Page 15 - Insurance Times March 2021

stake in IDBI Federal Life Insurance the changing life stage needs of an into force. The companies that are
Company Ltd (IFLI) to Ageas Insurance individual. There are three options understood to be revising their rates
International NV for Rs. 507.10 crore. available in this plan, each with a include Max Life Insurance, Tata AIA
Following this transaction, the joint unique offering. We believe customers Life Insurance, IndiaFirst Life and
will see value in the product and use it Aegon Life.
venture has been rebranded as Ageas
to secure themselves and their
Federal Life Insurance Company Ltd, Reinsurers price their rates based on
IDBI Bank said in a statement. families." life expectancy - which is a long-term
IFLI is a three-way joint venture of IDBI Term insurance cover trend - and not on a single-year
Bank, Belgium's Ageas and Federal premium set to rise as experience. However, this time the
Bank. After the conclusion of the stake concerted action has coincided with
sale, IDBI Bank's shareholding in IFLI reinsurers hike rates the pandemic, which has caused nearly
has come down to 25 per cent from Life Insurers in India are set to hike 1.5 lakh deaths in India.
the earlier 48 per cent. premiums for their term plans after "The industry is seeing a worsening of
The shareholding of Ageas in IFLI has several reinsurers increased rates for mortality claims among policyholders
gone up to 49 per cent from 26 per cent underwriting portfolios of these pure- due to Covid. The actual claims paid is
earlier. protection covers. The move comes turning out to be higher than what was
even as the domestic life companies estimated by actuaries at the time of
Federal Bank continues to hold 26 per face higher-than-expected mortality pricing the policies" said R M Vishakha,
cent stake in IFLI.
claims due to COVID. MD & CEO of IndiaFirst Life Insurance.
On August 6, 2020, IDBI Bank had Reinsurance rates for Indian life "We have received 630 death claims
informed the exchanges that it has for Rs. 41 crore arising out of Covid.
companies had been hardening before
entered into a Share Purchase These included 291 from individual
the pandemic. Global underwriters,
Agreement (SPA) to sell 27 per cent of led by the US-based RGA, turned wary policies and 324 claims from group
its stake in its joint venture (JV) arm in the wake of lower rates in the Indian policies," she added.
IFLI to other JV partners - 23 per cent
market, which some said were According to Vishakha, reinsurance
to Ageas Insurance International NV
cheaper than the cost of a life cover in cover is provided by multinationals in
(Ageas) and 4 per cent to The Federal European countries with better life some cases and they are outside the
Bank Ltd (Federal Bank).
expectancy rates. Given that this hike purview of the insurance regulator. "If
has come during a pandemic, insurers domestic insurers do not increase their
HDFC life launches new do not have the headroom to absorb rates in line with what is quoted by
term plan the higher costs. Domestic reinsurer reinsurers, they will end up bearing
GIC Re is also understood to have the risks on their books," she said.
HDFC Life has launched its latest
flagship term product Click 2 Protect raised rates on some contracts. Insurance distributors say that there
Life. The non-linked, nonparticipating, "Some reinsurers changed rates at the has been a secular trend of
individual term plan has been designed start of this fiscal year. While others, improvement in life expectancy in India.
to cater to the changing needs in the who may not have fully reflected the As a result, the term insurance rates
different life stages of an individual. hike then, are seeking to change rates have fallen dramatically over the last
Speaking on the launch, Srinivasan now. We believe the current increases decade. Even after the rate increases,
Parthasarathy - Chief Actuary & are only a catch-up with market rates. the cost of life insurance will be
Appointed Actuary said, In line with our reinsurance cheaper than what it was 10 years ago.
arrangements, we reflected the rates
"The pandemic has made every Over the last two years, reinsurers
individual aware of the need for in the new product we launched in July turned wary of the decline in rates.
financial protection. With time and 2020," said Satyan Jambunathan, CFO Insurers have been bringing down
at ICICI Prudential Life Insurance.
changing lifestyle the need for financial rates for high-value policies because
protection is not the same as it was a According to insurance distributors, policyholders in that income segment
few years ago. Based on customer some companies have indicated that had better life expectancy because of
inputs and our research findings we rates will go up from April 2021, when frequent medical tests and
have designed a product that meets the new reinsurance contracts come treatment. T

The Insurance Times, March 2021 15