How Has Health Insurance Evolved In Pre And Post-Pandemic Period?

The Covid-19 pandemic prompted a reevaluation from both health insurance companies and policyholders. Uncovering vulnerabilities in the healthcare system allowed regulators to address gaps and introduce new features, ultimately enhancing and ensuring adequate protection for health insurance policyholders. The ensuing changes signify an improvement in health insurance coverage following the pandemic.

According to experts, health insurance has significantly changed before and after the COVID-19 pandemic. While certain shifts were already underway before the outbreak, the crisis has hastened the pace of several trends within the health insurance industry.

According to experts, the landscape of health insurance has witnessed notable transformations both before and after the pandemic. "Pre-pandemic health insurance primarily focused on standard features such as cumulative bonus, waiting periods, and room rent capping, with the most sought-after plans emphasising these aspects. However, the demand for comprehensive health coverage has surged in the wake of the pandemic.

"Most selling plans now integrate pandemic-specific provisions and offer expanded coverage for mental illness and outpatient services. Senior citizen plans have become more tailored to address the unique needs of the elderly, while worldwide coverage and sub-limits are gaining prominence as individuals seek international healthcare options. The pandemic has undeniably accelerated the evolution of health insurance, highlighting the necessity for robust and flexible coverage options that encompass a wide array of healthcare needs," explains Rakesh Goyal, Director, Probus Insurance Broker.

Here are some developments across various facets of health insurance:

Modular Plans

Modular plans in health insurance have marked a departure from the traditional bundled packages that offer fixed benefits and coverage options. These one-size-fits-all plans often included services that weren't necessary for all policyholders. Responding to evolving customer preferences and growing demand for flexibility, many insurance companies have transitioned to modular health insurance plans. "These plans empower policyholders to select and customise the benefits they want in their coverage while excluding those not relevant to their needs. The emergence of modular health insurance plans reflects a positive shift towards more personalised and cost-effective coverage options, granting individuals greater control over their healthcare expenses and the ability to tailor insurance plans to their unique requirements," says Siddharth Singhal, business head of health insurance at Policybazaar.com.

Waiting Periods

Waiting periods were the norm pre-pandemic, with most plans imposing a four-year wait for pre-existing conditions and certain treatments. However, there has been a significant shift, and now many policies provide Day 1 coverage for ABCD (Asthma, Blood Pressure, Cholesterol, and Diabetes) if the customer opts to pay an additional 10-15 per cent

premium. Additionally, for other ailments, the waiting period for pre-existing conditions can be reduced to just one year.

No Claim Bonus (NCB)

Before the pandemic, health insurers provided a maximum NCB of up to 150 per cent for policyholders who remained claim-free throughout the policy year. "At present, insurers are emphasising the significance of a healthy lifestyle, with some introducing renewal bonuses that can reach up to 10 times the original value. Furthermore, certain plans extend high bonuses even in the event of a claim," adds Singhal.

Mental Illness Coverage

In the past, mental health coverage was frequently restricted or excluded from numerous insurance policies. However, there is now a growing acknowledgement of the significance of mental health, leading many insurers to broaden their coverage for mental health treatments and counselling. A comprehensive health insurance plan encompasses the policyholder's protection against hospitalisation expenses associated with mental disorders. This includes coverage for the patient's room rent, ambulance fees, and other hospitalisation-related costs. Insurance policies often extend coverage for various mental health conditions, such as anxiety disorders, acute depression, post-traumatic stress disorder, bipolar disorder, mood disturbances, schizophrenia, obsessive-compulsive disorder, and psychotic turmoil.

Worldwide Coverage

Before the pandemic, numerous plans provided restricted or no international coverage. Presently, an increasing number of health insurance plans are extending worldwide coverage, allowing policyholders to seek emergency or planned treatments abroad.

Senior Citizens Plans: Elderly individuals are more susceptible to health issues as they age. Historically, health plans imposed certain restrictions on senior citizens due to their classification in the high-risk category. However, with the health insurance sector becoming more inclusive and expansive, senior citizen plans now provide increased and more comprehensive coverage. "Post-pandemic health insurance has undergone changes in cumulative bonuses and waiting periods, witnessed increased popularity of COVID-19-specific plans, and a heightened focus on OPD coverage while some policies are now tailored to specific individual needs. In 2023, we at ManipalCigna Health Insurance launched ManipalCigna Prime Senior, a special policy for senior citizens with a sum assured ranging from Rs 5 lakh to Rs 50 lakh," says Ashish Yadav, head of products, ManipalCigna Health Insurance.

Insurance players such as HDFC Ergo (formerly Apollo Munich Health Insurance), Star Health Insurance, New India Assurance, National Insurance, and Care Health Insurance (formerly Religare Health Insurance) have already introduced the Senior Citizen Red Carpet Plan, Senior Citizen Mediclaim Policy, Optima Senior, Varistha Mediclaim Policy, and Care Senior, respectively. Subsequently, several new players entered the market with their own senior plans. Niva Bupa (formerly Max Bupa) unveiled the Senior First Plan for Senior Citizens in 2021. In 2021, Aditya Birla Health Insurance introduced the Activ Health Essential plan, designed as an affordable health solution to address the specific health needs of senior citizens. In 2022, ICICI Lombard launched a health insurance plan specifically dedicated to senior citizens.

Surrogacy Insurance

A noteworthy development in maternity coverage is the availability of surrogacy coverage for individuals. The Insurance Regulatory and Development Authority (IRDA) has recently approved insurance companies to provide coverage for surrogate mothers for up to 36 months. "Surrogacy acts as a medical alternative for families or individuals facing

challenges in natural conception due to medical conditions, making it challenging for them to start a family. The circular issued by IRDAI is a positive step towards expanding coverage to such families, allowing them to fulfil their dream of having children, especially in light of advancements in medical science. This inclusive measure ensures that these individuals have access to high-quality medical care," says Bhaskar Nerurkar, head of the health administration team at Bajaj Allianz General Insurance.

Health Insurance Plans With Riders: Many health insurance plans in the market now offer optional cover or a rider that can be purchased with the health insurance plans at an additional cost, which covers OPD expenses like doctor consultations and lab investigations, among others. "This is highly beneficial for covering OPD expenses due to acute ailments and infections that do not require hospitalisation. Bajaj Allianz General Insurance Company has also launched its revamped and enhanced Health Prime Rider, which covers OPD expenses and provides coverages like Emotional Wellness cover, Dental Wellness cover, Diet and Nutrition Consultations, and Physical Fitness coverage, in addition to already existing covers like Tele-consultation, Doctor Consultation, Investigations (pathology and radiology), and Annual Preventive Health Check-up cover," says Nerurkar.

Personalised Health Insurance Products: The more knowledge insurers possess about policyholders, the more effectively they can manage risk. Data is now being utilised to craft personalised health insurance products based on a consumer's family history, lifestyle, and income bracket. Wearable technology, such as fitness bands, provides insurance companies with real-time health-related data from policyholders, marking a significant stride in enabling insurers to tailor coverage to individual needs.

Armed with an influx of data, insurers are now confidently offering personalised products. Among the increasingly popular options are personalised health insurance products encompassing critical illness plans, maternity plans, OPD-based health cover, and health insurance covering lab tests and medications, with no room rent capping.

Innovative New Products Introduced Via The "Use and File" Process

Beginning with sandboxing, regulators have given insurers more flexibility through the "use and file" process. The IRDAI extended the 'Regulatory Sandbox' trial period from six to 36 months. In June 2022, they introduced 'use and file' for non-life products, letting insurers market products without prior approval. This helps avoid long waiting periods for filing. "Use and file" means insurers can do in-depth research and quickly launch a full product without sandbox limitations. For instance, the IRDAI allowed a 'pay as you drive' (PAYD) add-on in motor insurance. This made us one of the first insurers to offer PAYD features to customers quickly. "Use and file" significantly speeds up the introduction of new policies, making it easier for insurers to bring unique products to the market more often and offering more choices to policyholders.

The Choice To Opt For Advanced Features Or A Cost-Effective Plan: Health insurers now provide more flexibility to policyholders, allowing them to add or remove features based on their needs and budget. These need-based health insurance products are designed to address the specific medical requirements of today's consumers. Insurance companies offer niche products that enable consumers to customise benefits according to their preferences. Many insurers provide multiple variants of health plans, with basic options for those seeking affordability and enhanced coverage available in other variants at higher premiums. New health plans also

incorporate cost management features, such as co-payment management, deductibles, and adjusting room rent limits, providing more control over premiums. Plans with modular products offer increased flexibility, allowing customers to compare features online and review inclusions, exclusions, and terms before making a final selection.

Enhanced Insurance Coverage To Manage The Rising Costs Of Medical Care

Several treatments are now available for diseases once considered incurable. However, these treatments come with a cost, and the reality of high medical inflation is something we must face. As a result, people are seeking higher health insurance coverage. With the increase in critical illnesses and significant hospitalisation expenses, consumers now recognise the importance of having sufficient coverage with a higher sum insured. Consequently, some insurers have introduced plans that offer renewal bonuses of up to 10 times the sum insured. Previously, policies with an insured sum of Rs 25 lakh or more were uncommon. However, more insurance providers now offer higher sum insured options.

Introduction Of Budget-Friendly Products: Basic health insurance coverage is still limited in non-metro areas. Many individuals in these regions sought affordable plans that started with standard basic coverage. Consumers with modest budgets, young adults/millennials, those in Tier 2/3 cities and beyond, and individuals with limited incomes have notably preferred these products. The IRDA introduced standardised health insurance products such as Arogya Sanjeevani, Corona Kavach, Corona Rakshak, and Saral Suraksha Bima, providing consistent coverage and benefits across various insurers.

Promoting Well-Being And Preventive Actions

Nowadays, health insurers are placing more importance on urging policyholders to cultivate healthier habits and even rewarding them. "Following the guidelines of the IRDAI, health insurers award policyholders with reward points for adopting healthy behaviours and participating in physical activities like jogging, cycling, or exercising. These reward points can be utilised to pay premiums during renewal and can also be exchanged for savings on prescription costs, diagnostic fees, outpatient visits, and more," explains Singhal.