Insurers remain divided over Covid-19's status as 'pre-existing condition'

Some insurers are of the opinion that Covid-19 cannot be treated as a pre-existing condition while issuing policies to customers who might have had the infection but subsequently recovered from it. Still others said the underwriting practices will change, given it is still an evolving situation in terms of complications and side-effects.

Experts have said it will depend on each insurer and their underwriting standards whether they want to treat Covid and the complications arising from it as a pre-existing condition.

Anything that increases the risk for insurers will call for either a repricing or refusal. This is the principle of underwriting. If research proves that Covid results in anything permanent, it will fall under the pre-existing category, cautioned experts.

But not all Covid patients behave in the same manner. Some show mild symptoms and recover after a brief quarantine. Still others suffer from serious ailments requiring invasive/non-invasive ventilation. There are studies to convey that Covid can have long-term pulmonary and vascular complications.

A pre-existing condition generally means a health condition a person is facing prior to purchasing a policy. According to the insurance regulator, pre-existing disease is any condition, ailment, and injury diagnosed by the doctor and for which medical advice or treatment was provided or recommended by the doctor within a time span of 48 months (two years) before the effective date of the health insurance policy issued by the health insurance company.

Bhabatosh Mishra, director–underwriting, products & claims, Max Bupa Health Insurance, said, “As far as our company is concerned, we do not consider Covid as a pre-existing condition. Covid is an infectious disease caused by a virus. Because we are witnessing short-term complications in patients recovering from Covid, we will impose a cooling-off period of 90 days before we issue a policy. This gives us better knowledge of the disease while underwriting the policy.”

“Covid is still continuing to be a disease of uncertainty. We cannot factor in huge premium for covering people who have had Covid. At the same time, we cannot blindly give them cover. We are trying to give pre-existing disease (PED) exclusion to those with high morbidity. This PED exclusion depends on policy rituals which may vary between six months and four years,” said Dr S Prakash, managing director and chief executive officer, Star Health and Allied Insurance. He said for Covid patients who had mild symptoms, there is a 14-day cool-off before they can be issued any health policy. Many insurers have decided to impose a cooling-off period before they issue a policy to a customer with Covid. 

A senior insurance executive said, “I do not think it will be explicitly treated as a pre-existing illness across the industry. It may be case-by-case.” Let’s say, somebody has liver damage. It can be due to various reasons, one of which may be Covid. At the time of policy issuance, if somebody discloses he has liver damage, it will be treated as a pre-existing issue. But, Covid per se doesn’t become a pre-existing issue, he explained.

The chief executive of a private insurance company said if Covid results in permanent lung damage, it will be treated differently. The insurer may choose to increase the premium. If a company’s underwriting guidelines do not permit it to cover such risks, it may choose not to cover it. The principle of exclusion is related to what is reversible and what is not.

Said Amit Chhabra, business head–health at PolicyBazaar, “Covid is not a pre-existing disease, according to the current definition, but there is a cooling-off period. However, some insurers do introduce an exclusion in some rare cases.”  Since the onset of the pandemic, insurers have covered the disease and paid claims to policyholders. The industry and the regulator came up with short-term products designed specifically for Covid, so that people without comprehensive health product are at least covered against the virus.

 The uptake was massive and around 12.8 million lives covered under all Covid-specific products in the market with a premium of more than Rs 1,000 crore and a total sum insured of more than Rs 12 trillion as of end-January.

Similarly, insurance companies (general and health) have paid more than Rs 6,500 crore worth of Covid claims so far, against more than Rs 13,500 crore worth of claims.