Photo/Illutration Visitors can take a free PCR (polymerase chain reaction) test to see whether they are infected with the novel coronavirus at this facility in Tokyo’s Shinjuku Ward. (Asahi Shimbun file photo)

Life insurance companies plan to sharply narrow the scope of novel coronavirus patients eligible for medical insurance benefits by excluding people under 65 who have only mild symptoms.

The Life Insurance Association of Japan told member companies on Sept. 1 to consider changing payment standards to exclude those patients from the insurance payouts.

The move comes after payments of medical insurance payouts related to COVID-19 skyrocketed due to a special arrangement to deal with the pandemic.

Benefit payments are expected to decline by around 70 percent once the pool of eligible beneficiaries is scaled back, according to industry sources.

However, the abrupt change in payment standards could face a backlash from existing policyholders, particularly younger people who will become ineligible.

In a large majority of medical insurance products, policyholders are eligible for benefit payments only when they have been hospitalized.

But under a “deemed hospitalization” arrangement, novel coronavirus patients recuperating at home are deemed as equivalent to those who have been hospitalized and are entitled to benefit payments.

Insurers are paying benefits regardless of their symptoms as long as subscribers produce a certificate of positive test results issued by a medical institution or a public health center.

Benefit payments surged during the April-June period for the sixth wave of novel coronavirus infections earlier this year. At many life insurers, cases of deemed hospitalization accounted for more than 90 percent of benefit payments related to COVID-19.

Six industry leaders--Nippon Life Insurance Co., Dai-ichi Life Insurance Co., Sumitomo Life Insurance Co., Meiji Yasuda Life Insurance Co., T&D Holdings Inc. and Fukoku Mutual Life Insurance Co.--paid 100.9 billion yen ($728 million) in COVID-19 benefits between April and June, about 1.7 times the 58.6 billion yen they paid during the entire year through March, according to figures compiled by The Asahi Shimbun.

The amount was 19 times the 5.2 billion yen paid during the same quarter the previous year.

The Life Insurance Association of Japan proposed changing payment standards in line with the government's policy to simplify COVID-19 case count rules nationwide, now scheduled for Sept. 26.

Under the association’s guidelines, benefit payments will be limited to novel coronavirus patients 65 years or older, those who have been hospitalized, those who are pregnant and those who have received COVID-19 medications.

Doctors will not necessarily monitor the health of COVID-19 patients under 65 who have only mild symptoms once the health ministry eases the case count rules, which currently require detailed information on all patients. 

The Life Insurance Association of Japan concluded that those patients should not be covered by the deemed hospitalization arrangement and be eligible for benefit payments.

It will be up to individual life insurers whether it will change the payment standards.

But the Big Four--Nippon Life, Dai-ichi Life, Sumitomo Life and Meiji Yasuda Life--plan to follow the association’s guidelines when the simplified case count rules are put in place across the nation. Smaller players will likely follow suit.

The new rules will limit detailed reports only to patients at risk of becoming seriously ill, such as people 65 or older, those requiring hospitalization and pregnant women.

Requests for benefit payments have remained high since July, when a seventh wave of novel coronavirus infections set in.

Some insurers have had to pay interest on arrears after missing the deadline for benefit payments, such as within up to five business days from the date of the request.

A growing number of policyholders have requested benefit payments immediately after taking out a policy.

Those individuals are apparently purchasing policies after learning they are likely to be infected with the novel coronavirus because their family members tested positive, for example.

In certain cases, subscribers have requested benefit payments only days after taking out a policy that comes with a maximum guaranteed amount, sources said.

Those who apply for a medical insurance policy are usually required to declare their medical history and health conditions, but no item on the health statement form is related to COVID-19, such as whether they have been in close contact with infected individuals.

Nippon Life has taken the unusual step of restricting the sales of two types of insurance: medical insurance and income protection insurance.

The company on Aug. 4 started accepting new contracts only at the invitation of its staff and declining to issue policies at the request of customers.

Company officials said the measure is intended to preclude “immoral contracts” with those who try to take out policies knowing that they are highly likely to be infected.

The Asahi Shimbun