The day that Antonio Reyes fell ill with covid-19, his heartbroken wife had to take him to a private hospital due to the shortage of beds in the third wave of infections. Only in the first week of being hospitalized, the account for hospital expenses was almost 300,000 pesos (about 14,500 dollars). “I remembered in the midst of desperation that I had insurance, I was on the verge of bankruptcy,” says Carolina, his wife, in an interview.
There are few cases that have been able to use a medical expense policy to face the high costs of medical care due to covid-19. According to figures from the Mexican Association of Insurance Institutions (AMIS), although mortality levels have dropped due to omicron infections, the average cost of hospital care for people infected with coronavirus and who have medical expense insurance rose to 520,439 pesos (just over 25,000 dollars) a beginning of 2022, in contrast to the 412,274 pesos of average cost registered in 2021.
Of the 4.2 million infections counted throughout the pandemic by the Ministry of Health in Mexico, only 46,127 people have been able to use their major medical expenses policy to pay for hospital care, the cost of which can be up to 3.5 million pesos ( about $170,000) when the patient has to be intubated and admitted for several days in an intensive care unit.
Pedro, a 50-year-old worker living in Querétaro, took out additional family health insurance to the one his company granted him, for which he paid 149,000 pesos (just over 7,000 dollars) in one year, until in April of last year He was hospitalized with symptoms of coronavirus. “Unfortunately, the covid affected him too much and he spent 20 days in the Intensive Care Unit, he was intubated for 15 days, although he managed to overcome the disease to receive rehabilitation for another 20 days,” says one of his relatives, via email. Of the account of 1.5 million that he had to pay, in the end he made a disbursement of 95,000 pesos (just over 4,500 dollars).
Norma Alicia Rosas, general director of AMIS, explains that the Mexican population has become more sensitive to the medical care they may receive in the event of a covid-19 infection. “We have an increase of between 8% and 10% in the acquisition of medical expense policies,” he says. However, the acquisition of insurance in the midst of the coronavirus crisis can mean new obstacles for users.
In recent weeks, the SURA insurance company informed its clients that it would only attend to the claim of a medical and life expenses policy of users of legal age who have at least one dose of the covid-19 vaccine. “Each of the companies (insurers) can establish the underwriting criteria that they consider appropriate,” says Rosas.
The insurance business has changed significantly as a result of the pandemic, and above all, the conditions that these companies take into account in order to grant a policy and the cost they have. “This pandemic, this catastrophe, is not the same as an earthquake that lasts a minute, but rather this event that has lasted almost two years and whether you like it or not, it must be very clear in insurance how a pandemic is included as natural catastrophe”, says Edgar Karam Kassab, vice president of AMIS, in an interview.
Although the insurance industry in Mexico has faced the payments derived from covid-19 for medical expenses and life insurance coverage for those who died from this disease, it is an unprecedented event. After this pandemic, Hurricane Wilima, registered in October 2005, has meant such a high payment of insurance premiums, although at that time, 62 deaths were registered due to this phenomenon.
The claims ratio, that is, the proportion that exists between the cost of the claims produced in a certain set or portfolio of policies and the volume of the premiums (the amount that the user pays to receive the insurance) has risen considerably due to the covid-19. In the last year, medical expense insurance policies have a loss ratio of 100% to 120%: for every peso paid by the client, the insurer must pay up to 1.20 pesos for hospital care.
However, for workers like Antonio or Pedro they have meant an important respite for their pockets. “You don’t know how expensive it is to spend a single night in an intensive care room until you have to face it,” says Carolina. “For a 50-year-old person, medical insurance can cost up to 70,000 pesos a year, while hospitalization with intubation can reach 4 million pesos, the cost of a premium is not comparable with what this disease can cost”, says Karam.
Gerardo de la Garza Ramírez, a member of the Mexican Association of Insurance and Bond Agents, specifies that the fatality rate of people who had medical insurance so far during the pandemic was 6%, while the president of AMIS stresses the importance of workers being able to acquire an individual policy, since 72% of medical expense insurance is contracted by companies. “A person who works for 25 years in a company and at the time of retirement, the policy is cancelled, hence the importance of having individual insurance, which is like savings over time,” concludes Karam.
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