Last week, life and property insurance associations agreed to accept digital COVID-19 certificates for insurance claims without requiring a written diagnosis from a medical professional. The decision not only ended a days-long standoff with the Financial Supervisory Commission, but should also further ease the burden on medical staff, who have been busy with an increasing number of people undergoing polymerase chain reaction tests amid the latest outbreak.
Prior to last week, insurance companies had objected to the commission’s suggestion that policyholders use digital certificates for insurance claims if they become infected or are quarantined. They voiced concerns that the practice could be susceptible to fraud, as digital certificates lack detailed information on patients, while information provided by policyholders, rather than doctors, is difficult to authenticate. To address these concerns, the government updated the digital certificate system to include national ID numbers and a QR code with which insurers could examine policyholders’ information.
Hospital staff are already stretched thin — issuing diagnoses for insurance purposes only adds to their pressure and is a waste of scarce resources, as there are many non-COVID-19 patients who need to be taken care of. The change of tack by insurers makes life easier for policyholders and hospitals, and ensures policyholders’ rights.
However, the associations remain critical of paying compensation to policyholders who test positive for COVID-19 in rapid antigen tests, even though the Central Epidemic Command Center (CECC) treats certain groups of people who test positive in a rapid test as confirmed cases. Insurers face growing financial stress due to high payouts to COVID-19 policyholders amid a surge in domestic infections, while the accuracy of rapid test results is still up for debate. By some estimates, insurers are expected to dole out NT$30 billion to NT$90 billion (US$1.01 billion to US$3.02 billion) during the latest outbreak.
The commission has estimated that some insurers might be compelled to increase capital in light of a decline in their capital adequacy if the number of local COVID-19 cases surpasses 3 million as forecast by the CECC.
A move by insurers to cancel policies or refuse policyholders’ claims due to rising financial pressure could have huge social implications, including potential legal action by policyholders and damage to insurers’ credibility.
The furor over COVID-19 insurance policies carries a painful lesson for insurers. The products provided financial support to people with COVID-19 and families facing economic difficulties in the past two years. However, as COVID-19 has become a flu-like illness, and the government has shifted its policy to coexisting with the virus, insurers failed to adjust their products in a timely manner, resulting in many policyholders pushing their luck to purchase more such products. In theory, insurance policies help people cover losses should something unexpected happen, but COVID-19 insurance products have started to look like lottery tickets to some people.
The commission has required insurers to fulfill their obligation to COVID-19 insurance policyholders and reminded them of the importance of the public’s trust in financial institutes, which, if lost, takes many years to regain.
At the same time, financial authorities must closely monitor the effects of paying compensation on insurers’ financial strength to avoid any adverse impact on the overall financial system. Other government agencies should also provide assistance to insurers. For example, the Ministry of Health and Welfare could adjust COVID-19’s classification, and exclude asymptomatic and mild cases from the notifiable communicable diseases category, which would help insurers to a certain extent.
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