The life insurance industry is witnessing a hike in rates, by top private life insurers, for the second time in the current fiscal. Industry officials said this is because of the spread of the new omicron variant adding uncertainty.
Niraj Shah, HDFC Life Insurance chief financial officer, said protection prices in India are a lot lower than in some of the developed countries with superior healthcare facilities and higher life expectancy. “Historical increases in India have been lower than inflation growth. We should expect pricing and underwriting norms to evolve in line with expanding geographical and demographic coverage over time.”
RM Vishakha, IndiaFirst Life Insurance MD and CEO, said global reinsurers follow business considerations in revising their rates. He said domestic insurers are dependent on their support for providing cover and have to increase rates whenever reinsurance rates are revised.
According to a report by Motilal Oswal, health insurance premiums will record a growth momentum as Indians look to protect themselves and their families so that they can be financially secure for any kind of medical treatment during the third wave.
The COVID-19 pandemic has helped drive awareness about the importance and need for a medical cover. This translated into a 28% and 18% growth y-o-y in FY21 and the first half of FY22, respectively. Moreover, general insurance companies reported a 29.81% rise in premium income from the health segment to Rs 42,571 crore during the seven-month period ended October 2021 – compared to Rs 32,796 crore witnessed in the same period last year.
According to IRDAI, health premium income shot up by a record 34% to Rs5,463 crore in the month of October alone. It should be noted that in April 20, growth in health insurance was muted at 5.7% because of the nationwide lockdown. But demand during this phase was very strong. There were challenges due to the strict lowdown and limited preparedness on the part of insurers to conduct business online at such a large scale.
The frequency of claims, during the second wave April-August 2021, recorded a 44% increase.