The COVID-19 pandemic has disrupted some foundational processes in our highly interconnected world. One of these critical processes is that of issuing insurance policies and processing claims. In times of such global health crises, the entire insurance sector is under tremendous pressure.
On the one hand, they have to change their existing business processes without much notice or preparation, and on the other, they also have to ensure that more people are insured. This is because, due to lack of insurance policies, many people have been forced to apply for instant personal loans and medical emergency loans to cover the cost of sudden medical expenses. This is particularly true for a country like India, where the number of policyholders, as compared to the total population, is very low.
In the last few years, the insurance industry has been focusing on lifestyle diseases that are becoming common. A 2016 WHO Report lists heart disease as the most common cause of death across the world. A gradual increase in these diseases has made people opt for health insurance to cover the health-related risks in case of any untoward incident. A $3133.4 billion health insurance industry in 2019 and which is expected to reach $4475 billion in 2026 solidifies how necessary health insurance has come to be in today’s time. But, how effective are existing and new health insurance in covering the costs of testing and treating the virus? Let’s find out.
Does health insurance cover costs during pandemics like COVID 19?
With COVID-19 continuing to spread across the world, there’s much confusion with regard to health insurance. The foremost question is that does health insurance cover the medical costs if one is diagnosed with COVID-19? The answer, however, is complex and layered.
Many health insurance companies, though, provide basic coverage as in the case of common illness, but all the policy benefits stand nullified as soon an outbreak is declared a pandemic. The insurance companies have in the past, especially during the SARS pandemic, and the earlier instances of pandemic borne huge losses by paying a large number of claims arising due to the outbreak. This has led them to relook at their strategies and policy clauses.
Many insurers categorically exclude the coverage of the epidemic out of their policy. Thus, an insured person might not get any policy benefit in case the person gets infected with a disease classified as a pandemic. However, there are exceptions like if a government or regulatory authority intervenes and orders to cover the medical cost of occurring due to an epidemic. Or if a policy does not specifically exclude an outbreak, then a person is bound to get the benefits of the health insurance policy. The best approach would be to get in touch with your policy provider to get complete clarification.
What have insurance companies done in the past?
To understand how insurance companies might act today, it becomes essential to revisit their past decisions in such outbreaks. An important aspect to examine is what happens to insurance claims that occur in other cases, like natural disasters. Most insurance companies do provide coverage against natural disasters like earthquakes, tornados, etc. and applications are processed under the policy norms unless there are specific exclusions or clauses.
However, it becomes difficult to assess the actual amount of damage caused and processing and settlement of claims due to natural disasters may take longer than usual. This is because there would be many people who face a similar issue, and the insurance company might have a long list of claims to settle.
Other disasters that are man-made like war or plane crashes have different rules. Insurance companies do not usually cover war, and many of them have a specific war exclusion clause in the policies. This is because it is difficult to assess the exact extent and cost of damage caused due to wars. The war exclusion clause is not limited to two nations entering into a battle; it specifically excludes invasion, insurrection, revolution, military coup, and terrorism.
Most life insurance and travel policies include the deaths or disability caused due to a plane accident. Airline companies also, in most cases, have a liability towards all its passengers in case there is an unfortunate incident. These are settled as per the international guidelines that have been framed and are adhered to if a plane accident happens, causing loss and injury to human life.
Similarly, specific travel insurance policies cover such instances as well. However, most insurance policies do not cover plane accidents that have been caused due to war or terrorism.
Under what conditions does health insurance fail to cover the cost?
Even if an individual has a health insurance policy covering an epidemic or has bought an exclusive policy seeking a cover against the COVID-19 pandemic, there could be some exceptions under which the health insurance policy might fail to cover the cost of treatment. If a person has specifically purchased insurance recently to cover against COVID 19, then he might also not get a claim under some circumstances. They are as follows:
- If there is no hospitalization. Most insurance policies require hospitalization for a minimum of 24 hours to process health insurance claims.
- Some insurance policies might not provide you a cover if you have had a recent travel history to a country that has been severely affected by COVID-19.
- No illness or medical condition would be covered before the mandatory 30 days are over.
- Any pre-existing disease might not be covered. Also, if the policy is purchased to get coverage against COVID-19, then the insurer would ensure that corona has not originated before the start of the plan.
Most COVID-19 exclusive policies also have many terms and conditions. Non-adherence to those can lead to no coverage of costs. The treatment cost would not be borne if:
- An insured person comes in contact with someone with a history of COVID-19.
- If the insured person or any of the immediate family members traveled to countries as specified in the policy as excluded from travel.
- A person has had shown any of the symptoms like cough, cold, fever, body ache and shortness of breath for the last six weeks of buying the policy
How are countries managing the costs for insured and uninsured people for COVID 19?
As countries across the world record an increase in the number of patients and fatalities due to COVID-19, they are working overtime to ensure that those suffering from COVID-19 are treated timely. Insurance Regulatory Department of India has also advised insurance companies to come up with insurance plans and situation-specific products to cover the costs of COVID-19 treatment. Considering the interests of those belonging to weaker economic sections of society, countries like India have announced that all the probable patients who are unable to bear the cost of treatment for free through their Ayushman Bharat Health Scheme.
Insurance companies in the USA have declared that they will cover the diagnostic testing cost of patients if recommended by the doctor. The government of the USA has also announced that the administration would bear the cost of treatment of those infected by a coronavirus, and cannot bear the expenses. The countries are taking measures to provide treatment to all the sections of the society without having to worry about the high cost of COVID19 treatment in the absence of any medical insurance.
Insurance companies in Germany are also covering the costs of tests for coronavirus. Health insurance companies in Germany are also planning about the various aspects of coverage and premiums if COVID-19 continues to spread in the country. However, there is no clarity if the insurance companies will also cover the treatment costs of the policyholders. Employers, along with the insurance companies, are also working on the possible solutions to cover the maximum costs of treatment.
What are insurance companies doing to help?
Insurance companies in several countries have been advised by the regulatory authorities to come up with specific products to provide cover against COVID-19 and help the insured meet the treatment expenses. Many insurance companies have come up with new products keeping in mind the risk that coronavirus poses. Insurers are adopting all possible steps to attract maximum customers. Insurance companies are waiving off the medical checkups, which are often considered mandatory. The policies being offered are also priced in a manner that the insured has to pay a very reasonable amount of premium.
To maximize the conversion rates for term insurance and health insurance, the aggregators and insurers have come up with medical checkups over the phone. This has reaped benefits for the companies as they are seeing an upward trend with new policyholders increasing by 35%. Experts, however, are averse towards these emerging trends and advise people from evaluating the actual need and benefits of the COVID-19 policy before purchasing one. An important point to consider is to discuss any hidden costs or exclusions with the insurers. Many also doubt the credibility of telemedical checkups over the phone.
The regulators are telling insurance companies to provide maximum benefits during treatment within existing policy and governments are also offering various benefits like lowering or waiving off costs of medications, free tests, etc. However, it would be best to keep a watch on the government’s new initiatives and take a cautious decision after carefully evaluating the pros and cons of the new policy.
The current situation caused by the COVID-19 pandemic has naturally caused panic and fear among people. However, the right approach is to avoid any hasty decisions and base them on misleading information. Awareness about various government benefits and the guidelines for treatment is a must. Adhering to the guidelines issued by the respective health departments of your area would be the ideal solution and this would help everyone combat the virus most effectively.
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