Page 10 - Life Insurance Today July - December 2020

individuals who may be appointed as micro insurance what's best for me" attitude towards life. But ask any savvy
agents. These include non-government organizations millennial and they will tell you that the Covid-19 has driven
(NGOs), self-help groups (SHGs) and micro-finance home the point that everyone needs insurance, particularly
institutions (MFIs), among others. IRDAI had come out with term insurance aka life insurance.
an exposure draft on revisiting the product structure for
dwellings, offices, hotels, shops and micro, small and medium According to CARE Ratings, the industry could return to
enterprises (MSME) against fire and allied perils. growth in the second or third quarter of FY21. Overall, the
outlook is expected to be stable in the medium term.
As per the issued modification guidelines, age-related Starting from October, health insurance premiums are set
ailments like Knee-cap replacements, Cataract Surgery, to increase. To make health insurance products more
Alzheimer's and Parkinson's, etc. which were earlier 'customer-centric', the IRDAI has introduced a host of
excluded from the health insurance policy will now be changes in last one year. Insurers are using this time to
covered by the insurance company. In an age of immediacy, revamp their offerings by adding new features and
constant change and overwhelming choice where loyalty is standardizing products.
no longer a given, the industry has to extend beyond its core
products and services if it is to retain its customer base. They will launch the revamped products with a higher price.
The rise in premiums could be in the range of 5-20%. Apart
COVID 19 has not only crippled the life but has given major from the standardization of products, the Regulator has
blow to economy all over the world including India. Like asked the insurance companies to ensure coverage for
other sectors, life insurance companies have reported a telemedicine. In the wake of corona virus outbreak,
contraction in new business premiums, four months in a row. telemedicine service is gaining popularity. Health Insurance
As uncertainty prevails over salaries and job loss, there are segment has been one of the brightest spot in the general
less takers for new insurance policies. This has resulted in insurance category. This is offered by both multi line general
the industry losing around four million policies and premiums insurance companies and specialized standalone health
worth around Rs 45,000 crore. The industry as a whole lost insurance companies as well.
four million policies and around Rs 15,000 crore of new
business premium. Since the lockdown happened, people This means the future course of corona virus will decide the
were saving money for necessities. level of challenge health insurer's face. This may also be an
opportunity for the health insurance industry to prove its
So, around Rs 30,000 crore of renewal premium did not metal and win the trust of the prospective customers. To
materialize. The increase in new businesses is driven by ensure a successful future the sector has increased service-
HNIs. There have been a substantial amount of defaults, based businesses and introduced new propositions - many
especially in the lower and middle income group, which of which were not available five years ago. Both are
means only high value renewals are coming. This year examples of generating growth and increasing revenue.
certainly it will not remain the same. The life insurance
business in India is likely to contract in 2020, declining 0.9 References:
per cent this year, compared to 8.8 per cent growth 1. https://timesofindia.indiatimes.com/business/india-
recorded in 2019, mainly on account of civic and financial business/irdai
uncertainties due to job loss and no growth in income. The 2. https://www.business-standard.com/article/economy-
trend is similar for private insurers too.
policy/irdai-plans
The insurance regulator is monitoring the persistency levels 3. https://indianexpress.com/article/opinion/web-edits/
of life insurance companies and is also working on standard irdai-issues-new-guidelines
products for dwelling unit insurance and term insurance as 4. https://www.business-standard.com/article/
well. The Irdai also wants 13th month persistency at least companies/icici-lombard-and-bharti-axa
90 per cent and 61st month persistency at a minimum of 5. https://www.livemint.com/companies/news/
65 per cent. There is demand for health insurance products. reimagining-a-digital-future-for-a-sector
But we have witnessed lukewarm response in life insurance. 6. IRDAI Annual Report 2019-20
A common misconception about millennial is that they don't
give a shit about insurance, given their lousy and "I know 7. Newspapers & Journals

10 July - December 2020 Life Insurance Today