The health segment in non-life insurers’ portfolio has become the biggest line of business, overtaking the motor insurance segment. In fact, by the end of the year, the health segment likely to be far ahead of motor, said T L Alamelu, member (non-life) of Insurance Regulatory and Development Authority of India (Irdai).

The pandemic has promted people to buy health covers, as the uncertainty around the virus and its effects are rising with the number of infections going up daily. This fear among people is aptly reflected in the huge response the Corona Kavach policy has got since launch. Corona Kavach is a standard product that offers protection against covid-19 virus.

According to Irdai, some 750,000 Corona Kavach policies were sold as of August 14, covering 1.29 million lives and the premium colleted is Rs 215 crore. The demand for Corona Rakshak, on the other hand, is somewhat muted, with 183,000 policies being sold, covering 217,000 lives. Premium colleted was Rs 29 crore. This is in contrast to what is happening in Aarogya Sanjeevani, where the number of policies is around 72,000 with premium of around Rs 33 crore.

“It just shows that there is a fear factor among the public so they are finding a lot of value in the Corona Kavach. It’s a short-term policy and relatively cheaper, hence people are buying it in large numbers. Also, not many people have opted for the three-and-a-half-month tenure and most have opted for nine-and-a-half months, as they believe the virus is not going away any time soon,” Alamelu said.

While the lockdown and economic downturn have shrunk both vehicle sales and motor premium collections, they have had an oppposite effect on premiums in the health segment, which have registered a 10.4 per cent rise to Rs 18,415 crore as of July 2020 from Rs 16,674 crore a year ago. In the retail health segment, premiums rose 31 per cent to Rs 7,124 crore as of July 2020 from Rs 5,667 crore last July.

Experts say muted growth in the economy and subdued activity in auto sales are expected to further impact motor insurance business, while health insurance will continue its pick-up going forward, with the pandemic creating a renewed interest in health insurance.

That said, there still exists a huge protection gap. It is visible in the number of reported corona claims the insurers have received. While the number of infected cases is touching 2.77 million, insurance claims intimated so far (as of August 18) are about 125,000. This seems to indicate that 96 per cent of the population has not been covered for corona. And, this is true not only true for covid but for other diseases also.

“Out-of-pocket expense is one more aspect of the health protection gap. There is lot of out-of-pocket spending, so much so that it becomes financially unviable for not only below poverty line customers but also for the middle class,” Alamelu said.

“There are other aspects like non-treatment and under-treatment due to limited access and unavailability of services. With the spread of covid in tier-2 and 3 cities, and in villages, the health protection gap has become extremely pronounced,” she added.

But she said there has been a lot of progress in health insurance. Prior to March 2020, the number of health products that had come out in the past 20 years were about 500. But, between March and now, the number of products approved is about 131, which reflects the urgency of the regulator and the needs of the consumers to which insurers are responding.