INSURANCE COVERAGE DURING PANDEMIC AND EPIDEMIC- AN ANALYSIS
Author: Kritika Mundra, IV year of B.Com.,LL.B(Hons) from Amity University Kolkata, India.
Insurance law plays a crucial role in today’s society, health insurance being one of the most common types of insurance. Individuals tend to safeguard themselves from unexpected heavy medical expenses.
Therefore, to safeguard from this kind of heavy expenses of hospitalisation, people generally take health insurance. In recent time, we saw the spread of various new kinds of diseases such as Ebola, Nipah and COVID-19. These diseases have not only affected some countries but have also attacked all countries around the world. However, now the problem which arises is whether these new kinds of new diseases will be covered under the existing policy of health insurance.
In the year 2019-20, there was an outbreak of COVID-19 globally, which had affected lakhs of people worldwide. Therefore, the problem which arises globally is whether the existing health policy covers these types of new diseases. Therefore, this paper attempts to enlighten on the said question.
Insurance now a day is the most common practice, and it plays a pivotal role in today’s society. To avoid any loss from contingency, people like to take insurance. It may be a company or an individual to protect themselves from any kind of risk and take a different type of insurance.
Companies can take insurance such as Fire Insurance and Trade Insurance to protect their business and trade, whereas, an individual can take insurance such as Health Insurance or Life Insurance for the sake of their family, so if anything happens to an insured person, it should not affect their family.
In the immediate past, we have seen that Health Insurance is one of the most common types of insurance, and generally, most of the individuals as well as the companies are covering this type of insurance for their employees. However, due to the increase in various types of diseases such as Coronavirus, it is a matter of great debate whether the Insurance Companies are entitled to cover this type of Epidemic and Pandemic diseases.
Lately, in the year 2019-20, we saw the outbreak of a Novel Coronavirus disease, which has affected various parts of the world. Now, it was a matter of tension whether these types of diseases will be covered or entitled under the same health policy if individuals are affected by Covid-19.
Therefore, this paper tries to analyse the coverage of Insurance Companies during these kinds of situations, i.e., during the Epidemic and Pandemic.
DEFINING INSURANCE AND HISTORICAL BACKGROUND
Insurance means a type of arrangement where company or state undertakes the responsibility to provide guarantee, i.e., to compensate and indemnify against any type of specified loss, illness, damage, or death for a payment of a specified premium. Insurance mainly tries to protect from any kind of financial loss. It is a type of risk management which primarily hedges against the risk of contingent and uncertain loss.
Therefore, in simple words, one party protects others in case of any loss arising in the future, for which the insurance party provides timely money for the insurance. There are mainly two parties involved in insurance. The first part is, the company who provides Insurance or who takes guarantee is called an insurance company or an insurance carrier or an insurer.
However, on the other hand, the party which is insured or on whose behalf the guarantee is taken is called an insured or a policyholder. Insurance in India has evolved through many phases. The development of insurance has evolved through mainly three stages. Insurance law in India has its origin in the United Kingdom, where the British Company started operating in India.
The Oriental Life Insurance, and insurance company, commenced its business at its first office in the city of Calcutta, which was followed by Bombay Life Insurance Company in the year 1823, then subsequently followed by Madras Life Insurance Society in the year 1829 and then followed by Oriental Life Assurance Company in 1874. The first statutory act to regulate the Business of Life Insurance in India was passed in the year 1912 which was named Indian Life Assurance Companies Act 1912.
The act was based on the English Act of 1912. After India got its independence, on January 19, 1956, the control of Life Insurance Companies was taken over by the Government of India. Thereafter, the Life Insurance Company (LIC) was incorporated in the year 1956 under the aegis of Life Insurance Corporation Act, 1956, which accordingly provided the exclusive right to Life Insurance Company to Life Insurance business in India.
After, the incorporation of Life Insurance Company in 1956, Life Insurance Company started playing monopoly in the field of Insurance Industry. After, the introduction of LPG policy in India in the year 1991, the Indian Government introduced various reforms for the financial sector paving the way for liberalization of the Indian Government. Even after the introduction of LPG policy, private entities were still not allowed to enter into the business of insurance. However, the Government of India in the year 1993 formulated and eight-member committee which was chaired by Mr R. N. Malhotra.
The committee also includes the Governor of the Reserve Bank of India to help the committee in reviewing and understanding the prevailing and existing structure of regulation in the insurance sector. The main motto of the committee was to make recommendations for the betterment of the Insurance Sector by strengthening and modernizing the insurance regulatory system.
The Committee after the detailed analysis submitted its report to the Government of India in January 1994. The recommendations by the committee mainly include the privatization in the insurance sector by allowing the entry of private players in the business of health insurance and general insurance.
The report also focused on the establishment of an Insurance Regulatory Authority. After the recommendation received by the Malhotra Committee, the Indian Parliament passed the Insurance Regulatory Act, Insurance Regulatory and Development Act, 1999. The act was passed with the motto to provide for the establishment of a Regulatory Authority for Insurance by keeping in mind to protect the interests of the policyholders, to regulate, promote and ensure the growth of the insurance industry for the development of society, and to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalization) Act, 1972 However, after the introduction of the act, the Insurance Regulatory and Development Authority of India has gone through multiple amendments like, in the year of 2002 and 2008.
Still, IRDA is working with the motto to safeguard the interest of people and regulate the interest sector so that no one can be cheated, and all the insurance companies are working properly to adjudicate the justice to the people.
WHAT ARE PANDEMIC AND EPIDEMIC DISEASES?
WHO explains pandemic disease as, “A pandemic disease is one where there is a worldwide spread of the disease.” Therefore, it means they are such kind of diseases which have affected several parts of the world. Pandemic diseases are not a constraint to any boundary, whereas it has moved and affected various countries on the globe. The example of some of the pandemic diseases is HIV AIDS, COVID-19. These diseases have affected people worldwide.
Whereas epidemic diseases are those which have affected some parts or territory in the globe. These diseases mainly have affected only to some countries. The example of this kind of disease is NIPHA and Ebola. The WHO holds the authority to declare disease Pandemic and Epidemic.
INSURANCE POLICY DURING PANDEMIC IN INDIA
Health insurance policies play a leading role in today’s society. Health Insurance covers medicine and hospitalization expenses. People take Health Insurance so that they can be safeguarded against any unexpected medical expenses. Medical-related expenses involve a high amount of money, so it is always beneficial to take Health Insurance. It has come to notice that Health Insurance only covers the expenses which are explicitly mentioned in the policies.
Therefore, the policyholder needs to read each and every condition deeply. Thus, the problem arises with the new diseases which are recently faced by society.
Therefore, it is important to understand whether Insurance companies are liable to pay in that situation? Or is there any alternative by the government where the government can direct to the insurance company to provide reinsurance for the subject matter? The same problem we can analyse which came in front of India in the year 2020, where there was an outbreak of a disease COVID-19. This disease was declared a pandemic (the disease which has spread to different parts of India) by the World Health Organization.
Now, the question raised by the individual was whether their existing health policy will cover the disease for coronavirus? Now if the disease will be covered under the same Insurance Policy it is going to affect the Insurance Companies and will let the company charge crores of Rupees. And if the disease is not covered under the existing Health Insurance it is going to make an ample amount of loss to the Insurance Holder.
Insurance Policy, therefore, the Insurance Company is bound to take care of all the necessary charges related to hospitalization.
This notification also makes it clear that all the necessary medical expenses which arise during the quarantine will also be covered as a hospitalization expense as mentioned in Health Insurance Policy.
Therefore, we can see the Insurance Regulatory and Development Authority of India, in the interest of protecting the people of India, have made a clear notification to cover the expenses related to COVID-19. However, it is important to understand that the same doesn’t apply to new policies which are taken with the motto to protect from COVID-19.
Therefore, it is important to read the condition carefully before taking the Insurance Policy. Many companies also introduced separate Health Insurance for explicitly protecting from COVID-19.
Therefore, for the protection of the policyholder, it is important to choose the Insurance Policy after analysing all the conditions properly to safeguard themselves from the situation of epidemic and pandemic.
A new insurance policy named COVID 19 insurance policy was also introduced. It means such an insurance policy that provide financial assistance for the healthcare expenses incurred by the insured for the treatment of COVID 19. This insurance has been designed to help people to get good quality treatment and care so that they can fight against the disease.
The insurance provides coverage to the policyholder as soon as a short waiting period, which is usually 15 days has been served after the purchase of the policy. Thus, if a person is diagnosed positive with COVID 19, he can recover the loss of money from the policy only if he gets the disease after the waiting period of 15 days. But this insurance policy has validity up to only 9 months, after which it has to be renewed.
Insurance plays a pivotal role in society both actively as well as passive. Health insurance directly safeguards people, whereas a good insurance system protects the economics of the country. People take health insurance to protect themselves from future unprecedented loss. Medical treatment is very expensive nowadays, therefore, it is not easy to afford for everyone. Therefore, individuals buy insurance to safeguard themselves these kinds of expense.
In recent time we can see the outbreak of various new diseases such as EBOLA and COVID-19. These diseases have affected globally. It is a matter of great tension whether the existing insurance holders, who have already taken, will be provided insurance for these kinds of new outbreak diseases.