Did Panic Buying Health Insurance in 2020 Pay Off for Tamil Nadu?

Tamil Nadu has the maximum number of families covered by national health insurance – but there’s more to the story.

Tamil Nadu has the maximum number of families covered by national health insurance, data from the union health ministry shows.

(Photo Courtesy: Kamran Akhter/ The Quint)

This Diwali season, you might not be able to gather loved ones for a fun dinner but what’s stopping you from pampering yourself? Kirtilals in Chennai is giving a special offer of Rs 7,000 off per carat on diamond jewellery.

But that’s not the crowd puller – it’s their COVID-19 healthcare policy with an insurance coverage of Rs 5 lakh that's getting folks all excited.

As the pandemic rages on, healthcare policy is suddenly the need of the hour – says the salaried class.

It’s Raining Health Insurance in Tamil Nadu

Tamil Nadu has the maximum number of families covered by national health insurance, data from the Union Health Ministry shows.

A whopping 1.57 crore families in the state, about 60% of the population, have a cover of Rs 5 lakh a family.

Five other states that have more than 1 lakh families under the national health insurance scheme are Madhya Pradesh (1.28 crore families), Uttar Pradesh (1.18 crore), Karnataka (1.15 crore), West Bengal (1.12 crore) and Bihar (1.08 crore).

So why is Tamil Nadu scrambling for a health cover?

It’s the fear of contracting the dreaded coronavirus, say analysts.

“In the first months, there were a lot of issues with getting hospital beds, trying to manage without exposing more family members, many hospitals take advantage of the situation and overcharging for treatment. So when people were made to pay lakhs for the treatment, they realised the need of the hour is a health insurance policy and so the requests grew in May,” said an official working for Star Health insurance.

The state which already had the Tamil Nadu chief minister’s health insurance in operation, combined it with the Centre’s Ayushman Bharat-Pradhan Jan Arogya Yojana, according to data released by Health Ministry.

Is it Helping?

While more people are buying insurance, data suggests not many are able to benefit from it.

General insurance companies have received claims for over Rs 5,400 crore from COVID-19 patients across 3.49 lakh applications. Insurers have settled 2.17 lakh claims amounting to Rs 2,175 crore as on 5 October.

Even if you apply for an insurance, you can avail the benefits for COVID only a month after the commencement. As for other serious illnesses, the wait period is much longer. This has always been the protocol but because of the nature of the pandemic and the cost of the treatment, many people have complained of not being able to benefit from it.

A chief general manager of a nationalised bank in Chennai told The Quint that there has been a 20-30% increase in people opting for the health insurance policy since March.

“While many opt for the nominal scheme that requires them to pay Rs 600-Rs1,000 as annual premium, there has also been a spike in people opting for health insurance plans across all medical treatments for upto Rs 5- Rs 7 lakhs,” he told.

Data from the Insurance Regulatory and Development Authority of India shows that health insurance has seen premiums of Rs 22,903.44 crore in this fiscal till August, compared to Rs 20,274.09 crore last year, which indicates a growth of 12.97%, reported Times of India.

The official explained that since ‘awareness of the normal public has risen in the pandemic situation,’ the business in the health insurance has grown. And so they have launched specialised schemes such as the Corona Kavach Policy that aims at covering hospitalisation, pre-post hospitalisation, home care treatment expenses and AYUSH treatment in case anyone is tested positive of COVID-19 infection.

But, But, But....

While the fear psychosis over COVID is resulting in ‘panic buying’ of insurance makes sense, in a pandemic where people are losing jobs, getting furloughed or taking paycuts – how are they paying premiums?

“Initially, it was manageable as people were still doing payments by sending screenshots of cheques. But after April when salary cuts, job roll outs and migration crisis, the issue began. Then in May struck the fear of health with the hassle of getting a bed at hospitals who’s taking undue advantage and changing extra. That’s why many realised that not having a health insurance is the biggest tragedy in their lives. Then I started getting calls from households for their staff,” said Rishi Chugh, an agent with AIG Life Insurance.

“When I don’t take my car out, why pay for that insurance? When I have lost my job, and am barely managing my family affairs, how will I have the money for insurance? We are living out of our savings and staring at an uncertain future,” said Mohan who works in a private company in Chennai.

The Quint spoke to experts who said May and April saw relatively regular and timely payments but nearly zero new policy requests. From mid-April, 60% of the existing policy holders were faltering in the payments of the premium or not renewing their insurance for cars and others, said an expert from Life Insurance Corporation.