Why Companies Are Opting For Covid Specific Insurance Policies For Their Team?

Below is an analysis of why companies are opting for Covid insurance for their teams...

Covid cases are rising rapidly in India with the daily case count crossing 270K+. The new variant is spreading much faster than before

Reasons why companies are opting for Covid specific cover

To protect their team-members, many companies are opting for Covid specific health insurance policies, there are three main reasons why

1. Cheaper alternative to buying a full health insurance policy: Many companies don't have a health insurance policy especially those that have less than 100 employees because of budgetary concerns. A covid specific insurance policy is much cheaper (1/3rd the price of a general health insurance policy) and hence is easier on the budget
2. Keeping the claims ratio low on the main group health policy: Many companies have a health insurance policy in place. At the time of renewal, insurance companies price the next year premium based on last year claims on the health policy. If your claims increase due to large number of Covid claims, then next year the premium will also shoot up significantly. To protect against this, companies are taking a Covid insurance. Lets understand this through an example

Scenario 1: Without Covid Policy

ACME labs has 200 employees and has paid 10L for it's company's health policy. In a normal course, ACME Labs will have claims about ~9L during the policy term and their premium for next year would be ~12L.

Now, given the Covid situation lets say 3% of employees are hospitalized due to Covid and assuming 1L per hospitalization, that would mean added claims of about ~6L (6 employees x 1L per hospitalization)

The total claims at the end of the year would be ~15L (9L regular claims + 6L covid claims). Based on this the pricing for next year would be ~20L (an increase of 8L)

Scenario 2: With Covid Policy

Covid policies are quite reasonably priced at Rs ~1000 for a 3L coverage and Rs ~500 for a 1L coverage.

Now lets assume the company took a Covid cover for its 200 employees for 1L. The extra cost would only be 1L (200 employees x Rs 500 for a 1L cover). This 1L in coverage can potentially reduce claims by 6L on the main group health policy.

In summary, by paying for a Covid policy, you can potentially save much more by protecting the main health policy from Covid Claims

3. Replacement of existing Covid Policies: Due to the first wave many companies had opted for Covid specific policy which are up for renewal. However many insurers have discontinued those policies but there are new insurers who're now offering it. These new policies can act as a replacement for the older Covid policy and continue the protection for the team into the second wave

Policy terms

Below is a sample of the policy terms - It's worth noting that coverage is provided from day 1 and there no room rent limits in the policy

Pricing offered by insurers

You might be wondering what are the premiums being charged by insurers on a per employee basis. Below are indicative numbers

1L Sum Insured: ~Rs 500 per employee

3L Sum Insured: ~Rs 1000 per employee

5L Sum Insured: ~Rs 1500 per employee

Prices vary based on the age-group of employees but above holds accurate if majority employees are below 45 years of age

For more information, you can get in touch with us.

Disclaimer: The above is for information purpose only not a solicitation of insurance.