Page 14 - Insurance Times November 2023

principal (business owner) will fulfil Life insurers reluctant to 'carry' pregnant women
their obligations.
Insurers are shying away from offering life cover to pregnant women. Lack
According to sources, the ministry of of clarity and misinformation on the issue are leading to confusion and agony
corporate affairs is looking into
concerns raised by the insurers that for many.
they should have recourse to recovery "I contacted a major insurance broker seeking life insurance as an Indian
on par with the banks as forwarded by citizen in the US. Despite selecting a policy and completing the paperwork, I
the Department of Financial Services was denied coverage upon revealing my pregnancy," Manisha, an Indian
under the finance ministry. citizen now living in the US, told.

50-year bond ends life She also approached about half dozen individual insurers that also declined
her application for life cover at various stages of processing her proposal.
insurers' wait
Similar was the experience of Ratnamala, a software engineer from
The central government has Karnataka who works in Hyderabad.
introduced a new dated security of 50-
year tenor in its borrowing calendar for When contacted, a senior official of the IRDAI said, "Underwriting of female
the second half of the current financial lives who are pregnant at the time of proposal, insurers are at liberty to
year-a long-standing demand by life formulate their procedure with the policy."
insurance companies, particularly Life In the case of life insurance policy, underwriting for any condition such as
Insurance Corporation of India.
pregnancy or postoperative care, insurers take into account the prognosis of
"In response to market demand for the specific underlying condition, postpone the acceptance of the proposal
ultra-long duration securities, it has for a specific period of three/six months depending on the criticality of the
been decided to introduce a new dated underlying condition and its prognosis. And subsequent to the period, accept
security of 50-year tenor," the Reserve the proposal.
Bank of India (RBI) said while issuing
the borrowing calendar for the second "This is the general procedure, but diverse practices are possible like rating
half of the financial year. the lives appropriately instead of postponing. There is no dropping of cover
once accepted under life insurance policy," he said.
Market participants said that the Rs
30,000 crore supply in the 50-year
bond will be absorbed by the insurance more predictable. Green bonds in 5, participating products among life
10, and 30 years to be issued for Rs insurers is the key reason for the
companies.
20,000 crore. Huge redemption in H2 compression in the value of new
"The 50-year bond was introduced will be better for yields," Arun Bansal, business (VNB) margins of the
because there was a kind of demand executive director head of treasury at companies. However, the slight uptick
from the insurance companies," IDBI Bank, said. in the protection business is likely to
Churchil Bhatt, executive vice cushion the pressure on the margins,
president at Kotak Life Insurance said. with analysts at Kotak Securities
"The demand will be largely from the Life insurers face VNB expecting a margin compression of 110
insurance sector," Bhatt added. to 400 bps for most companies.
margin pressure in Q2
The central government's borrowing The life insurance industry is expected "We expect premium growth to remain
amount of Rs 6.6 trillion for the second to report a compression in its margin steady after a muted 1QFY24. Demand
half of the current financial year was during the second quarter of financial for annuity, non-par, and credit life
along the expectations of the market, year 2023-24 (Q2FY24) due to decline segments is likely to fare relatively
dealers said. better, while protection is witnessing a
in share of the margin accretive non-
"Borrowings are as per budgeted participatory products. gradual recovery," stated an earnings
numbers, good to declare in advance preview report by Motilal Oswal.
so that quarter-end positions can be The premium of non-life insurers are Analysts at Emkay Global estimates
adjusted accordingly. Auction to be expected to report decent growth, VNB margin for Life Insurance
over in mid-February 2024, so easing backed by improvement in business Corporation of India (LIC) to slip down
pressure on yield in the last quarter as across segments. to 14.6 per cent from 15.2 in the year-
by that time repo rate decisions will be The reduction in the share of non- ago period.

14 November 2023 The Insurance Times