Page 45 - Insurance Times May 2020

Covid-19: How it has impacted

India's insurance industry

T he pandemic has pushed businesses across sec- As a percentage of the total number of cases, the claims

tors to change the way they operate and the
filed are very less," said Chhabra.
insurance industry is no exception. From selling
new policies to settling claims, the extended
lockdown in the wake of covid-19 has pushed insurance Insurers believe the fear around covid-19 has pushed people
to buy health insurance. The report said inquiries about
companies to depend heavily on their digital architecture. health insurance policies have increased by about 30-40%.
But the issue now is the lack of data related to patient pro-
A report by professional services firm PwC, titled Covid-19: files, morbidity rates, and the course and cost of treatment
Impact on the Indian Insurance Industry, says that the two which is required to underwrite risk and determine the
productive months for the insurance industry-March for life premiums for products that are designed specifically for
insurance and April for non-life corporate renewals-have covid-19.
been hit by around 30% and 15%, respectively. It further
emphasizes the changes insurers will have to bring about Companies are consequently at the risk of under or over-
in terms of their product categories. pricing their products, said the PwC report. "Based on the
emerging experience of Covid-19 claims, insurance compa-
Health insurance nies will need to test the hypothesis of the state-wise or
district-wise possibility of escalation of claims."
According to the report, private health insurance schemes
cover only 18% of the population in urban areas and a little
over 14% in rural areas. "Since the risk of covid-19 is not General insurance
currently priced under active products, these claims may A large proportion of this industry is dependent on indus-
cause an additional burden on the books of insurers if tries and businesses such as automobile, travel, hotels and
treated outside government hospitals," said the report. infrastructure. So challenges in these sectors due to the
lockdown could create additional issues.
However, Amit Chhabra, health business head,
Policybazaar.com, an online insurance marketplace, said the The automobile sector was witnessing a slowdown even
number of claims for covid-19 is not really hurting insurers before the pandemic set in. The over 70-day lockdown lead-
as much because the number of planned surgeries are down ing to job loss and pay cuts across most industries will put
at the moment. For general insurers who have a mixed bag the purchase of new vehicles on the back burner, hurting
of products, motor claims are down due to the lockdown the motor insurance space further.
and social distancing which means their loss ratio is down
too. "Normally, that (lack of new purchases) would be compen-
sated for by increasing the coverage net of existing ve-
"Planned surgeries will happen eventually and claims could hicles, a vast majority of which fall out of the insurance net
go up then. But it's also important to note that covid-19 by the third and fourth years. But that would be difficult to
claims are not very high in number because the percent- do given the lack of distribution feet on the street," said
age of people covered under health insurance is quite low. the report.

The Insurance Times, May 2020 45