The life insurance industry is slowly returning to normal after facing a high claim load in the first five months of the current fiscal budget following the second wave of the Covid-19 pandemic.
“The industry is doing well. With every passing month, the business is getting better. Private sector life insurance companies are doing well and the public sector banking-led subsidiaries are doing well,” said Rushab Gandhi, executive vice president of IndiaFirst Life Insurance. Good.
in interaction with business lineGandhi said there are green shoots across the industry as well as for insurance companies and there is still strong demand among consumers for life insurance.
“A large portion of our portfolio is non-participating products; the contribution of protection work is increasing. Citations for the term life are increasing. It is a clear and sustainable trend.” He further said that claims, which have risen nearly two to three times in the second wave of the pandemic compared to the first, have also fallen for life insurers.
“In the first five months of the year, claims were very high. Peak deaths occurred in May and notifications came in June and July. Now it appears to be declining.”
A number of life insurers, burdened with high claims, reported losses in the first quarter of the fiscal year, and they also increased their premium rates.
According to IRDAI data, life insurers posted a 22.21 percent growth in first-year premiums in September year-on-year. Of this, private sector companies recorded a growth of 42.42 percent, while LIC recorded a growth of 11.55 percent last month on an annual basis. IndiaFirst Life Insurance grew 71.05 percent in September.
Analysts also expect the life insurance sector to continue to make a full return in the second half of the fiscal year.
“We have seen a good rebound in growth in the past few months, with September 2021 seeing healthy trends in most players. We believe premium growth will see strong traction during FY22, with continued focus on non-participating pensions,” Motilal Oswal said in a recent report. , while ULIP will see a gradual recovery.”
Care Ratings said that while Covid claims are likely to remain high in the second quarter, the impact should be reduced compared to the first.
“In the first quarter of the fiscal year, premium growth, albeit muted, was driven by unit related products and protection plans. However, the life insurance segment saw significant claims in the first quarter due to the second wave of the pandemic and profitability was hit as companies made provisions and reserves to mitigate the impact of claims.
Commenting on IndiaFirst Life Insurance’s growth strategies, Gandhi said the insurer is focusing on credit life insurance and is expecting a premium of around Rs 300 crore from this segment this year.
“In our partnership with Bank of Baroda, we have succeeded in obtaining correlation rates of over 70 per cent and have started making covers for all loan products,” he said, adding that the insurance company is working on linking up a number of other lenders like Well.
“Our strategy remains the same. We will remain a multi-channel distribution company with the main focus on Bancassurance and contribute 80-85 percent of the premium. In the agency area, our focus will be on quality rather than quantity, while on transaction banking our focus will remain on penetration.”