Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do. There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Now as I approach my 90th birthday ( 27 June 2023 ) , I invite you to visit my Digital Avatar ( www.hemenparekh.ai ) – and continue chatting with me , even when I am no more here physically

Sunday, 12 July 2020

Corona Kavach Cover




Context :

Extract :

Ø  Several insurers have announced the launch of the ‘Corona Kavach' policies for

    #   three -and-a-half months;
    #   six-and-a-half months; and
    #   nine-and-a-half months

with sum insured ranging from Rs 50,000 to Rs 5 lakh ( in multiples of Rs 50,000 )

Ø  Launching the product, Bajaj Allianz General Insurance said premium for the base cover ranges between  Rs 447  to Rs 5,630 excluding GST, which varies depending on the age of the person, sum insured and policy period opted

Ø  Launching its Corona Kavach policy, HDFC ERGO said the new indemnity health policy will offer cover against medical expenses incurred due to hospitalisation of individuals seeking treatment for COVID-19, on positive diagnosis for the virus in a government authorised diagnostic centre

Ø  "So for instance, if a person between 0-35 years wants to opt for a base cover with sum insured of Rs 50,000 for three and a half months, the customer needs to pay Rs 447, excluding GST," the insurer added

Ø  Krishnan Ramachandran, MD & CEO, Max Bupa Health Insurance said the Corona Kavach plan from Max Bupa is competitively priced. The premium for Rs 2.5 lakh cover for an adult (31-55 year age group) is around Rs 2,200

=====================================================

Now take a look at the following data from :



[ A ] … No of people with Health Insurance across India  ( Millions / %age of total )


========================================================
Year
Total ( Million )
Govt Sponsored Schemes ( incl RSBY )
Group Business
Individual Business
FY 2014
216.2
155.3 (71.8 % )
33.7(15.6 %)
27.2( 12.6 % )
FY 2019
472.1
357.1(75.6 % )
72.9( 15.4 % )
42.1( 8.9 % )


Overall, the penetration of health insurance in India stood at just around 35 percent in financial year 2018



[ B ]Key figures of public health insurance

The gross direct premium income of the Indian health insurance industry was about 370 billion Indian rupees [ Rs 3,700 Crore ] in financial year 2019.

Public health insurance recorded the highest premium income of over 200 billion [ Rs 2,000 Crore ] Indian rupees that year with the highest share of premiums written in the western state of Maharashtra

A vast number of people seek care from private providers. Over 64 percent of the total healthcare expenditure in the country was from out-of-pocket expenses in fiscal year 2016


=========================================================

[ C ] … Increase in number of “Individual Business “ policies from FY 2018 to FY 2019


FY 2018  …….. 33.3 million “ Individual “ Policy Holders

FY 2019……….  42.1 million “ Individual “ Policy Hoders

Therefore , increase in ONE YEAR = 42.1 – 33.3 = 8.8 million policies

========================================================


[ D ]    Average Premium per “ Individual “ policy


FY 2019 ……….. Total Individual Policies = 42 million

                       Total Premium Amount = Rs 20,000

 million ( Rs 2,000 Crore )


Hence, average annual premium = Rs 476 / - 

  
=========================================================


QUESTIONS – OBSERVATIONS :


( A )  Insurance Industry


Ø  On your own , you could sell Personal Health Insurance to only 8.8 million ( 88 lakh Middle Class / Rich ) people in FY 2019, and on average earned Rs 476 / year by way of premium .”


Out of that Rs 2,000 crore that you collected ( by way of premium in entire FY 2019 ) , possibly your payout to the few ( 10 % of number insured = 8 lakh persons ? ) could have been Rs 1,000 crore, leaving you with GROSS PROFIT of Rs 1,000 crore


For much shorter terms ( 3.5 / 6.5 / 9.5 months ), how do you justify premium amounts announced for CORONA KAVACH ?


Going by your FY 2019 actual sales, how many CORONA KAVACH policies do you expect to sell in next 3 / 6 months ?  May be 1 million ( 10 lakh ? ) ?


How much premium do you expect to earn from these 10 lakh individuals ?


Say, ( ave ) Rs 1000 / policy x 10 lakh persons ? = Rs 10000 lakh = Rs 100 crore ?


And, if out of these 10 lakh insured persons , say ONE lakh ( 10 % ) get infected / hospitalized , how much do you expect to payout ? Rs 50 crore ?


Rs 5,000 / - per Covid patient hospitalized ?


I understand that you may not want to make public, your internal calculations of sales / expenses / profits etc . 

But I suppose you have to furnish your projections to IRDAI [irda@irdai.gov.in / irdandro@irdai.gov.in  /  irdamro@irdai.gov.in ]







I suppose you have answers to all of my questions and will safeguard the public interest during these trying times


You may even want to ask the Insurance Companies :


“ For CORONA KAVACH , do you have to have same profitability standards as with your other / standard / normal , offerings ?


For once, could you treat CORONA KAVACH differently as your MORAL SUPPORT to alleviate the sufferings of Covid infected POOR people ?




 ( B )   Central Government

    
Ø  No poor person seems to be taking out any “ Individual Health Insurance “ . He / she depends upon Govt-sponsored Schemes


Ø  In light of these, it is almost looks certain that those 82 crore POOR people ( to whom the Central Government is planning to give FREE rations for July-November ) , are unlikely to apply for CORONA KAVACH


Ø  This, despite the fact that these very 82 crore POOR persons are the ones who need the CORONA KAVACH the most, since they are most vulnerable because of their congested living conditions ( impossible to maintain Social Distancing )



Ø  They have lost their jobs / income and have no money even for buying groceries , leave aside any money for CORONA KAVACH insurance premium


Ø  It was for this reason that in my following earlier blog / email , I had urged the Central Government to pay the COVID KAVACH premium on behalf of these 82 crore POOR people


[ Read :   Corona Kavach Insurance     /    07 July 2020 ]



Ø  But , even at Rs 500 / - by way of premium ( for next 6 months ) , covering 82 crore POOR would require the Government to shell out, Rs 41,000 crore ! Untenable !


Ø  I urge Dr HarshVardhanji to persuade the Insurance Companies to accept Rs 100 / - per insured , needing Rs 8,200 crore



Ø  Argument ( for lowering the premium to Rs 100 / - per insured ) is as follows :

#  Being able to sell 82 crore ( 820 million ) policies at one go, as against only 8.8
     million policies in FY 2019 ( almost 93 times ! )


#  Within 1 month , earning ( from Central Government ) Rs 8,200 crore by way of
    premium, as against Rs 2,000 crore earned during FY 2019 ( spread-over entire
    year )


====================================================

With Regards,



Hemen Parekh  /  hcp@RecruitGuru.com  /  11 July 2020

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