One of the key concerns during the management of any pandemic is the economic impact it will have on the residents of affected countries. With businesses and factories halting work, and the imminent threat of an economy slowed by the pandemic, a further possibility of high healthcare expenses for diagnosis, treatment, and/or hospitalization form a deadly combination that increases vulnerability to financial distress.
Keeping in mind the necessity of mitigating the financial strain posed by COVID-19, the Insurance Regulatory and Development Authority of India (IRDAI), on 4 March 2020, issued guidelines on handling of claims caused by or resulting from COVID-19 and all insurers are obligated to follow these guidelines.
The key provisions of IRDAI’s directive are–
(i) Where hospitalization is covered by an insurance product, insurers shall ensure expedition handling and processing of cases related to COVID-19;
(ii) The costs of admissible medical expenses during the course of treatment, including treatment during quarantine, shall be settled in accordance with the policy’s applicable terms and conditions, read with the extant regulatory framework;
(iii) All COVID-19-related claims shall be thoroughly reviewed by the claims review committee before being repudiated; and
(iv) Insurers were encouraged to introduce specific products to cover vector-borne diseases, with the aim of providing need-based health insurance coverage
Further, in order to meet health insurance requirements of various sections of the public, insurers were also advised to design products specifically covering the COVID-19 treatment costs.
However, there is no consensus in how insurers have interpreted circular, with several carving out certain exceptions for the applicability of the circular. One insurer has declared that claims due to COVID-19 were payable only if the concerned person was hospitalised for at least 24 hours. Another has stated that if the person proposed to be insured has been suffering from any respiratory system-related disease prior to the contraction of COVID -19, then claims under a regular indemnity-type health insurance policy or a specific coronavirus insurance policy may not be settled.
A special coronavirus insurance policy has been launched by online insurer, Digit. However, this policy has a waiting period of 15 days which would mean that if a person is diagnosed with COVID-19 within this period of 15 days, his claims will not be settled by the insurer. Further, a person will not be able to claim expenses on treatment of the disease where such expenses were incurred during the waiting period of the policy.
Keeping in mind the growing seriousness of this pandemic, the importance of providing a financial safety net for those at risk of infection, and, above all, respecting the spirit of IRDAI’s circular, it is incumbent on all health insurance providers to honour bona fide COVID-19 claims; to liberally interpret policy terms; and to design products that will serve the at-risk population. This commitment towards IRDAI’s intent, and not the hunt for loopholes, will contribute toward greater economic resilience, both in the people and in the country.