The threat of getting infected with COVID-19 has reinforced the importance of having adequate health insurance to stay financially protected. In the last 9 months, more and more individuals are resorting to buying a health insurance plan for financial protection. However, there is still a majority of the population who is not investing in health insurance plans fearing a medical test. Many people are living with an aversion to the concept of pre-entrance medical examination that needs to be conducted before buying a health insurance policy. It is a common myth amongst people that the premium for their health insurance policy will be quite steep if they go for a medical test. However, little do they know that no one can easily buy a health insurance policy without getting a mandatory physical medical done. Now, insurance companies are using tele-underwriting or relying on health declarations by applicants themselves for issuing them a health insurance policy.

A shift in the underwriting process

Over the last decade, the health insurance industry has greatly enhanced the speed and efficiency of its underwriting decisions. The evolution in the underwriting process is dedicated largely to the use of innovative technology in data collection and risk assessment processes. Underwriting, in simpler words, is the method by which insurance companies assess individual life and health risks for the likelihood of a claim. Over the years, the practice of underwriting has evolved due to market influence, improvements in data gathering, and advancements in technology. In modern times, certain subjective aspects of underwriting are being replaced by computer algorithms and predictive analytics.

The insurance underwriting process has also started potentially minimising the insurers' risk of financial exposure by identifying major mortality risks of policyholders. The evolved and accelerated underwriting process is being viewed as more likely to appeal to younger generations, most notably the millennials. At the same time, accelerated underwriting can potentially offer younger applicants more personalised insurance plans that allow for lower premium payments.

Change in the underwriting process during the COVID-19 outbreak

The coronavirus pandemic too has opened new chapters in the insurance sectors with businesses suddenly disrupted as human lives remained under threat. During the crises, the insurers are simplifying their underwriting process by providing health insurance to people through the process of telemedical in place of conducting physical medical tests at the medical centres. To ease off the underwriting process and in order to keep the customers away from medical centres, the insurers have partnered with prominent online insurance marketplaces to offer insurance to potential customers through telemedical consultation instead of a physical medical test.

Under the telemedical process, while buying health insurance, the customers are asked to provide some information about their basic health condition to an appointed doctor over the phone. The questions revolve around the lifestyle of the customers and general questions about his/her physical health. Based on this conversation, the customer is issued a health policy up to a maximum sum insured of Rs 1 crore. In the last 1 year, most health insurers are selling over 90 per cent of their health insurance policies without any medical test. These policies are completely being sold on the basis of customer declarations. As per insurers, 5 per cent of the policies are sold through telemedical while the remaining 5 per cent are sold through physical medical. Physical medical is now mostly done for policies being sold to senior-citizens or people with critical pre-existing conditions.

Customer declarations play a major role

Customers should be aware that declarations regarding pre-existing diseases if any, and your current lifestyle habits are material information that you must share with the insurance company to avoid claims rejection. While insurance companies have started offering non-medical policies to reduce entry barriers, it is still to your advantage to be sure about your health status. If you have been diagnosed with a particular ailment in the past and if you do not have the disease now, you should inform the insurer well in advance so that your insurer does not reject your claim due to non-disclosure of material information.

The author is Amit Chhabra, Head-Health Insurance, Policybazaar.com.