Life insurance grows well, claims drop after wave 2

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The life insurance industry is slowly returning to normal after facing a heavy claim burden in the first five months of the current fiscal year following the second wave of the Covid-19 pandemic .

“The industry is doing well. With each passing month, business improves. Private sector life insurance companies are doing well and banca companies run by public sector banks are doing particularly well, ”said Rushabh Gandhi, Deputy Managing Director of IndiaFirst Life Insurance.

In an interaction with Activity areaGandhi said that there are green shoots in the industry as well as for insurers and that there continues to be high demand among consumers for life insurance.

“A large part of our portfolio is made up of non-participating products; the contribution of the protection activity is growing. The quotes for term life are increasing. It is a visible and lasting trend, ”he noted. Claims, which increased nearly two to three times in the second wave of the pandemic compared to the first wave, also declined for life insurers, he added.

“In the first five months of the year, complaints were very high. The peaks in mortality occurred in May and the intimacies took place in June and July; now it seems to be easing, ”he added.

Burdened by high claims, a number of life insurers reported losses for the first quarter of the year and also increased their premium rates.

According to IRDAI data, life insurance companies recorded a 22.21% growth in first-year premiums in September on an annual basis. Of that total, private sector companies recorded growth of 42.42 percent while LIC recorded growth of 11.55 percent last month on an annual basis. IndiaFirst Life Insurance rose 71.05% in September.

To recover

Analysts also expect the life insurance industry to continue to make a full comeback in the second half of the year.

“We have seen a healthy pick-up in growth over the past few months, with September 2021 witnessing healthy trends for most players. We believe premium growth would experience a strong pull in FY22, with a continued focus on non-participating annuities, while ULIP would experience a gradual recovery, ”Motilal Oswal said in a recent report.

Care Ratings said that while Covid claims will likely remain high in the second quarter, the impact is expected to be minimized compared to the first quarter.

“In the first quarter of the year, premium growth, although moderate, was driven by unit-linked products and protection plans. However, the life insurance industry saw significant claims in the first quarter due to the second wave of the pandemic and the profitability suffered as companies built up provisions and reserves to mitigate the impact of claims, ”he said.

Growth strategies

Commenting on IndiaFirst Life Insurance’s growth strategies, Gandhi said the insurer has focused on credit life insurance and expects a premium of around 300 crore from the segment this year.

“We were successful in our partnership with Bank of Baroda in getting foreclosure rates over 70% and started covering all loan products,” he said, adding that the insurer was working on reconciliations. with a number of other lenders as well.

“Our strategy remains intact. We will remain a multi-channel distribution company with the main objective of bancassurance and contributing 80-85 percent of premiums. As far as the agency is concerned, we will focus on quality and not on quantity, while on banca, we will remain focused on penetration, ”he added.


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