Insurance Regulator provides Guidance on Handling of COVID-19 Claims
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.