COVID19: Life insurance sector struggling to recover
NEW DELHI: COVID19 has not only crippled the life but has given major blow to economy all over the world including India.
Like other sectors, life insurance companies have reported a contraction in new business premiums, four months in a row.
As uncertainty prevails over salaries and job loss, there are less takers for new insurance policies. This has resulted in the industry losing around four million policies and premiums worth around Rs 45,000 crore.
“The industry as a whole lost four million policies and around Rs 15,000 crore of new business premium. Since the lockdown happened, people were saving money for necessities. So, around Rs 30,000 crore of renewal premium did not materialise,” Raj Kumar, managing director of Life Insurance Corporation (LIC) said.
Rating agencies quote higher numbera. According to Care Rating, the life insurance sector witnessed a 18.6 per cent drop in the first year premiums to Rs 49,335 crore in the April-June quarter of the current financial year. Insurers claimed that even when business was bouncing back to normal from August, growth in renewals is only marginal.
“The increase in new businesses are driven by HNIs. There have been a substantial amount of defaults, especially in the lower and middle income group. which means only high value renewals are coming. This year certainly it will not remain the same,” another LIC official added.
This is certain to impact future business. According to data and analytics company GlobalData, the life insurance business in India is likely to contract in 2020, declining 0.9 per cent this year, compared to 8.8 per cent growth recorded in 2019, mainly on account of civic and financial uncertainties due to job loss and no growth in income. The trend is similar for private insurers too. “There is demand for health insurance products. But we have witnessed lukewarm response in life insurance,” an official from Bharti Axa Life insurance said.