As the impact of the Corona Third Wave is yet to be fully studied, life insurance companies are taking a cautious “wait and see” approach before deciding to increase premium rates.
Following an increase in premium rates by reinsurers, some life insurance companies have recently increased term insurance rates by 20-30 percent. After the severely damaging 2nd wave of Corona during April-May 2021, the rates increased and due to this there was a sharp increase in claims affecting the margins of insurance companies. As the impact of the Corona Third Wave is yet to be fully studied, life insurance companies are taking a cautious “wait and see” approach before deciding to increase premium rates.
“In line with mortality experience over the past few years, reinsurance companies have increased their rates by around 30 per cent in the past year. Because of this, almost all life insurance companies have increased their premium rates by more than 20 per cent,” says. Rushabh Gandhi, Deputy Chief Executive Officer of India First Life.
Rushabh Gandhi says, “So far, the Corona Third Wave experience has not been as deadly as the first two waves. Mortality continues to remain under control due to penetration of the vaccine in eligible populations. However, as the Corona Third Wave is yet to be fully studied and understood, life insurance companies are adopting a cautious “wait and see” approach. While we, at IndiaFirst Life, do not expect any further increase in premium rates this financial year, we are exercising greater vigilance. Approach to Underwriting.”
Rakesh Goyal, Director, Probes Insurance, says, “HDFC Life, ICICI Prudential and Bajaj Allianz Life are among the companies that have hiked term insurance rates so far. Additionally, other insurance companies are also expected to increase their rates. Reinsurers had asked for a 40-50 per cent increase in prices, but insurers have only increased it by 20-30 per cent.”
Rakesh Goyal says, “Still, it is too early to predict the impact of Corona Third Wave. While the cases have been on the rise in the last few days, there have been no deaths due to the latest variant compared to the 2nd wave of Corona. If things go out of control and there are more casualties in the coming days, the term plan rates will be revised going forward.”
According to PolicyX.com’s ‘Insurance Price Index’, term insurance price index value increased by 4.18 percent in Q4, 2021. The PolicyX.com report shows a huge 9.75 percent difference in term index values between Q1, 2021 and Q4, 2021.