There is a silver lining for insurers amid virus gloom

The Covid-19 crisis has triggered an unexpected change in the insurance sector. 

Apart from making people more aware of their mortality, there is widespread concern for insurers and consumers alike. Through unprecedented shifts in demand, operational disruption and shocks to financial markets, the global pandemic has impacted all aspects of the Kenyan insurance industry, including life, non-life and health insurers and reinsurers.

The Insurance Regulatory Authority (IRA) increased their engagement with insurers to better understand the potential financial and operational risks associated with the pandemic.  

IRA said in a statement how insurers should develop more consumer-centric solutions to handling payments of medical insurance in light of Covid-19. Claims should be accepted, approved where appropriate and paid and greater flexibility extended to core policyholders.

At present in Kenya, for every positive case, through contact tracing, there are 11 more people that are required to go into isolation.  

Hospitals have become expensive and those that need treatment are finding it hard to meet the costs.  

For example, from a single positive case, there were 17 admissions, with 13 in isolation, three still admitted and one demise. From this, the average total liability for an insurance company came to Sh6.6 million. Both private and public hospitals cost vary, depending on location and status. For example, the average cost for 24-hour care, personal protective equipment (PPE) and a Covid-19 test is anything from Sh20,000 to Sh60,000.

If, however, a person is in ICU and on a ventilator, then the cost goes up astronomically. Individuals and indeed insurance companies will not be able to bear these costs; they will face financial ruin if they have to pay for the treatment of the virus.

The silver lining for all of us, however, is home-based care.

The Ministry of Health recently issued guidelines for home-based isolation and care for patients with Covid-19.  

This approach dubbed Jitenge System aims to ease the growing pressure of Covid-19 patients in hospitals and nationally due to increasing community transmission.

Proper screening by early detection of contacts, self-monitoring, creating awareness among the population about signs and symptoms of the disease, and promoting people to self-report and self-isolate will aid in the effective management of the spread of coronavirus.

These measures will help individuals avoid the expensive cost of treatment where the only need is isolation and making sure that the condition does not deteriorate.

The stability that existed for the insurance industry has changed, but that’s not to say opportunities won’t arise post-crisis. The pandemic will be the catalyst to further digitalisation of the insurance industry, which has generally been slow to date.  

Data and technology are expected to improve customer service, potentially lower the cost of insurance and allow more tailored products for different customer segments.

Innovative new products will emerge from the crisis, such a those focusing on telemedicine. There will also be increased demand for pandemic cover, both commercially and personally.

Consumers may be willing to pay a premium for pandemic cover on travel insurance, for example, in the future.

Regardless of the challenges faced by the industry during this pandemic, there is clear harmony concerning operational flexibility, treating customers fairly and ensuring Kenya continues to make progress nationally against the virus.

- The writer is chief executive Apollo Group and director APA Insurance