Page 38 - Insurance Times August 2020

insurance regulator, IRDAI, has recommended that motor third number of corona virus (COVID-19) cases in India, general
party (TP) obligation of non-life insurers be determined, based insurance companies are set to come out with new package
on the number of vehicles insured. Each non-life insurer is rates for treatment.
mandated to write a certain amount of motor TP business every
year. Currently, the motor TP obligation is based on the Merger of PSU general insurers is at an advanced stage. The
premium income an insurer collects in any given year in this government had raised nearly 17,500 crore through initial
class of business. Motor third party insurance being an integral public offerings in New India Assurance Co Ltd and General
part of every individual vehicle, the monitoring of insurance of Insurance Corp of India Ltd, the only listed state-owned non-
such vehicles (by every insurer) most appropriately should be life insurance companies. Though insurance offices are
on the basis of the count of such insured vehicles rather than included under the list of exempted services under the
(indirect/derivative) evaluation of premium derived from the lockdown however with general restriction on movement
insurance of such vehicles", the working group said in its report. there is hardly any chance of new business. Insurance
players with robust digital infrastructure should fare better
The Insurance Regulator has cautioned the general public than others, if there is a sharp rise in COVID-19 cases, as
about cyber fraudsters in insurance. There are occasional seen in China and Italy.
reports of fraudsters offering insurance with unusually low
premium from fake entities through online and digital mode. One of the biggest challenges for insurers could be enabling
The customer should take due care and verify the alternative work arrangements for their employees and
genuineness of the website, insurer, intermediary and sales force such that they are more resilient and able to deal
agents before making any online payment. Insurance should with increasing claims and shorter response times. Even
be bought only from insurers and intermediaries registered when the dust settles with weakness in economy is bound
with the IRDAI and the agents duly appointed by the to persist in the near term with threat of pay cut and job
insurance companies. The approved list of insurers and losses. Many of the answers lies in the next few weeks as
intermediaries can be checked from IRDAI's portal, while how India tackles the corona issue. There have also been
agents' authenticity can be verified from the portals of some proactive steps taken by the industry on product
respective insurers. innovation front.

Marketers have a unique opportunity of being the IRDAI has asked insurers to come up with new need-based
customer's confidante by assuring them that their interests products for corona virus, and for which, a few insurers have
are safeguarded. During such crises, financial concerns can come up with such need-based specific products to cater to
seem daunting and add to the burden. India is still reeling the current requirement. These are defined benefit-based
under the impact of Corona virus and lockdown. It has a product where the benefit is paid on occurrence of the event
wide-ranging impact across the sectors of the economy. In and no bills are required. The industry has done well to find
some cases, the impact is minimal and short-lived. However, an opportunity even in such a situation however it still
in case of some sectors like insurance, the impact is going depends heavily on offline distribution which is bound to
to be negative in the near term as it will be hit from multiple suffer. The prospect of industry getting back its momentum
directions. In the long run, it is expected to change the way will depend both upon the time that India takes to recover
Indians look at protection cover and bring some long-lasting from corona virus and market crash.
positive changes in the very long run.
References:
However, both general and life insurers will see a setback 1. htt ps://ww w.irdai.gov.in/ADMINCMS/cms/
in terms of lower income on their investments and erosion frmGeneral_List.aspx?DF=MBFN&mid=3.2.8
of value. Also, the portfolio risk will be huge and might have 2. https://economictimes.indiatimes.com/markets/stocks/
to face sharp markdowns and higher market-to-market news/government-to-finalise-psu-general-insurers-
losses while arriving at the fair values of their investments merger
due to sharp market correction. Post lockdown, growth for 3. https://www.businesstoday.in/money/insurance/how-
the motor insurance segment would also get restricted as insurance-industry-is-dealing-with-coronavirus-woes
the IRDAI has deferred price hikes for now. Also, it is still 4. https://taxguru.in/corporate-law/covid-19-impact-
not clear as to how the liquidity crunch (cash flow pressures) insurance-sector.html
at medium and small businesses impacts demand for other 5. IRDAI Annual Report 2018-19
general insurance segments such as fire. With the rise in the 6. Newspapers & Journals T

38 The Insurance Times, August 2020