This waiting period condition for people recovered from coronavirus infection will only apply to life insurance contracts.
Industry experts said the waiting period for people who have recovered from coronavirus infection, to take out a new insurance policy, was put in place amid a rate high mortality rate linked to coronavirus infection.
Reinsurers have asked insurance companies to subject cases of coronavirus infection to standard waiting time norms as well, as high mortality rates have impacted reinsurance business. The waiting period is about one to three months, they added.
Reinsurance players provide coverage for insurance policies issued by insurers.
Sumit Bohra, president of the Association of Insurance Brokers of India (IBAI), said Indian insurers do not have the capacity to underwrite all of these risks. So most insurance policies above Rs 10-20 lakh are reinsured and reinsurers want “a good risk to enter the system” due to which the waiting period has also been made applicable to cases of coronavirus infection, he noted.
“Term insurance plans are reinsured by life insurance companies and given the past two years and the type of experience the industry has had with claims, this is a requirement that has been raised. and put in place by reinsurance companies, so we need to make sure that this rule comes into effect with immediate effect,” said Karthik Raman, chief product officer of Ageas Federal Life.
Raman said insurance companies already have the waiting period requirement for various other ailments and coronavirus infection is another ailment added to that list.
“It’s common practice to have a waiting period. It’s not just our country, it’s the whole world and COVID falls under that practice,” he said.
According to Bohra, coronavirus infection has also been included in the list of conditions for which a waiting period will be applicable as the death rate is high due to the infection.
“Previously, the mortality rate was lower and more risk was accepted. Any amount of premium is not enough to pay claims if the mortality rate is going to be high. With COVID, it’s not like a simple cold or flu.
“It also damages other parts/organs of the body, especially the lungs, so it is difficult to assess the survival rate if a policy is issued for a longer period,” Bohra said.
Yogesh Agarwal, Founder and CEO of Onsurity, said: “From our understanding, we have seen insurers asking for some sort of one-month waiting period. This is part of a risk management strategy due to what happened during the second wave of COVID”.
Term life insurance products are driven not only by insurers, but also by reinsurers in the ecosystem.
“We have seen reinsurers have not been able to do good business in the year and a half since the COVID pandemic,” he said.
Agarwal said the waiting period condition for people who have recovered from coronavirus infection will only apply to life insurance policies, not health. Additionally, it will only apply to new retail customers and existing policyholders will not be affected in any way.
In 2020-21, the country’s largest life insurer, LIC, gave over Rs 442 crore as reinsurance premium, up from Rs 327 crore in the previous financial year. Private sector players ceded together Rs 3,909 crore as reinsurance premium compared to Rs 3,074 crore in the previous fiscal year.