Weekly Insurance Round-up Tuesday, September 7, 2021

Hello Everyone! ✋

We're back with yet another edition of Beshak's Weekly News Round-up - an analysis of all Insurance News & Updates from our in-house research team. 

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• Work stress impacting individuals’ life and mental health 🤯
• Increased risk of hospitalization due to the Delta Variant🦠
• All Covid treatments must be covered by insurance ☂️
• Madras high court mandates ‘bumper-to-bumper' insurance. GIC asks for time to seek clarifications.🚗
• Depositors of stressed banks to get up to ₹5 Lac back from November 30 🤑
• HDFC Life’s M&A with Exide Life Insurance 🤝

Also included - 

👉 A Recording and Summary of Beshak’s exclusive Webinar on Restoration Benefit. 

• A recent survey conducted by ICICI Lombard General Insurance with individuals with different working statuses (like work-from-home, partial work-from-home, etc.) showed that almost one of every three respondents’ life was impacted by work stress. 
• The data showed a noticeable decrease in the health status proportion from 54% during pre-Covid to 34% during the post- Covid era.
• 62% of women and 65% of men did not report being satisfied with their mental health at the moment.
• 89% of the respondents felt that employers should provide them with some health and wellness programs.
• 70% of the respondents preferred a regular routine to work - either from home or from the office. Hybrid work culture was not favored. 
• Further, many respondents reported that work stress was creeping into their personal lives as well - as a result of increased working hours, fear of Covid19 infection, and financial instability. 
• On the bright side, however, individuals have realized the importance of health and wellness and are taking measures to improve their physical and mental health, with a focus on better working environments, regular health checkups, work-life balance, etc. Even many employers are reported to have adopted programs to keep employees motivated and stress-free. 
• As we see WFH becoming a norm for companies across the world, employers will need to quickly adopt measures that will help their people stay physically and mentally healthy. Providing a good insurance cover that will give employees the peace of mind that their healthcare needs will be taken care of, could be one way of doing this. 
• As financial advisors, we must encourage customers to take responsibility for their physical and mental wellness. In addition to that, they should be guided to the right insurance plans for their families, as a strategy to mitigate any impact of a hospitalization occurring. 

Source 👉: The Economic Times

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• According to a study conducted by The Lancet across 40,000 individuals in England, it was found that people who are infected with the Delta variant of Covid-19 were at a higher risk of being hospitalized as compared to that of the Alpha variant of Covid-19. 
• In fact, the risk of emergency in infections with the Delta variant was found to be 1.5 times higher than the Alpha variant. Further, it was found that the Delta variant is 2 times more likely to make patients severely ill, compared to the Alpha variant. 
• While the Delta variant reduced the effectiveness of the vaccine, those who got the jab were less likely to get hospitalized than those who weren’t. At the moment, ramping up vaccination seems like our best chance to deal with the Coronavirus variants. In fact, a previous study that we analyzed showed that the Delta variant was very prominent in places where the vaccination coverage was very low.
• The Lancet is an international general medical journal that invites submissions of any original contribution that advances or illuminates medical science or practice, or that educates or entertains the journal's readers.

It is the responsibility of a financial advisor to help families stay in touch with the realities of risk, and help them prepare for the financial impact of any such health crisis or hospitalization. 

Ahead of advising an insurance plan - the families should also be counseled to adopt best health practices to stay healthy - in this case, getting vaccinated on time, social distancing at all times, wearing masks, and handwashing to keep the risk of infections low. 

Source 👉: Financial Express

Original report 🔎: The Lancet

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• In a recent ruling, a Maharashtra Ombudsman stated that all Covid positive cases should be covered by insurers, regardless of the patient being hospitalized or not. 
• This means that individuals who only had mild, moderate symptoms and weren’t advised hospitalization (home isolation or quarantine only) ended up bearing the costs on their own - can now claim their expenses from their insurers too. This will be applicable regardless of the 24-hour admission necessity that’s usually involved in a health insurance claim. 
• In fact, in reality, several individuals with severe symptoms too ended up taking treatments at home (including with oxygen cylinders) - as hospital beds were in shortage. A lot of such claims too were rejected by insurers stating home treatments/ quarantine wasn’t covered. 
• While the industry is split in their views about this ruling - some experts saying this is a welcome update, while others pointing that existing domiciliary covers should be sufficient to cover home treatments - for customers, this ruling brings some much-needed relief.
• Domiciliary Hospitalisation is a term used for medical treatments taken at home which otherwise would have required hospitalization. There are certain clauses for domiciliary hospitalization to be paid by the insurer, which are as follows:
  • Treatment must be taken at home because the insured person is not in a condition to be moved to a hospital. (or) Treatment is taken at home due to the unavailability of a bed/room in a hospital. 
  • And, the treatment taken at home is medically necessary and advised in writing by a medical practitioner/doctor.
• As a result, cases of mild/ moderate Covid infections, where hospitalizations weren’t deemed necessary, were generally not considered under such covers. 
• This new ruling however, takes it one step ahead saying all Covid positive cases should be covered irrespective of hospitalization or severity of the infection. 

Source 👉: CNBC TV18

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• The Madras High court on the 26th of August 2021 ruled that “bumper to bumper” insurance is mandatory for all vehicles sold after 1st September 2021.  Bumper-to-Bumper insurance is a comprehensive vehicle insurance policy that provides 100% coverage of damages to the fiber, metal, and rubber parts of an insured car.
• With this new ruling, the insurance industry is compelled to update the policy designs and existing risk models of motor insurance covers.
• Motor insurance is divided into two types - 
  • Own damage insurance: This protects against the loss and damage caused to the insured person’s vehicle due to an accident, fire, theft, etc. 
  • Third-party insurance: This covers the damage caused to a third party because of the insured’s vehicle.
• Until now only third-party insurance was mandatory, whereas the comprehensive policy would be chosen by individuals based on their preference. With this new rule, vehicle owners will need to purchase both types of insurance.
• The new comprehensive motor package offered at the dealership may be at least 3 times the premium of current third-party prices which will be a reason for the increase of the vehicle’s overall price. This could affect the sales of vehicles.
• However, this order by the High Court was put on hold till 13th September as the General Insurance Council (GIC) sought some clarifications. The GIC has asked for at least a 90 day window to make the necessary changes post-approval by IRDAI.
• No change yet: We must note that while the ruling has been made, implementing the order will take time as the ecosystem needs to sort out many things. The next steps will include -  
  • Insurers design new products according to in line with this ruling
  • Insurance Regulatory and Development Authority of India (IRDAI) needs to approve these changed products
  • The Motor Vehicles Act will need to be amended, for which an approval from the Supreme Court is necessary.

Source 👉: The Economic Times

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• Last month, the Union Cabinet approved the DICGC Bill 2021 ensuring Rs 5 lakh is paid to depositors within 90 days, in case a bank fails, 
• In an update to that notice, a Gazette notification dated 27th August 2021, stated that the Act will come into force from 1st September 2021, which means before 30th November 2021 (which is 90 days from the effective date), depositors will start getting their funds back.
• The 90 days will be divided into 2 sections of 45 days. In the first 45 days, the stressed banks are expected to collect the information about the number of claimants and claim amounts and inform the DICGC. Within the next 45 days, DICGC is directed to process the claim and make payment to each eligible depositor.
• At present, it takes 8-10 years for the depositors of the stressed banks to get their insured money and other claims, however now with this act depositors can get the amount in 90 days. 
• Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the Reserve Bank of India (RBI) that provides deposit insurance - a protection cover for bank deposit holders when a bank fails.

Source: 👉 The Economic Times

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• HDFC Life announced an acquisition of a 100% stake and merger with Exide Life insurance. 
• By acquiring Exide’s existing presence in South India (especially in tier-2 and tier-3 locations), HDFC life hopes to strengthen their distribution channels and leverage their complementing business models.
• In addition to that, this move is pegged to improve benefits for customers through a wider range of products and service touchpoints. 
• Beshak has been quoted in this article 😎

Source: Livemint

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Restoration Benefit - Useful or Gimmick? 

An interesting interaction between Financial Advisors - Manish Chauhan, Deepak Khemani, Sathish KV,  LK, Avinash Sonee, Nikhil Kataria, Mahavir Chopra amongst others. 

Here’s the recording 👇

If you are the one who likes to read, here’s a quick summary: 

👉 3 Important aspects of the Restoration Benefit 

• It restores the sum insured up to the base sum insured of the policy. Some policies trigger the restore benefit when the full amount is exhausted, while some offer triggers on partial usage as well. 
• In any claim, the maximum amount that can be claimed is limited to the base sum assured or Sum Insured + NCB
• It kicks in after the first hospitalisation in most policies, meaning the restore sum insured can be available from the second hospitalization. Hence in the case of one large hospitalization in a year, the restoration will not work. 

👉 How useful can a Restoration Benefit be, depends on these 4 things:

• Whether it covers related illnesses or only applies to unrelated illnesses
• Whether it will be triggered for a future claim after a partial or only a full exhaustion
• Whether it will be triggered for all benefits in the policy or only cost for inpatient treatment
• Whether the restoration can be done, an unlimited number of times (or only once per year/ lifetime

👉 3 Hidden Conditions one must watch out for -

• Some policies have a condition that this benefit can be used only once in a lifetime for critical illnesses.
• Some policies do not allow restoration for critical illnesses such as cardiac arrest, cancer at all.
• Some policies impose proportionate premiums from the next year, for the restored sum insured when the benefit is used

👉 Always consider the Restoration benefit as a bonus. 

• Since restore is not triggered in the first claim, and the maximum claim is capped to the base sum insured + NCB, we recommend not to consider restore when advising adequate sum insured. 
• The Restore benefit should be considered as a good backup for a rare but severe situation - that requires multiple hospitalizations (for example: in cases of Cancer - for chemotherapy)
• Advisors must be careful while discussing the restoration benefit with clients, as it might encourage them to settle for a lower cover (assuming restoration will kick in and help out). Always ensure that they have an adequate cover (at least 10-15 lakhs per person).
• The advantages of the restoration benefit come with several terms and conditions that vary from plan to plan. Only by carefully assessing and explaining these terms to the buyer, can you ensure that they have an adequate cover for the long term. 

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