Embedded Value: New areas of insurance unfold in Covid-19 pandemic

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May 28, 2021 2:15 AM

Health coverage during overseas trip due to flight cancellation, forced quarantine abroad at own cost, rent for house not in use, cost of vaccination are all opportunities for insurance companies

Embedded Value: New areas of insurance unfold in Covid-19 pandemicSelling insurance is a kind of social responsibility which demands a missionary zeal to serve the people individually and the society at large.

The entire world is in the midst of a catastrophe triggered early last year by the Covid-19 virus. The financial and physical health of all stands unpredictable. In such a scenario, insurance is the best rescuer. Those who are protected with suitable health insurance plans can hope for best possible treatment and meet their medical expenses without their own finances being adversely affected or depleted. Similarly, those who have taken adequate life insurance for themselves are leaving behind some financial corpus for their loved ones to hang on to till they are able to fend for themselves.

Financial protection
This magical protection through small monthly or periodical outgo can save lives from financial crisis. But unfortunately the trail of miseries that corona victims have been leaving behind for dependent family members scripts a very pathetic story .For this escapable plight of the people I would point my fingers towards the insurers who do not conduct their business with the commitment to provide financial protection to each eligible individual in the society through different insurance plans.

This pandemic must force the insurers to rethink their business in respect of product design, premium rates, policy conditions and privileges as also about the methods, medium and strategies to distribute the products in the market to achieve full coverage for all the eligible individuals. Selling insurance is not just a business to garner huge profit by denying rightful benefits to the insured persons by exploiting the fine print while settling claims. Selling insurance is a kind of social responsibility which demands a missionary zeal to serve the people individually and the society at large.

On the otherhand, the pandemic has created the need for different variants of insurance too. During lockdowns people have lost jobs, partially or fully lost their income, entrepreneurs have faced partial or full business interruptions leading to suspension of production andeven complete or partial suspension of demand. Such a scenario has caused defaults in EMI payments and accentuated the financial hardship when one or more family members have fallen sick due to the corona virus necessitating hospitalization or even prolonged treatment. All these factors emerging in the current scenario were perhaps beyond the imagination of the insurers hence even those who adopted health insurance policy or life insurance policy have found their policies woefully deficient in nature and extent of cover.

New areas for insurance
Several new areas have emerged during the pandemic which require urgent initiative by the insurers, leading to growth opportunities as well as customer satisfaction. Health coverage during overseas trip following flight cancellation, forced quarantine at foreign locations at own cost, expense on rent for accommodation not in use, expense on vaccination, expense on preventive gears and on Ayurvedic and other immunity boosters; as also on cremation and burial.

The pandemic has pointed out the deficiencies not only in the scope of coverage but also in the nature of coverage. Insurers still design their products, delivery and service culture on the models introduced by insurers globally who have been very conservative by tradition. They do not want to innovate and risk their profitability. Current opportunities in insurtech, however, facilitate cost cutting in a big way. Hence harnessing the internet of things, artificial intelligence and data analytics can help to provide cost effective and wide ranging cover to the policyholders. What the industry needs is a mindset that recognises the opportunities provided by the pandemic to look at its business and products very differently. The pandemic has not only brought to surface the deficiencies but also the opportunities.

The writer is former MD & CEO, Star Union Dai-ichi Life

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