Insurers seek re-pricing of Corona Kavach, Corona Rakshak policies

Surabhi | | Updated on: Dec 06, 2021

With claims rising, low-ticket schemes prove expensive

Worried by rising claims and low premium, insurers have approached the insurance regulator IRDAI for a re-pricing of the Corona Kavach and Corona Rakshak policies.

Insurers point out that these low ticket policies were expected to be for a short duration, but with the pandemic continuing, they are turning out to be expensive propositions for them and hitting their balance sheets.


“The industry as a whole has asked for repricing of Corona Kavach and Corona Rakshak. We priced it around June 2020, and the actual peak has been five to 10 times of the expectation. These products are a guaranteed loss of money,” said a source privy to the development.

Sources said general insurers discussed the issue with IRDAI recently and shared data on losses.


“Insurers too have to report to their shareholders. These schemes were supposed to be for a short duration and no one had thought that Covid cases and claims would rise to such an extent,” noted another insurer.

Covid-specific covers

The Corona Kavach and Corona Rakshak policies were launched last year based on IRDAI guidelines by all insurers to provide Covid-specific cover to customers.


Corona Kavach is a family health insurance policy for Covid-19 with sum insured between ₹50,000 and ₹5 lakh available with a term of three and a half months, six and half months and nine and half months. Premiums are as low as ₹150 in some cases.

Corona Rakshak is a defined benefit policy with a sum insured between ₹50,000 and ₹2.5 lakh.


Comprehensive cover

Many insurers are now advising customers to move to Aarogya Sanjeevani, which is the standard health policy, which would provide more comprehensive health cover. Some insurers said that customers, too are preferring to shift to a full-fledged health cover.


“One of the objectives, when these policies were launched, was that they would educate customers about the benefits of health insurance and they would eventually migrate to full fledged covers,” noted an insurer.

A recent note by ICICI Securities said that industry-wide Covid claims till May 14, 2021 was 1.5 million in terms of number and $3.1 billion in value compared to 11.1 million in numbers and $2.1 billion in value in 2020-21.


“Our channel checks indicate that industry losses are higher on Covid-specific polices (Corona Kavach and Corona Rakshak),” it said.

The general insurance industry has over ₹24,000 crore of Covid related claims to date from the beginning of the pandemic.

Published on June 20, 2021
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