Tag: Covid-19

How health cover cushioned impact of Covid

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Health insurance has come a long way in the last one year in providing succour to the general public affected by the Covid-19 crisis.

Even as coronavirus completes one year of unleashing physical, psychological and economic turmoil on almost all sections of the society, the response from the regulator, industry and public to the first-ever major health crisis in the last one century, stands out quite prominently.

In the last one year, product innovation and standardisation have been driven by the insurance regulator, Insurance Regulatory and Development Authority of India (IRDAI), whose policy framework was met with an enthusiastic response from industry players.

The IRDAI has also played a pivotal role in simplifying complexities in health insurance policies, bringing in transparency to provide clarity to policyholders.

Standard Covid basic products

In the face of the Covid-19 challenge, the regulator rose to the occasion by introducing standard Covid basic products, ‘Corona Kavach’ and ‘Corona Rakshak’, to be offered by non-life and life insurers mandatorily for nine-and-a-half months.

All general and standalone health insurers began offering the products from July 10, 2020. In the backdrop of Covid cases surging between March and September 2020, the introduction of standard covers made a key difference to general public, according to industry experts. As the focus shifted gradually from hospitalisation to home care treatment, a provision to cover home care treatment costs under Covid-specific insurance products was brought in.

The Corona Kavach policy underwent regular modifications in the backdrop of changing ground realities and requirements of patients, and was made to cover some associated costs, including expenditure for personal protective equipment.

The IRDAI Chairman, Subhash C Khuntia, underscored that insurance companies must come to the rescue of policyholders and cater to the changing needs of customers in difficult times. The Covid-specific insurance products are a case in point, and reflect the adaptability of the regulator as well industry players. Corona Kavach finally turned out to be the right product that is aptly designed to cover all specific aspects associated with Covid-19, such as testing and home treatment costs.

The systematisation/standardisation of treatment costs were also ensured by the General Insurance Council (GIC), which brought out an indicative list of treatment costs. This had a positive impact on all Covid-related claims in the last one year.

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. Similarly, the basic standard health cover product, ‘Arogya Sanjeevani’, has made good inroads. The standard health cover policy, offered by general and health insurers, provides a maximum cover of ₹5 lakh.

Going forward, Arogya Sanjeevani can provide a further boost to the health insurance portfolio in the post-Covid era.

A big shift

The Covid-19 outbreak and the need for health insurance can prove to be a game-changer for the industry in the days to come.

Innovative products and new service offerings such as telemedicine are likely to pick up, opening up new avenues in health cover, too. Digital technologies and their increased use, both by insurers and customers, are also expected.

There has also been an increase in demand for health insurance by consumers as they have become more health-conscious. The increase in demand has been fuelled to a significant extent by the younger generation, say industry sources.

As per the data available with insurers, millennials were the top buyers of the Corona Kavach plan, as over 40 per cent of the buyers are in the age group of 18-30 years.

As the treatment costs are high in private hospitals, data show that a good number of policyholders had opted for the higher side of the sum insured of ₹2 lakh to ₹5 lakh.

While the Covid threat is expected to pass over a period of time, with vaccination as well as preventive protocols by the larger public, the interest in health insurance is here to stay.

According to Sanjay Datta, Chief-Underwriting, Claims and Reinsurance, ICICI Lombard GIC, while Covid-specific policies were short-term policies, they created greater awareness on the need for long-term and regular health insurance.

“Overall, they have created large-scale awareness among the general public,” he told BusinessLine. As per industry estimates, insurance penetration in the country was at 3.78 per cent in FY20, which is low compared to the global average of 7.23 per cent.

Of this, the non-life segment penetration amounts to only 0.97 per cent. This is expected to expand further.

The final impact

What will be the final impact of coronavirus on the bottom line of insurers? It may take more time to get an answer for this question.

According to the CEO of a major non-life insurance company, an understanding of the net impact of Covid on the business of general insurers, may differ from company to company.

“As of now, we can say that health insurance business has certainly got a boost and it has overtaken motor segment. But the real picture will only come out with full-year numbers,” he added.

The lessons learnt in response to Covid can also go a long way in preparing for future perils to public health and designing viable and efficacious products.

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Pent-up demand will come back: HDFC Ergo

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HDFC Ergo General Insurance remains optimistic about growth prospects for the general insurance sector and believes that improvement has already been evident in the third quarter of the fiscal.

“If one looks at only the third quarter data, then motor premiums have increased, private car registrations, two-wheeler registrations are back. So, next year, all the pent-up demand will come back and we will see a good year for the industry. And ,of course, we will be riding the good economic growth,” said Anurag Rastogi, President, Chief Actuary and Chief Underwriting Officer, HDFC Ergo General Insurance.

In an interaction with BusinessLine, Rastogi noted that the Covid -19 pandemic has turned health insurance into a pull product.

“As offices open up and people come to normalcy and start moving around, we see demand picking up. Look at the third quarter separately and retail health insurance has grown by 30 per cent,” he said, adding that this is fairly healthy growth.

“January, February and March is the peak period when health insurance is sold and this quarter will give some idea as to what we should expect from the coming year,” he further said.

Non-life insurers reported a 6.7 per cent growth in January this year to ₹ 18,488 crore compared to ₹17,333.7 crore in the year ago period.

Rastogi also said insurance companies are well prepared to deal with any possible second wave of Covid cases in the country.

“Insurance companies can never relax. We are prepared for whatever happens and will continue to honour our commitments to our customers,” he said.

When asked about the merger of HDFC Ergo Health Insurance (formerly known as Apollo Munich Health Insurance) with HDFC General Insurance, Rastogi said it will help scale up operations and improve delivery of products and services to customers.

“It is a union of two good institutions coming together. It brings together the knowledge of health insurance of HDFC Ergo Health Insurance, which was a wonderful institution with good products, systems and the financial strength of HDFC Ergo General Insurance,” he said.

The two had announced the completion of the merger in November 2020.

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SBI to contribute ₹11 cr to PM Cares Fund to help fight Covid-19

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State Bank of India (SBI) has decided to contribute ₹11 crore to the PM CARES Fund to support the Government’s Covid-19 vaccination drive.

Dinesh Khara, Chairman, SBI, in a statement, said, “The fight against the pandemic is not yet over, and as a responsible Corporate Citizen, we consider it our duty to support the government’s efforts to vaccinate all.”

Early last year, SBI committed 0.25 per cent of its annual profit to support the fight against Covid-19. Additionally, SBI employees had contributed ₹107 crore to the Fund, said the statement.

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Insurance is the most preferred financial product to protect family post-Covid: Survey

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Insurance has become the most-preferred financial product to protect the family against health emergencies post the Covid-19 pandemic with more people inclined to invest in insurance products in the next six months, according to a survey from Tata AIA Life Insurance.

According to a consumer confidence survey on the impact of Covid-19 commissioned by research agency Nielsen, life insurance turned out to be the most preferred financial tool driven by the need to secure family’s future financially and the concern around medical emergencies.

 

The survey also found that most consumers would like to buy life insurance in the next six months as part of their investment plans.

The survey conducted on 1,369 respondents across nine centres revealed that during the pandemic, 51 per cent of the respondents invested in life insurance, while 48 per cent invested in health-related insurance solutions, which is higher than other financial asset classes.

More than half of the respondents said their views towards life insurance have changed positively due to the pandemic and 49 per cent want to invest in buying a life cover in the next six months and 40 per cent intends to invest in health insurance.

The survey said 30 per cent of the people invested in life insurance for the first time during the pandemic, while 26 per cent invested in health-related insurance solutions for the first time.

Financial security against medical emergencies and expenses has become the topmost priority, with as many as 62 per cent mentioning about it and a majority of 84 per cent saying they are still concerned about self and family due to coronavirus. 61 per cent were worried about themselves/family and their top concern is the economic slowdown.

“Of the respondents concerned about self and family, 50 per cent are worried about mental health due to increased workload due to Covid-19 pandemic. Among female respondents, 55 per cent said they are concerned about the mental health due to the increased workload during the pandemic.

“41 per cent people are buying financial products online more often than before Covid-19 pandemic,” the survey said.

Among the other asset classes, one-third of the respondents said they invested in bank or company fixed deposits, and 30 per cent invested in mutual funds, while 24 per cent invested in stocks, 17 per cent invested in gold/digital gold.

“Life insurance has clearly emerged as the preferred financial asset as per our Covid sentiment study. There is a distinct shift towards considering life insurance as the primary source of future financial protection, followed by health and wellness solutions.

“The survey findings have helped capture and unravel the transition in customer usage and attitude towards life insurance,” said Venky Iyer, CDO and Head marketing, Tata AIA Life Insurance.

The survey reveals that with changing money needs and priorities, consumers’ monthly allocation towards insurance, savings and investment, has increased. With less discretionary spends and more focus towards essentials spending, consumers are motivated to save, and invest more in life insurance than they were pre-Covid, he observed.

Tata AIA Life said the motive behind doing the survey was to get a comprehensive understanding about consumers’ usage and attitude pre and post Covid-19 pandemic towards financial instruments and type of life insurance policies.

The survey was conducted on salaried, business and self-employed male and female in the age-group of 25-55 years through computer-aided web interview.

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Aditya Birla Health Insurance offers mental well-being cost support

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Aditya Birla Health Insurance is offering customers mental health support in terms of counselling and consultation, apart from hospitalisation expenses, under its new comprehensive health insurance policy.

The move comes after the insurer’s experience with a mental health helpline for customers during the Covid-19 lockdown that registered a lot of interest and calls.

Also read: Is mental illness cover worth the money?

“Mental stress levels had gone up during the Covid-19 lockdown. People were at home, income levels in some cases were impacted, or just the pressure of dealing with so many things. So we started a mental helpline for our consumers free of cost. We were expecting not too many people to call because normally there is this taboo around that. But we were positively surprised that so many customers of ours actually use that facility,” said Mayank Bathwal, CEO, Aditya Birla Health Insurance, adding that they then decided to make it a part of the product offerings.

The insurer has recently launched a revamped version of its flagship product, Activ Health, which also offers customers access to mental counselling.

Under the facility, the customer can first call the helpline and talk to a counsellor and if the counsellor assesses that they need more detailed counselling support, then the product provides them that feature and they do not have to pay for it, Bathwal explained.

The insurer has tied up with Mpower, run by Neerja Birla, for counselling support.

“When we talk about mental health, the first thing is counselling support, and not necessarily anything to do with hospitalisation,” he pointed out, adding that the product not just covers mental health from a hospitalisation perspective but also includes mental counselling cost support.

Meanwhile, commenting on the health insurance sector, Bathwal said opportunities for the sector continue.

“It was already a very fast growing category. So my sense is that will continue. Covid has only increased the awareness level for health insurance, because people have realised that something like this can happen to any and everyone,” he said.

Between April and December 2020, Aditya Birla Health Insurance grew by 57 per cent with total gross written premium of ₹859 crore in the period.

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Ind-Ra revises banking sector outlook for FY22 to Stable

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India Ratings and Research (Ind-Ra) has revised its outlook on the overall banking sector to stable for FY22 from negative.

The credit rating agency estimated that overall stressed assets (gross non-performing assets/GNPA + restructured) could increase 30 per cent for the banking system, with the increase being almost 1.7 times in the retail segment in the second half (October 2020 till March-end 2021) FY21.

Also read: States’ fiscal deficit to moderate to 4.3% of GDP in FY22: India Ratings & Research

The agency estimates gross non-performing assets (GNPAs) at 8.8 per cent in FY21 (FY22: 10.1 per cent) and stressed assets at 10.9 per cent (11.7 per cent).

Along with revision in outlook, Ind-Ra has upgraded its FY21 credit growth estimates to 6.9 per cent from 1.8 per cent and 8.9 per cent in FY22, with the improvement in the economic environment in 2H FY21 and the government of India’s (GoI) focus on higher spending, especially on infrastructure.

Referring to the revision in outlook, Ind-Ra observed that the substantial systemic measures have brought the system-wide Covid-19-linked stress to below expected levels.

Further, banks have also strengthened their financials by raising capital and building provision buffers.

According to its assessment, provisioning cost has fallen from the earlier estimate of 2.3 per cent for FY21 to 2.1 per cent (including Covid-19-linked provisions); it is estimated at 1.5 per cent for FY22.

Outlook for PSBs

Ind-Ra

revised the outlook on public sector banks (PSBs) to Stable for FY22 from Negative.

The agency reasoned that regulatory changes led to an improvement in the ability of PSBs to raise Additional Tier (AT) I capital, a high provision cover on legacy NPAs, overall systemic support resulting in lower-than-expected Covid-19 stress, and minimal surprises arising out of amalgamation of PSBs.

Also, the fact that the GoI has earmarked ₹34,500 crore for infusion in PSBs in 4Q (January-March) FY21d should suffice for their near-term growth needs.

Outlook for private banks

Ind-Ra

said the outlook remains Stable for private banks, which continue to gain market share, both in assets and liabilities, while competing intensely with PSBs.

“Most have strengthened their capital buffers and proactively managed their portfolios. As growth revives, large private banks would benefit from credit migration due to their superior product and service proposition,” the agency said in a note.

Stressed assets

According to Ind-Ra’s estimates, stressed assets will rise 30 per cent in 2HFY21 and 8 per cent in FY22.

The agency estimates that about 1.24 per cent of the total bank book is under incremental proforma NPA and about 1.75 per cent of the total book could be restructured by end-FY21.

“As a conservative measure, the agency has not adjusted for overlaps between those categories. This is the incremental stress purely on account of the Covid-19 pandemic and does not include the slippages that banks would witness in the normal course of business,” said the note.

Also read: Lenders remain risk averse to additional lending or alter lending terms: Ind-Ra

Ind-Ra estimated the stock of stressed retail assets for PSBs could increase to 2.9 per cent in FY22 from 2.1 per cent in FY21, while it could increase from 1.2 per cent to 4.3 per cent for private banks.

Provisions

Excluding Covid-19-linked stress, Ind-Ra expects the provision coverage ratio (excluding technical write-offs) for both PSBs and private banks to reach 75 per cent-80 per cent by end-FY21.

“If we consider the provision on proforma gross NPAs (still not considering Covid-19 provisions), the resultant provision cover could be about 70 per cent at end-FY21 and FY22, while the historic slippage rate will continue and banks would still have Covid-19 provisions as buffers.

“PSBs have 0.2 per cent-0.5 per cent provisions while private banks have 1 per cent-2 per cent Covid-19 provisions, most of which is unutilised,” the agency said.

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India Ratings revises outlook on overall banking sector to stable for FY22

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India Ratings and Research on Monday said it has revised its outlook on the overall banking sector to stable for 2021-22 from negative.

“This is because substantial systemic measures have reduced the system-wide Covid-19 linked stress below the expected levels. Banks have also strengthened their financials by raising capital and building provision buffers,” it said in a statement.

The agency has upgraded its credit growth estimates for the current fiscal to 6.9 per cent from 1.8 per cent and 8.9 per cent in the next fiscal. This is due to the improvement in the economic environment in the second half of the fiscal year and the Centre’s focus on higher spending especially on infrastructure.

India Ratings estimates gross non performing assets at 8.8 per cent in the current fiscal and 10.1 per cent next fiscal and stressed assets at 10.9 per cent.

Provisioning cost has fallen from its earlier estimate of 2.3 per cent for 2020-21 to 2.1 per cent (including Covid-19 linked provisions) and is estimated at 1.5 per cent for next fiscal.

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Covid-19 claims register marginal decline: Insurers

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Medical costs and insurance claims for Covid-19 treatment seem to have declined in recent months, with treatment costs now largely standardised and better management of the infection.

According to insurers, the average claim amount is now at about ₹1 lakh for Covid-19 hospitalisation, compared to the previous ₹1.3 lakh to ₹2 lakh.

“Covid-19 claims have gone down from what it was initially. In the initial days, the average size went up to ₹2 lakh, but it has been consistently coming down… At the industry-level, it is in the range of ₹1 lakh. For us, the average size is ₹1.25 lakh to ₹1.3 lakh as our product has no constraints. We do all our underwriting at the sales time,” said Anurag Rastogi, President, Chief Actuary and Chief Underwriting Officer, HDFC Ergo General Insurance.

Rastogi attributed this to various reasons. “The government has intervened, different State governments have fixed that maximum ceiling and insurance companies have been working with hospitals to rationalise the costs. The hospital industry has been very supportive. The General Insurance Council has been working with hospital associations and IMA so that common customers are not inconvenienced,” he told BusinessLine.

Treatment costs

Sanjay Datta, Chief, Underwriting, Claims and Reinsurance, ICICI Lombard General Insurance, said overall, the per case treatment costs have remained the same or gone down slightly.

“The treatment has improved and not everyone who is getting Covid is getting hospitalised. More and more people with mild symptoms are isolating at home. Second, those who are going to the hospital are going at a stage when it is managed better. So, there are less cases of people going to ICUs or being put on ventilators. In terms of hospitalisation costs, doctors are now getting specific only tests done now,” he noted.

An industry expert, too, said that average cost now is at ₹1 lakh, or even marginally lower for Covid-19 hospitalisation. “This was at about ₹1.2 lakh to ₹1.3 lakh earlier,” he noted.

A second wave

The lower daily caseload has also brought some respite, but insurers say they are prepared for a possible second wave.

Sky-rocketing Covid-19 treatment costs, with bills for some patients reportedly touching ₹10 lakh, had proved to be a significant concern for patients and families and insurance companies. The General Insurance Council had even brought out an indicative list of treatment costs in an attempt to rationalise hospital charges.

According to industry sources, about ₹12,500 crore of Covid-related medical claims have been filed, of which, nearly ₹7,500 crore have been settled.

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NBFCs’ stressed assets could touch ₹1.5-1.8-lakh cr by fiscal end: Crisil Ratings

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Stressed assets of non-banking financial companies (NBFCs) are likely to touch ₹1.5-lakh crore to ₹1.8-lakh crore by the end of the current fiscal, according to a report by Crisil.

This would amount to about 6per cent to 7.5 per cent of their assets under management (AUM), it said.

Also read: InvITs, REITs can raise ₹8-lakh crore capital in the medium term: Crisil

However, the one-time Covid-19 restructuring window, and the micro, small and medium enterprises (MSMEs) restructuring scheme by the Reserve Bank of India (RBI) will limit the reported gross non-performing assets (GNPA), it said in a statement on Tuesday.

“Alongside wholesale loans (dominated by real estate and structured credit), vehicle finance, MSME finance and unsecured loans have been in the spotlight this year due to a rise in stressed assets,” it said. The impact is likely to be transitory for vehicle finance.

“The big challenge this year will be the unsecured personal loans segment, where underlying stress has increased significantly with early-bucket delinquencies more than doubling for many NBFCs. This segment had last seen such pressure in 2008-10, after the global financial crisis,” it further said.

Unsecured loans to MSMEs is another area where underlying borrower cash flows have been affected, Crisil also highlighted. “However, despite the potential asset-quality stress, reported metrics may stay benign on the back of high write-offs,” it said.

Stressed assets in real estate finance could touch 15 per cent to 20 per cent of AUM by March this year, the agency said. In the category of unsecured loans (including personal loans and consumer durables), stressed assets could amount to 9.5 per cent to 10 per cent of AUM, while in vehicle finance it could be at a similar 9 per cent to 10 per cent of AUM. Stressed assets in lending to the MSME segment could reach 7.5 per cent to 8 per cent of AUM by March this year, Crisil projected.

Krishnan Sitaraman, Senior Director, Crisil Ratings, said, “Collection efficiencies, after deteriorating sharply, have now improved, but are still not at pre-pandemic levels. There is a marked increase in overdues across certain segments and players.”

Also read: Securitisation volume improves in Q3 on revival in economy: Crisil

Gold loans and home loans should stay resilient, with the least impact among segments, he however, said.

Rahul Malik, Associate Director, Crisil Ratings, said how NBFCs approach restructuring will differ by asset class and segment. “While the traditional ones such as home loans have seen sub-1 per cent restructuring, for unsecured loans it is substantially higher at 6 per cent to 8 per cent on average, and for vehicle loans 3 per cent to 5 per cent,” he said.

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Mastercard and Razorpay partner to make digital payments more accessible for MSMEs and startups

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Mastercard and Razorpay have launched a strategic partnership to empower Indian micro, small and medium enterprises (MSMEs) in digitising their operations, maintaining business continuity in the challenging environment and preparing for the future beyond cash.

“SMEs and startups would require establishing a digital footprint to build their customer base and meet demand for secure, convenient and touch-free transactions. With the partnership, Mastercard and Razorpay will work together to cater to the needs of MSMEs,” Mastercard said in a statement on Tuesday, noting that the Covid-19 pandemic has accelerated the adoption of digital technologies.

Also read: AGS Transact partners Mastercard for ‘contactless’ cash withdrawals at ATMs

“We are excited about strengthening our partnership with Mastercard, the global payments and technology leader, in furthering digital adoption and equipping millions of businesses, especially in tier 2 and 3 cities, with industry-leading technologies that will help ensure business resilience,” said Amitabh Tewary, Chief Innovation Officer, Razorpay.

“Mastercard is excited to extend its partnership with Razorpay, India’s youngest unicorn, on a strategic level,” said Rajeev Kumar K, Senior Vice President, Market Development, South Asia, Mastercard.

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