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 ]
Dear Shri Subhash Chandra Khuntia
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