Page 24 - The Insurance Times May 2025

life and insurance industry. The PAT for life insurance indus- Graph-6
try suffered an 11% reduction in FY 2021-22 from INR 8661
Cr to INR 7751 Cr, also during this FY, general insurance in-
dustry also suffered losses resulting in reduction in total profit
compared to previous financial year. The general insurance
industry suffered losses from 2022-23 as well. The impact
of COVID is visible on the PAT of the insurance industry in FY
2021-22. However, in FY 2022-23 there is an increase in life
insurance profit and 722% in total PAT of the insurance in-
dustry. This however explains that the profit for life and non-
life industries decreased in the year 2021-22 due to COVID
and non-life continued to suffer losses in subsequent two
years. .

Death Claim in Life Insurance Industry Discussion
During the peak of the COVID in 2020-21 and 2021-22, the The nominal premium income had consistent growth over
death claim of life insurance industry increased by 41% and the last five years period from 2019-20 to 2023-24 indicat-
45% respectively and then reduced by 32% in 2022-23 and ing no impact of COVID. On the one hand, there was a risk
minor increase of 2% in 2023-24. This again explains that of a reduction in premium income because of job losses, on
the pandemic risk crystalized within the Indian life insurance the other hand, there was increased awareness towards
market. insurance due to adversities observed during corona. The
second reason could have played a dominant role in consis-
Graph 5
tently increasing the premium income.

During the period of COVID, interest rates and inflation were
low and therefore in 2021 and 2022, there was a consis-
tent growth of around 7% in real premium, however, post
Russia-Ukraine war, the inflation shot up due adverse eco-
nomic impact led to decrease in the real premium income
in 2023 of 2.4%.

On the other hand, insurance penetration had a consistent

Source: IRDA Annual reports for respective years

Operating Expenses
There is a steady increase in the operating expenses from
2019-20 to 2022-23 at an annual rate of 4%, 13% and 28%
respectively in three financial years followed by a fall of 12%
in 2023-24. This coincides with the COVID period in 2020
and 2021. The rise in operating expenses in 2022-23 is sub-
stantial at 28%, represented by 25% in the life insurance
industry and 32% in the non-life industry. The fall in operat-
ing expenses in 2023-24 in life insurance industry is 0.5% and
29.5% in non-life industry resulted in total fall in 12%.

The Insurance Times May 2025 23