BENGALURU: Health insurers could rack up Covid-related claims of over Rs 10,000 crore during the current fiscal if trends continue according to an analysis by ICICI Securities.
As per data, Covid claims have risen to Rs 2,658 crore by end of August from Rs 176 crore in June. “Till August, total Covid claim amount is estimated at 11% of non-life health gross direct premium income (GDPI). It could be higher as a share of health net earned premium (NEP) depending on reinsurance arrangements,” said Ansuman Deb, analyst, ICICI Securities.
General insurers collected Rs 51,637 crore by way of health insurance in FY20. According to Irdai data, the incurred claims ratio of the health segment was nearly 90% in FY19. The first quarter had seen an improvement in health insurance claims ratio as most Covid treatment was undertaken at government centers and most elective surgeries were postponed over fears of the virus.
The lockdown had also resulted in a drop in accidents and other infectious ailments like gastroenteritis, which usually see an outbreak every monsoon. The clams experience could however change with private hospitals taking on the growing number of Covid claims.
With rising Covid claims, higher health loss ratios could put pressure on general insurers in the second half of fiscal 2021, said Deb adding, “exponential increase in Covid claims will lead to cut in earnings estimates, but well-funded insurers stand to gain market share in health insurance in the longer run.”
Insurers’ books would also be under pressure as reinsurers are currently hesitating to underwrite the Covid risk. “This has been a major challenge for pricing of insurance policies covering Covid treatment,” said ICICI Securities.
Adding to insurer’s woes are the non-Covid claims. With the lockdown easing many policyholders have started getting treated again as per normal and ICICI Securities said – data shows non-Covid claims had dipped in the first half of fiscal 2021 but have normalised and are closer to pre-Covid levels.
ICICI Securities also noted the health loss ratios – come in the face of other issues for general insurance companies – like no increase in motor third-party rates for fiscal 2021 and low auto sales translating to low auto insurance sales.
As per data, Covid claims have risen to Rs 2,658 crore by end of August from Rs 176 crore in June. “Till August, total Covid claim amount is estimated at 11% of non-life health gross direct premium income (GDPI). It could be higher as a share of health net earned premium (NEP) depending on reinsurance arrangements,” said Ansuman Deb, analyst, ICICI Securities.
General insurers collected Rs 51,637 crore by way of health insurance in FY20. According to Irdai data, the incurred claims ratio of the health segment was nearly 90% in FY19. The first quarter had seen an improvement in health insurance claims ratio as most Covid treatment was undertaken at government centers and most elective surgeries were postponed over fears of the virus.
The lockdown had also resulted in a drop in accidents and other infectious ailments like gastroenteritis, which usually see an outbreak every monsoon. The clams experience could however change with private hospitals taking on the growing number of Covid claims.
With rising Covid claims, higher health loss ratios could put pressure on general insurers in the second half of fiscal 2021, said Deb adding, “exponential increase in Covid claims will lead to cut in earnings estimates, but well-funded insurers stand to gain market share in health insurance in the longer run.”
Insurers’ books would also be under pressure as reinsurers are currently hesitating to underwrite the Covid risk. “This has been a major challenge for pricing of insurance policies covering Covid treatment,” said ICICI Securities.
Adding to insurer’s woes are the non-Covid claims. With the lockdown easing many policyholders have started getting treated again as per normal and ICICI Securities said – data shows non-Covid claims had dipped in the first half of fiscal 2021 but have normalised and are closer to pre-Covid levels.
ICICI Securities also noted the health loss ratios – come in the face of other issues for general insurance companies – like no increase in motor third-party rates for fiscal 2021 and low auto sales translating to low auto insurance sales.
