is piloting a product in-house that will let consumers inspect the cars through an app. “We are currently training our systems and organising data sets. In 6-8 months, we should be ready,” said Das.

Acko had, in the past, deployed its own people for inspection. “We had developed capabilities in-house to send an inspector, Swiggy-like, to the location and finish formalities instantly, upon a customer request,” he said. Now, with the self-inspection module, Acko wants to take it a step forward.

The COVID Effect COVID-19 has forced digitisation across multiple businesses, and entrepreneurs feel that the mandatory physical-distancing norms could push many customers to choose self-inspection over getting someone else to do it.

Trivedi from Inspektlabs pointed out that insurers are more ready than before, given that surveyors cannot travel freely.

A top fintech angel investor who has evaluated these companies pointed out that many customers missed the renewal of car insurance as they had to stay indoors. For them, these services have been a saviour.

(The writer is Pratik Bhakta.) TOP

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'Extend vehicle insurance validity,' private transport operators urge insurance regulator – Live Mint – 6th July 2020

Private passenger transport operators' body Bus & Car Operators Confederation of India (BOCI) has requested insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) to extend vehicle insurance validity. The appeal came amid coronavirus outbreak in the country.

"We urge IRDAI and the government to extend vehicle insurance validity equal to number of lockdown days from the date of expiry without additional premium and no increase in annual premium for next one

year," BOCI president Prasanna Patwardhan said.

Patwardhan mentioned operators are under pressure from multiple sides — fuel price hikes, reduced capacity due to social distancing norms, loan EMIs, taxes and insurance premiums, among others.

"The ongoing financial burden with no revenue in the past quarter has pushed us on the brink of collapse," he said.

BOCI operators run 17 lakh buses and account for 30 crore passenger trips. Its members also operate 1.1 million cars which are used for which are used for intercity travel, as school buses, and as tourist vehicles.

At present, the operators will not be able to pay premiums, leading to large number of defaults, as they have not been able to operate since lockdown began, he said.

Owners pay about ₹1 lakh per year towards insurance premium for a bus, and for premium buses it might go up to ₹2 lakh, he added.

The vehicles have been grounded since lockdown, therefore third-party damage is ruled out. Since a major part of the premium amount is paid towards third-party damage, the insurance companies should increase validity equal to the number of lockdown days, BOCI said.

"The validity extension sought will bring much-needed relief to an already stressed sector," Patwardhan added.

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New vehicle owner? You have to buy these insurance covers as long-term motor policy starting August 1 - Times Now – 5th July 2020

Starting August 1, 2020, the long-term comprehensive motor insurance which covers damage to the vehicle and damages (or losses) caused to a third-party person, for three years for cars and five years for two-wheelers, will be scrapped.

Animesh Das, Head of Product Strategy, Acko General Insurance, said: "Discontinued part is the long term own damage (OD) component of the policy. Features and coverages for both own damage and third-party part are the same as before, just that the own damage part is now limited to just 1 year."

This move will help new vehicle buyers as they will not have to pay a huge premium cost all at once at the time of purchasing a new vehicle.

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Das further said: "The decision will help the customer with the flexibility to switch to some other insurer for the OD part post 1 yr of expiry. Also, this will reduce the upfront cost while purchasing a new vehicle."

According to Irdai, the distribution of long-term third party policies is challenging as it is unaffordable for vehicle owners.

The possibility of forced selling or being linked to loans was high and that policyholders are saddled with long term product with no flexibility, it said.

Why IRDAI is scrapping the long-term comprehensive policy? Rakesh Goyal, Director, Probus Insurance, Insurtech Broking Company, said: "On discovering several loopholes in the way the long term package products used to work, the IRDAI decided to scrap these three years (for cars) and five years (for two-wheelers) motor insurance products.

With the current decline in the auto industry, the elimination of this long term product is definitely a relief for customers who are considering buying a new vehicle. Also, for the long term package products, if the customers were not happy with the service, he or she still had to stick with the product as it didn't provide any flexibility to alter the options."

"In addition to this, the structure of No Claim Bonus (NCB) differed from insurer to insurer, thereby leading to confusion and discontentment among the insured. The insurer had also been facing challenges in regards to the actuarial pricing for long term own damage cover and also the possibilities of forced selling had been elevated," he added.

Options available to new car buyers from August 1, 2020 New vehicle owners will have to mandatorily buy a three-year or five-year long-term third-party motor insurance for cars and two-wheelers, respectively. They also have the option to buy a standalone annual OD policy separately from any insurer.

"Customers will still have an option to buy 2 variants of long term motor policy, a 3 year third-party + 1-year OD or a 3 year TP only policy as opposed to 3 variants earlier that additionally included 3 years third-party and 3 years OD policy (5 years in case of bike)," Das explained.

(The writer is Aparna Deb.)

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New auto insurance scheme: No compulsory deductible, service warranty on car repair – Live Mint – 5th July 2020

In a bid to provide relief to customers, Liberty General Insurance recently launched ‘Liberty Assure’ service as a part its existing Private Car Package Policy. The auto insurance customer who avail this service, will no longer need to pay the 'compulsory deductible' for every claim. No extra premium will be charged from the buyers to provide this unique cost-effective feature, the company said in a statement.

Compulsory deductible is a mandatory component of every auto insurance that you purchase for your private car. It is a fixed amount set by car insurance company, which is deducted at the time of claims. It is determined based on the engine capacity of an one’s car. At present, the compulsory deductible amount for private cars of 1500 cc and above is ₹2,000 and for private cars of 1499 cc and below is ₹1,000.

For example, if the compulsory deductible for a private car is ₹2,000 and the customer incurs a total assessed claim expense of ₹2500, then the customer’s insurance company will pay ₹500, after deducting

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the compulsory deductible of ₹2,000. Now, with 'Liberty Assure', this ₹2000 will also be paid by the insurance company.

As the Liberty insurance customers will no longer need to pay the amount charged as compulsory deductible, they will be able to save some more money.

Moreover, the Liberty Assure feature will have an additional 'service warranty' for customers. It will cover 'any defects arising from the repair of an accidental vehicle.'

"Liberty insurance’s preferred provider network (PPN) workshop will make such loss good by providing the required repair or replacement of the defect at no

additional cost," the company said. The customer can visit the same workshop with the service warranty certificate for any further repair or replacement of the defect. However, the service warranty will available up to 6 months or 10000 kms. The warranty will be effective from the date of delivery of vehicle from Liberty’s PPN Workshop.

Launched under IRDA's new Sandbox initiative, the 'Liberty Assure' feature will be available in eights cities across the country — this feature will be available to the customers across eight locations- Delhi-NCR, Bangalore, Ahmedabad, Jaipur, Kolkata, Hyderabad, Mumbai, Chandigarh.

As an additional benefit, if the customer avail vehicle repairing option at Liberty’s PPN workshops, they also get some free value-added services such as pick-up & drop, exterior car wash, engine tune-up and A/C check up among others.

"All customers intimating their vehicle’s own damage partial loss claim(s) under Private car package policy during July 03, 2020 — December 31, 2020 will be eligible to avail the benefits specified under this unique feature at the company’s PPN workshops only," the insurance company said.

"With the introduction of ‘Liberty Assure’—an industry first offering where the customers can save the cost of compulsory deductible without paying any additional premium—the company re-affirms its commitment to innovate and design value-driven products and services for its customers," said Roopam Asthana, CEO & Whole Time Director, Liberty General Insurance Ltd.

(The writer is Anulekha Ray.)

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CROP INSURANCE

Kharif 2019: A third of Fasal Bima claims not honoured – Financial Express – 9th July 2020

The Centre has written to state governments urging them to invoke the penalty clause on insurance companies that have defaulted on settling the claims made by farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY). The move follows reports that insurers are yet clear as much as a third of the over Rs 15,000 crore claimed by farmers as crop insurance for the Kharif 2019 season, even as the new summer season began on July 1.

The delay in claims settlement by insurance companies under the PMFBY and Weather Based Crop Insurance Scheme (WBCIS) have been taken seriously by the government in view of the hardships faced

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by farmers during the lockdown period and the slump in demand for agriculture produce, according to an official source.

While four public sector insurers — AIC, Oriental, New India and National — together were yet to settle claims of Rs 2,589 crore as on June 29, six companies in the private sector could not clear Rs 2,142 crore by then, official data shows.

AIC, the largest PMFBY player, has acquitted itself by disbursing Rs 7,117 crore (83%) to farmers against claims of Rs 7,946 crore by June 29.

However, New India and Orient still had outstanding amounts at 92% and 66% respectively of the claims. IFFCO Tokio and

Reliance General, according to the data, were reported to have not paid 99% and 94% respectively of the farmers’ claims by June 29.

Of course, almost 100% of the admitted claims eventually get paid — nearly all of the claims pertaining to the seasons before 2018-19 now lie settled, whereas the unsettled amounts for kharif and rabi 2018 are only 5.8% and 14% respectively. Yet, timely release of the monies to the farmers is important for the sustainability of the farming activities, and this has become a more pressing need owing to the Covid-19 crisis.

According to PMFBY/ WBCIS norms, settlement of claims has to be completed by insurers within 60 days from crop cutting experiment (CCE) date, failing beyond which states can levy penal interest at 12%/annum on them and pass on the proceeds thereof to the farmers.

States are also empowered to relax the norms on the basis of genuine reasons for the settlement delays. The CCEs, done during harvesting period to assess the actual yield, start from October and end in January for most of the kharif crops. However, as some crops like tur or cotton in Maharashtra are harvested late the all the CCEs are completed by end of April. So, all kharif insurance claims are required to be settled by end-June latest.

“The department has noticed that substantial amount of claims are still pending for rabi 2018-19 and kharif 2019 seasons where admissible subsidy amount and actual yield data have been provided by the respective state government,” Ashish Bhutani, CEO of PMFBY, said in a letter to states’ agriculture secretaries. He has asked states to impose penalty on the companies and ensure that farmers are paid the claims amount along with penal interest at the earliest.

As all the claims payment to farmers by insurance companies are also subject to receipt of government share in gross premium, the Centre has also stipulated that states have to release their share of premium subsidy within 3 months from requisition made by concerned insurance company, failing which 1% interest per month shall be levied as penalty on the state government.

“Responsibility of any error, omissions and mis-reporting lies with the state’s nodal agency and the insurance company. Both the state and the insurers shall have to resolve all the grievances of the insured farmers and other stakeholders in the shortest possible time,” a government official said, adding all such complaints could not be reason for delaying claims settlement. Claims need to be cleared before start of next season and sowing in 40% of normal area has already been completed in the first month of kharif sowing season (June-September), the official said.

In the three years up to FY19 after the launch of the PMFBY, 5.3 farmers farmers have got Rs 64,541 crore as insurance amounts. Under the PMFBY, farmers pay a fixed 1.5% of sum insured for rabi crops

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and 2% for kharif, while it is 5% for cash crops. The balance premium is paid by the Centre and states in a 50:50 ratio. The premium is decided through a bidding process every year. However, effective from this season the Centre has allowed states to fix premium for 3 years.

Meanwhile, as reported by FE earlier, a drop in crop insurance claims by farmers in the last kharif 2019 season, coupled with the prospect of a good monsoon and robust crop in the current summer season, has pushed down Fasal Bima premiums quoted by insurance companies. Over the years the premiums against sum assured, as quoted by insurers, have been steadily rising, reflecting the firms’ concerns over the shirking margins. The latest trend may be indicating the cementing of the scheme, largely dependent on government support, as a viable insurance model, according to industry watchers.

(The writer is Prabhudatta Mishra.) TOP

Himachal Government implements Bima Yojana for Kharif season - The Tribune – 8th July 2020

The state government has implemented the Pradhan Mantri Fasal Bima Yojana for this Kharif season. The last date for signing up for the insurance of maize and paddy is July 15. Announcing this here today, Agriculture Minister Ram Lal Markanda said the scheme was for non-debtor farmers. The insurance of all debtor farmers would automatically be done by financial institutions.

The insurance will be done by the Agriculture Insurance Company of India, offering maize and paddy a cover of Rs 30,000 per hectare. The premium would be two per cent of the insurance amount.

The minister said a comprehensive risk insurance was being provided through the scheme to cover yield losses due to non-preventable risks such as natural fire, lightning, drought, storm, hailstorms, pests and diseases. He urged the farmers to insure their crops at the nearest primary agriculture cooperative societies, rural banks and commercial banks.

This scheme is not applicable in Kinnaur and Lahaul-Spiti. — TNS

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SURVEY & REPORTS

COVID-19 Impact: Insurance premium volumes will recover only by 2021, says Swiss Re sigma study – Moneycontrol – 9th July 2020

Insurance premium volumes will return to pre-COVID-19 levels by 2021, a sigma study by Swiss Re Institute hopes.

The study said, the sharpest economic contraction since the 1930s will lead to a slump in demand for insurance in 2020, more so for life products, with global premiums expected to contract by 6 percent, than for non-life covers (-0.1 percent).

“The magnitude of premium losses will be similar to that seen during the global financial

crisis in 2008-09, even though this year's economic contraction of around 4 percent will be much more

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severe. Unlike for the global economy, we expect a strong V-shaped recovery in insurance premiums, a remarkable showing considering that the world is currently in the throes of the deepest recession ever,” said Jerome Jean Haegeli, Group Chief Economist at Swiss Re.

The sigma study said, this year's recession will be the deepest since the Great Depression of the 1930s, but it will also be short-lived. The recession will lead to a steep fall in demand for insurance. After growing by 2.2 percent in 2019, global life premiums are forecast to contract by 6 percent in 2020.

Further, the report said that due to prevailing and lower interest rates, savings products will be more affected, while mortality related covers (term plans) will be more stable.

Emerging Asia, led by China, to underpin market resilience through 2021 Swiss Re Institute estimates that total premium volumes in advanced markets (life and non-life) will shrink by 4 percent this year and return to positive growth of more than 2 percent in 2021.

But in the emerging markets, it said that premium growth will remain in positive territory in both years, up 1 percent in 2020 and 7 percent in 2021. Looking at a long-term view, the sigma report said that the ongoing shift in global insurance market opportunity to emerging Asia and China in particular, will continue.

The report said that excluding medical insurance premiums, China remains on track to become the largest insurance market globally by the mid-2030s. “By then India, another emerging giant, will also be among the 10 largest insurance markets of the world,” said the report. Right now, India is at the 11th position globally with total premium volume of $106 billion.

Insurance penetration, density flat in India When it comes to the insurance penetration and density, the figures for India were flat as per the Swiss Re’s sigma report. Insurance density which is premium per capita stood at $78 (approximately Rs 5,850) in FY20 compared to $ 74 (approximately Rs 5,550). The world average was USD 818 (Rs 61,350 approximately).

Insurance penetration (premiums as a percentage of gross domestic product) stood at 3.76 percent in India for FY20. Life insurance penetration was at 2.82 percent while that for non-life stood at 0.94 percent. The world average was 7.23 percent with 3.55 percent for life and 3.88 percent for non-life insurance. In FY19, India had insurance penetration of 3.7 percent with 2.74 percent for life and 0.97 percent for non-life.

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Insurance industry will absorb the earnings shock When it comes to the pandemic, there has already been a slew of claims related to hospitalisation as well as business losses filed.

The sigma report said that there is uncertainty about what the ultimate claims burden from the pandemic will be, with the mid-point of the range of current estimates from various external and public sources at around $55 billion. However, it added that the insurance industry is very well capitalised to absorb losses.

"The industry's capital position means it should be able to handle the COVID-19 shock. The upper end of the range of total property and casualty claims estimates by most external insurance analysis is $100 billion, similar in scale to losses caused by Hurricanes Harvey, Irma and Maria in 2017, which the industry also absorbed," Haegeli said.

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PENSION

NPS annuities: How to earn regular pension after age of 60 – Live Mint – 10th July 2020

NPS subscribers have to mandatorily opt for an annuity scheme at the time of exit. They have to opt for an annuity service provider (ASP) at the time of retirement or premature exit from the scheme.

Annuity under the National Pension Scheme refers to the regular payment to the NPS subscriber after her exit from the scheme. These regular payments are provided by an IRDA registered insurance company called an annuity service provider.

If an NPS subscriber retires at the age of 60, she has to compulsorily buy an annuity plan for 40% of the total corpus. She can withdraw upto 60% in lumpsum.

However, if a subscriber chooses to make a premature exit, she will have to buy a compulsory annuity for 80% of the total corpus. She can withdraw 20% in lumpsum.

Currently there are seven ASPs empanelled with PFRDA to provide annuity services to the NPS subscribers. They are Life Insurance Corporation of India, SBI Life Insurance, ICICI Prudential Life Insurance, HDFC Standard Life Insurance, Bajaj Allianz Life Insurance, Reliance Life Insurance and Star Union Dai-ichi Life Insurance Co. Ltd.

LIC is the default ASP in case the subscriber does not choose one.

The minimum age to receive annuity is predefined by each ASP. Like, HDFC Standard Life and LIC allow annuity from the age of 30 while SBI Life offers the annuity only after the subscriber reaches 40 years of age.

A subscriber can choose from different annuity options provided by the ASPs as below: Annuity payable for life at a uniform rate to the annuitant. Annuitant is a person who receives an

annuity. Annuity payable for 5, 10, 15 or 20 years certain and thereafter as long as the annuitant is alive. Annuity for life with return of purchase price on death of the annuitant.

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Annuity payable for life increasing at a simple rate of 3% per annum. Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime

on death of the annuitant. Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime

on death of the annuitant. Annuity for life with a provision of 100% of the annuity payable to the spouse during his/ her

lifetime on death of annuitant. The purchase price will be returned on the death of the last survivor.

The monthly annuity amounts or pension will differ depending on the option chosen. You can visit the insurer website for specific payouts. Annuity can be received in quarterly, half yearly or yearly frequencies as well.

(The writer is Avneet Kaur.) TOP

Huge relief for salaried! EPF support extended by 3 months for these employees - Financial Express – 8th July 2020

PF Contribution rate 2020: There is good news for salaried individuals. The take-home pay of employees in these times, when many of them are facing a cash crunch, will not be hit by this recent decision of the government. The Union Cabinet chaired by the Prime Minister Narendra Modi has given its approval for extending the contribution — both 12 per cent employees’ share and 12 per cent employers’ share — under the Employees Provident Fund, totalling 24 per cent for another 3 months from June to August 2020.

However, the relief is not applicable to all employees and all organisations. This PF

benefit will be applicable to all those establishments which have up to 100 employees and out of those, 90 per cent are earning less than Rs 15,000 a month. Only employees in such establishments will be eligible for this benefit.

The beneficiaries entitled for 12% employers’ contribution for the months of June to August, 2020 under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) will be excluded to prevent overlapping benefit.

Earlier in March, it was announced that in the employee provident fund (EPF) account, the employee’s contribution of 12 per cent plus 12 per cent of the employer’s contribution will be paid by the government for the next 3 months. But, after today’s announcement, this approval is in addition to the existing scheme for the wage months of March to May, 2020 approved on 15.04.2020.

Effectively, from March till August, i.e for 6 months, the employee and the employer need not contribute towards EPF and instead, the government puts the contribution into the employee’s PF account.

Based on the basic salary of the employee, 12 per cent is equally contributed by the employee and the employer. The interest rate is paid on such monthly running balance that keeps accumulating in the employee’s PF account. As pension contribution, 8.33 per cent of the employer’s contribution goes into the employee’s pension scheme (EPS) every month.

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The relief is a part of the package announced by the Government under Pradhan Mantri Garib Kalyan Yojana (PMGKY)/ Aatmanirbhar Bharat in the light of COVID-19, a Pandemic.

About 72.22 lakh workers working in 3.67 lakh establishments will be benefited and would likely to continue on their payrolls despite disruptions.

(The writer is Sunil Dhawan.)

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NPS account opening gets cheaper with e-PRAN card – Live Mint – 7th July 2020

National Pension System (NPS) subscribers can now opt for e-PRAN card at cheaper rates. Pension fund regulator PFRDA has given subscribers the option of choosing in between physical and e-PRAN cards with both being treated equivalent for all purposes.

"NPS subscribes have hitherto been provided with a physical PRAN (Permanent Retirement Account Number) card along with the welcome kit. In order to give them a choice to optimise the cost i.e. the account

opening charges payable to Central Record keeping Agencies (CRA), it has now been decided that a subscriber may, either opt for physical PRAN card or e-PRAN (PRAN received through email) along with the option to receive welcome kit as well, either physically or through email," PFRDA said in a circular.

NPS account opening charges: To open a Permanent Retirement Account (PRA) under NPS, you can choose two agencies namely NCRA (NSDL-CRA) and KCRA (Karvy-CRA).

Physical PRAN card: PRA opening charges is ₹40 for NCRA and ₹39.36 for KCRA.

e-PRAN card: Under KCRA, PRA opening charges drops to just ₹4 if you opt for ePRAN card and get welcome kit also sent by email. NCRA will charge you ₹18 for the same.

The Pension Fund Regulatory and Development Authority (PFRDA) said both physical and e-PRAN shall be considered at par whenever presented for identification, servicing, exit or any other NPS related processing.

If you chose e-PRAN while opening a new NPS account but want to get a physical PRAN card at a later stage, you can request for it by paying extra.

PFRDA has recently started onboarding new NPS subscribers in a paperless manner through e-signature and one-time password (OTP) based systtem.

For opening of NPS accounts through non-internet banking digital mode through POPs (banks as well as non-bank POPs), OTP received on their registered mobile number and e-mail can be used for paperless NPS account opening.

PFRDA administers more than 3.60 crore subscribers under the National Pension System with an aggregate Assets Under Management (AUM) of more than ₹4.55 lakh crore.

(The writer is Nikhil Agarwal.)

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PPF account extension rules eased: Key things to know – Live Mint – 7th July 2020

In view of the lockdown restrictions, the government has eased the time limit for Public Provident Fund investors who want to extend their account. The subscribers PPF accounts - whose deadline for submitting the extension form is due in lockdown with one-year grace period after maturity - may submit the prescribed form for extension through registered email id by 31st July, the postal department said.

The original copy of PPF extension form can be submitted to the concerned operating agency once the lock down is completely lifted, it added.

PPF accounts mature in 15 years and they can be extended beyond 15 years in blocks

of five years. They can be be retained with or without making further contributions. The corpus will earn continue to earn interest till the account is closed.

If PPF account holders want to continue with the contribution mode after maturity, they will have to submit Form H within one year from the date of maturity of the account. Otherwise, fresh deposits into PPF account will not earn any interest. Also, the fresh deposits in the PPF account will not be eligible for deduction under Section 80C of the Income Tax Act.

If PPF account holders don't close the account or submit the form after the account matures, no fresh contribution will be allowed but the balance will continue to earn interest.

Meanwhile, the Central Board of Direct Taxes (CBDT) through a notification also extended the time limit by a month till July 31, 2020, for making various investments for claiming deductions under the I-T Act, which includes Section 80C (PPF, NSC etc), 80D (mediclaim), 80G (donations) etc, for 2019-20.

The government has allowed PPF subscribers to make deposits till 31st July in their accounts for FY 2019-20 subject to the condition of maximum deposit ceiling of ₹1.5 lakh. The government has also announced some relaxation in the eligibility norms for opening of Sukanya Samriddhi accounts due to the coronavirus lockdown.

(The writer is Surajit Dasgupta.)

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Atal Pension Yojana Subscriber? Now upgrade or downgrade pension amount anytime during the year – Financial Express – 6th July 2020

APY Downgrade Online: Pension Fund Regulatory and Development Authority (PFRDA) has asked all banks to process upgrade or downgrade of pension amount requests of Atal Pension Yojana (APY) subscribers throughout the year with effect from 1st July 2020. However, any upgrade or downgrade can be done once in a financial year. Earlier this facility was available only during the month of April of every year.

This will enable the APY subscribers to increase or decrease their pension plans as per their changing income levels and capacity to pay APY contributions, which is very important to continue contributions in the scheme till 60 years.

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Under the APY scheme, a subscriber would receive a minimum guaranteed pension of Rs.1000 to Rs.5000 per month after attaining the age of 60 years, depending upon his contributions. The subscribers can opt

to decrease or increase pension amount during the course of the accumulation phase, as per the available monthly pension amounts.

Illustratively, someone at age 30 looking to have a pension of Rs 1,000 from age 60, will have to contribute Rs 116 each month till age 60. However, at age 33 he or she decides to upgrade the APY pension account to say Rs 3,000 or Rs 5,000, it is possible to be upgraded. Similarly, the downgrade is also possible by reducing the pension amount from say Rs 4,000 to Rs 3,000.

In case of an upgrade or downgrade, the bank has to be intimated by filling up a form and giving authorisation to the bank for the additional contribution to be paid for Upgraded pension account. In case of a downgrade of pension account, the differential amount would be refunded to the subscriber through direct credit to the bank account (registered under APY). All the contributions into the APY are made either monthly, quarterly or half-yearly through the auto-debit facility from the savings bank account of the subscriber.

After the death of such subscribers, same pension amount would be paid to the spouse of the subscriber and on the demise of both subscriber and spouse, the accumulated pension wealth as accumulated till age 60 years of the subscriber would be returned to the nominee.

Online upgrade or downgrade APY account For upgrading the APY pension account, one may visit the following link which enables the user to check the differential amount to be given or to be received as per the new pension amount chosen. (https://npslite-nsdl.com/CRAlite/APYUPDNGradeView.do)

One has to enter the PRAN – Permanent Retirement Account Number and the new pension amount.

The monthly pension amount is the amount that you wish to get from age 60. It can be Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000, Rs 5,000.

Similarly, For downgrading the APY pension account, one may visit the following link and enter the PRAN- Permanent Retirement Account Number and the new pension amount. (https://npslite-nsdl.com/CRAlite/APYDNGradeView.do)

Offline upgrade or downgrade APY account To upgrade or downgrade the pension account offline, one has to fill a form and submit it to the bank where the account is registered. The form can be downloaded from the link (https://npscra.nsdl.co.in/nsdl/forms/Form_to_Upgrade-Downgrade_Pension_under_APY.pdf)

One will have to mention the revised pension amount in the form. The bank will then enter the revised contribution amount.

Earlier, from 1st of July, 2020 auto-debit of APY contributions has also started, which was stopped till 30th June, 2020 due to PFRDA’s circular issued on 11th April, 2020 for providing relief to the APY subscribers from out-break of Covid-19. As per current arrangements, if all the pending APY contributions due between April-August, 2020 get auto-debited from Savings account of the subscribers, latest by 30th September 2020, then no penal-interest would be charged to them.

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There are a few functionalities available online for facilitating APY subscribers to access their APY accounts and get various forms without visiting their Bank branch. These functionalities include downloading Upgrade/ downgrade form, PRAN Card Printing, View/download of APY e-PRAN with complete subscriber’s details, Transaction Statement, APY Subscriber Information Brochure and Subscriber Details Modification Form.

The Atal Pension Yojana was launched by Government of India in the May, 2015 and is being administered by PFRDA. This scheme is open to all Citizens of India for joining who are in the age group of 18-40 years, through the bank-branches or post offices where they have their Savings Bank accounts.

(The writer is Sunil Dhawan.)

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National Pension System, Atal Pension Yojana assets under management soar 33 per cent - The Hindu Business Line – 4th July 2020

The assets under management (AUM) of National Pension System and Atal Pension Yojana surged a whopping 33 per cent year-on-year as of June 30 to touch Rs. 4.64-lakh crore.

On the same day last year, the combined AUM stood at Rs. 3.48-lakh crore, official data with pension regulator PFRDA showed. As of end March this year, the aggregate AUM of both NPS and APY was at Rs. 4.17-lakh crore.

Subscriber base The total subscriber base as of end June 2020 touched a milestone of 3.50 crore, up 22 per cent over 2.87 crore as of end June last year.

Speaking to BusinessLine on the latest data, Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory & Development Authority (PFRDA), said that a major part of the growth comes from the ‘All Citizen model’ and the Corporates.

“We are encouraged because this 33 per cent overall year-on-year growth has come despite the Covid-19-induced lockdown in April-June this year. The steps taken by our PoPs (fintech focussed) to digitise the process is really working well. Corporates are on boarding and individuals are also enthused by the government move

to extend tax benefits for investments up to July 31. NPS is slowly coming of age and they are now a distinct investment opportunity available in the kitty of investing public,” Bandyopadhyay said.

He highlighted that a little over a year back, the PFRDA board had allowed pension fund managers to undertake Point-of -Presence (PoP) business, and four managers out of seven had gone for licences.

“Out of the four, two are now doing exceedingly well. This is also giving us fillip in the entire effort,” he said.

Overall growth Bandyopadhyay said that traditionally Central and State Government employees’ contribution is significant to the overall growth of NPS. “This year it is changing. In corporate and ‘all citizen model’, there is decent growth,” he said.

He said that various initiatives are being taken for smooth onboarding of new subscribers to NPS from the comfort of their homes. To further facilitate the ease of NPS account opening, PFRDA had recently allowed subscribers to open their NPS account through One Time Password (OTP) also.

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In this process, the customers of banks (registered as PoPs), who wish to open NPS Account through internet banking of the respective banks, can open NPS accounts using OTP received on their registered mobile.

(The writer is KR Srivats.)

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IRDAI CIRCULARS

List of corporate agents registered with the authority is available on IRDAI website. TOP

IRDAI issued circular regarding Group Credit Life Schemes – Modifications to align the coverage with the moratorium announced by Reserve Bank of India to all insurers.

TOP IRDAI issued press release regarding Corona Kavach policy.

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Gross direct premium underwritten for and up to the month of June 2020 is available on IRDAI website.

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New Business Statement of Life Insurers for the Period ended 30th June, 2020(Premium & Sum Assured in Rs.Crore) is available on IRDAI website.

TOP Working Group to study and make recommendations on formation of an Indian Pandemic Risk Pool.

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IRDAI issued circular regarding formation of a “Panel of Actuaries”. In terms of the powers conferred under section 14(2)(e) of the IRDA Act 1999 and Regulation 6 of IRDAI(Appointed Actuary) Regulations, 2017, Insurance Regulatory and Development Authority of India (IRDAI) hereby invites expression of interest from Actuaries for formation of a “Panel of Actuaries”.

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IRDAI issued circular regarding guidelines on standard individual health insurance product to all General and Standalone Health Insurers (except ECGC, AIC).

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Updated list of TPAs as on 07th July 2020 is available on IRDAI website.

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List of Insurance Marketing Firms as on 30.06.2020 is available on IRDAI website.

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GLOBAL NEWS

Advanced Asia Pacific: All non-life markets in region show growth in 2019 – Asia Insurance Review

All markets in advanced Asia reported non-life premium growth increases in 2019, according to Swiss Re Institute.

However, the deep recession currently unfolding globally will leave its mark on demand for non-life insurance in the Asia Pacific region with premiums forecast to decline by more than 2%.

Firmer rates in Japan and Australia, though, will cushion the blow, says the institute's “Sigma extra 4/2020

World Insurance: Regional review 2019, and outlook” report released yesterday.

The advanced markets in Asia Pacific are Australia, Hong Kong, Japan, New Zealand, Singapore, South Korea and Taiwan.

In Japan, Swiss Re Institute forecasts that non-life premium growth will contract by 3% in 2020, after an average increase of around 4% over the past two years. The COVID-19 induced economic recession, VAT hike in late 2019, and the postponement of the Summer Olympics will be key factors. The negative effect of these will be partially offset by rate hardening after recent typhoon losses.

Eisewhere in advanced Asia Pacific, Hong Kong and Singapore will likely see a sharp reduction in non-life premium growth. The recession-induced slump in demand is expected to be less severe in South Korea and Taiwan.

Non-life profitability The sigma report notes that non-life profits were hit by a series of natural disaster losses in 2019, particularly in Australia and Japan. In Australia, the bushfires ravaging the country since late 2019 may have dealt the industry its first underwriting loss since 2011, though some of the claims may be filed only in 2020. In Japan, insurers faced increased claims resulting from Typhoons Faxai and Hagibis.

Firmer rates in Japan and Australia could help underwriting profitability but are unlikely to be enough to offset the drag from weakening investment results in view of lower yields and equity valuations, says the report.

Life With economic recession projected for most markets in advanced Asia-Pacific, Swiss Re Institute forecasts that life premiums will shrink by around 4% in 2020. A subsequent recovery in 2021 will not fully offset the drop. Unlike in emerging Asia where rising risk awareness is a strong supportive factor, economic constraints and negative wealth effects are more important for advanced markets given already high awareness and penetration rates.

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Life sector's profits Life insurance profitability will remain under pressure because of low interest rates. In Australia, the life insurance sector reported a loss of $174m in 2019 and there are as yet no catalysts for a sustained improvement. The updates to Japan’s standard mortality table in April 2018 have also resulted in narrower mortality margins and lower core profits for life insurers.

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Emerging Asia: Non-life premium growth predicted at 3% this year and next - Asia Insurance Review

Swiss Re Institute has forecast that non-life premium growth in emerging Asia in 2020 and 2021 will average 3% each year, well below the historic trend of 8%. The near-term outlook is clouded by the COVID-19 crisis.

Falling car sales and ongoing de-tariffication will continue to hold back growth in motor premiums, the institute says in its “Sigma extra 4/2020 World Insurance: Regional review 2019, and outlook” report released yesterday.

In comparison, personal A&H insurance, which has performed well in recent years, is expected to continue to grow steadily. Reforms in public health systems are being implemented in several countries including India, Indonesia, the Philippines and Vietnam. These will open more opportunities for private health insurance participation. Growth is accelerating from a low base for agriculture, liability and credit insurance.

The emerging Asian insurance markets are: Bangladesh, China, India, Indonesia, Macau, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam.

Life On the other hand, premium growth in the life market in emerging Asia is expected to remain positive this year, and bounce back strongly after a COVID-19 induced slump, particularly in China. The forecast is that life premiums in emerging Asia will rise on average by 3.4% in both 2020 and 2021.

While premium growth in 2020 will slow, the outlook for the life insurance sector in emerging Asia remains relatively favourable despite the COVID-19 crisis. Increasing risk awareness and alignment of sales channels to the distribution of protection products will help to support growth.

Profitability, though, will remain challenged by a low interest rate environment, as all regional central banks leverage aggressive monetary policies to support economic growth. In the near term, regulations will continue to focus on improving consumer protection and strengthening solvency measures. The conversion to economic solvency regimes like RBC may generate more capital demand and trigger market consolidation.

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Asia: Excess cancer mortality is a concern for many countries - Asia Insurance Review

Changing demographics associated with ageing populations and changing lifestyles in Asia mean that the cancer burden is only set to grow, according to a new report from The Economist Intelligence Unit (EIU). As a reference, Asia-Pacific had an estimated 8.8m new cases and 5.5m cancer deaths in 2018.

The EIU report “Cancer preparedness in Asia-Pacific: Progress towards universal cancer control”, sponsored by the world’s largest biotech company Roche, examines the findings from the EIU’s Index of Cancer Preparedness and describes the complexities of the cancer challenge facing 10 Asia-Pacific countries: Australia, China, India, Indonesia, Japan, Malaysia, Philippines, South Korea, Thailand and Vietnam.

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The report says that countries in the vast Asia-Pacific region show great diversity in their healthcare needs, and responses to cancer are highly influenced by their stage of economic development:

High-income countries with established healthcare infrastructures are primarily dealing with quality-of-care concerns.

Upper-middle-income countries are refining their universal health coverage systems to close access gaps and ensure financial sustainability.

Lower-middle-income countries are setting up the foundations for an increasingly important cancer challenge.

The research found a strong association between income level income level and overall cancer preparedness as measured by the Index of Cancer Preparedness: that is high-income countries outperform upper- and lower-middle income countries.

Furthermore, a strong correlation was seen between overall score in the Index of Cancer Preparedness and cancer control outcomes as measured by the ratio of mortality to cancer incidence in the countries. This demonstrates that, in broad terms, better preparedness to manage the cancer burden equates with achieving

better cancer outcomes. Differences were observed between countries’ ability to address the cancer burden.

Given that as many as 70% of cancer cases in low- and middle-income counties in Asia are diagnosed at a late stage, an emphasis on preventive services and moving from opportunistic to population-based screening is needed. While Indonesia and Malaysia have demonstrated strong growth in health spending, and China has the biggest reduction in out-of-pocket health expenditure in the analysis, it is still only high-income countries that meet WHO-recommended spending for universal health coverage.

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