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EXCLUSIVE
LIFE INSURERS KEEN TO HAVE A SECOND GO AT PURE PLAY HEALTH SEGMENT
There are 24.50 lakh life insurance agents while general and health insurers
collectively employ only around 3.60 lakh agents. If life insurers are allowed
into health insurance, the number of agents will increase by 600 per cent,
thereby increasing health insurance penetration significantly.
* PTI
* August 29, 2022, 08:00 IST
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Mumbai: With the regulator IRDAI hinting at allowing life insurers to enter the
lucrative health segment, the industry led by the leader LIC and its large
private sector peers are keen to have a second go in the indemnity based health
space.
The life sector players such as LIC, private players like ICICI Prudential Life,
HDFC Life, and Bajaj Allianz Life, among others, are unanimous in saying that
all of them were offering health insurance before the sectoral regulator Irdai
in 2016 abruptly asked them to stop selling new pure play mediclaim health
insurance policies.
And so there is nothing that prevents them from re entering the segment. Also,
all of them continue to offer non indemnity based health policies even now.
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When contacted, Life Insurance Corporation said, they are actively reviewing the
proposal from the regulator as health is closely aligned to their core business
of life insurance and that there is nothing new in it for them as they have been
in it for decades and also continue to offer a host of non indemnity products.
"We're already offering a lot of long-term health protection and guaranteed
health products. We are evaluating the suggestion that the regulator has made,"
chairman MT Kumar told news agency.
The chairman further said he does not think it will be difficult for them to
offer pure-play health policies as they are already offering some of the health
products in the fixed benefits segments.
Mediclaim policies, which are indemnity-based health plans and are annually
renewed or sold with one-year validity are the best-selling health plans in the
country. However, in 2016 the Irdai asked life insurers to stop hawking such
plans. Life insurers since then have been allowed to offer only fixed benefit
health plans.
Recently, Irdai chairman Debasish Panda said it was time life insurers re-enter
the health vertical and mandated the industry to ensure that every citizen has a
health policy by 2030. He also tasked life insurers to double their business by
2030 and one way to achieve the first objective is to allow more players into
the segment.
However, later Panda clarified that no decision was made and that the regulator
is evaluating the pros and cons of allowing life insurers to sell health
insurance.
Currently, there are 24.50 lakh life insurance agents while general and health
insurers collectively employ only around 3.60 lakh agents. If life insurers are
allowed into health insurance, the number of agents will increase by 600 per
cent, thereby increasing health insurance penetration significantly.
Industry watchers support the move saying globally life and health insurance are
better aligned with life players and the move will help widen the reach of both.
Moreover, life insurers already have the necessary infrastructure for
distribution and policy servicing.
They also argue that though regulations vary from country to country, composite
insurance companies exist in many countries wherein, life insurers sell both
life and general insurance products along with health covers.
ICICI Prudential Life said even today they've a large customer base of 2.63 lakh
in the health space despite allowing most customers to port out following the
regulatory ban.
"We are keen to re-enter health insurance as there's nothing new in it for us
having been in the segment for many years before the abrupt ban in 2016 and that
it perfectly gels with life business," NS Kannan, MD & of ICICI Prudential Life,
told news agency.
The regulator had stopped us from selling new health policies in 2016 when we
were very active in the segment. Since we know the business well there is
nothing new for us and so we are keen to re-enter this segment as and when the
regulator allows us. After all health and life go perfectly well and globally
this is allowed, Kannan explained.
Following the ban, ICICI Prudential had stopped selling individual health plans
like hospital care III, health saver, cancer care and medi assure policies, but
it still sells fixed benefits plans like the heart/cancer protect policy and it
still services over 2.6 lakh customers.
Another leading life player, Bajaj Allianz Life also said they will look at the
sector again as they know the business well having been in it for many years.
"We're keen to understand the direction this proposal will take. As a company we
are well placed to serve the health insurance needs of customers. Over the years
we've built robust processes and technology backbone to make us agile and be
prepared to offer newer products in newer segments. Moreover, our extensive
distribution network will allow us to be present where our customers are," Tarun
Chug, CEO & MD of Bajaj Allianz Life told news agency.
So by allowing life players to offer health insurance, the regulator will only
be ensuring that there is parity among all those who are selling health covers
and that the ultimate beneficiaries will be customers, he argued.
Similarly HDFC Life, which also had a large customer base before the ban, is
keen to re enter the health segment, its CEO and MD Vibha Padalkar had told news
agency.
Life insurers have sold health insurance in the past. There are natural
synergies there. Customers will benefit through one-stop solutions, more
innovative products and access to services nationwide touchpoints through a life
insurer's branches and partners.
The penetration of health insurance is nascent, and we can all play a part in
improving the situation. The pandemic has made it very clear that health
insurance is a necessity, Padalkar said.
According to S K Sethi of Ria Insurance Brokers, health savings plans by life
insurers can be a good beginning as it gets tax exemption. It is a good idea
which needs discussion among all stakeholders.
Rushabh Gandhi of Indiafirst Life also said the industry is quite prepared to
roll out as and when a decision is made. Life insurers already have the
necessary infrastructure in terms of distribution coverage and policy servicing
to offer these plans in the market.
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EXCLUSIVE
NOT STRAPPING ON REAR-SEAT BELT MAY IMPACT INSURANCE PAYOUT
The non-compliance of seat belt laws not only puts the vehicle occupants' lives
at risk, their kin, in case of an accident, may also end up getting lower
compensation from motor accident claims tribunals for "violation" of rules.
* Dipak K Dash
* TNN
Click Here to Read This Story
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NEW DELHI: The death of Tata Sons ex-chairman Cyrus Mistry and his friend
Jehangir Pandole in a motor accident on Sunday has again shone light on the fact
that not many strap on their seat belts while occupying the rear seat of a
vehicle.
The non-compliance of seat belt laws not only puts the vehicle occupants' lives
at risk, their kin, in case of an accident, may also end up getting lower
compensation from motor accident claims tribunals for "violation" of rules.
"There is no law which says that if a person doesn't wear a seat belt and is
killed or injured in a road accident, he or she will not get compensation. In
such cases, the tribunals or courts will go into the causes and may hold
flouting of the seat belt rule a contributing factor to the fatality or injury.
The tribunals or courts may then be inclined to award a lower compensation,"
said Dipak K Nag, a lawyer who has been dealing with cases of motor accident
claims.
Hari Ananthakrishnan, who retired as chief general manager (legal) of IRDAI, the
insurance regulator, said the court or tribunal will not only look into the
cause of the accident but also the coverage of the insurance policy. "The
minimum cover mandated under the Motor Vehicles Act does not cover 'gratuitous
passengers' travelling in private vehicles, they are insured under a
comprehensive policy. In such cases, the tribunal will look into all the aspects
before awarding compensation, including adherence to provisions of the Central
Motor Vehicles Rules, such as wearing seat belts," Ananthakrishnan explained.
While the rule for compulsory wearing of seat belts by the driver and the front
seat passenger was prescribed in 1993, the government made wearing of rear seat
belts mandatory from October 2002. However, compliance remains low due to poor
enforcement of the rule. In 2019, the government increased the fine for not
wearing seat belts to Rs 1,000, but that has also not helped to improve
compliance.
According to data available with the government, FIRs from 2018 to 2020 show
that in case of 60,466 road crash fatalities, not wearing seat belts was one of
the major causes of death. Although compilation of data does not specify the
number of rear-seat occupants killed due to not wearing seat belts, more than
50% of these fatalities were passengers.
Two different surveys by Maruti Suzuki India in 2017 and SaveLife Foundation in
2019 revealed low compliance of seat belt laws. According to the first survey,
barely 4% of respondents said they used seat belts. The other survey found 37%
of respondents felt wearing rear seat belts was not mandatory and 9% felt this
did not add to safety.
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EXCLUSIVE
RELIANCE GENERAL INSURANCE COMES WITH POLICYBAZAAR TO LAUNCH RELIANCE HEALTH
GAIN POLICY
Reliance General Insurance is a subsidiary of Reliance Capital, and is one of
India's leading general insurance companies. Launched in May, the Reliance
Health Gain Policy has since witnessed high demand among customers because of
its features and benefits
* ETBFSI
Click Here to Read This Story
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Reliance General Insurance, one of India’s leading General Insurance companies,
announced the launch of Reliance Health Gain Policy on Policybazaar’s online
platform today.
The company looks optimistic with the launch as one of its officials said that
offering Reliance Health Gain Policy on Policybazaar will enable us to make our
most flexible health insurance product accessible to a larger population and
present them with the freedom of choice.
“In India, the Fintech ecosystem with its large customer base offers a unique
opportunity to tap the uninsured population and make insurance available to
everyone in every corner of the country,” said Rakesh Jain, CEO, Reliance
General Insurance.
“We are optimistic that offering Reliance Health Gain Policy on Policybazaar
will enable us to make our most flexible health insurance product accessible to
a larger population and present them with the freedom of choice in health
insurance,” he added.
Sarbvir Singh, CEO, Policybazaar, echoed the sentiment, saying, “It is a unique
and timely product in the health insurance market. This plan, which is highly
customizable, will effectively cater to the needs of a small family of 2 as well
as a larger one of 12.”
Reliance General Insurance is a subsidiary of Reliance Capital, and is one of
India's leading general insurance companies. Launched in May, the Reliance
Health Gain Policy has since witnessed high demand among customers because of
its features and benefits.
The possible synergy achieved is at making flexible and personalised health
insurance plans easily accessible to customers.
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EXCLUSIVE
UNION ROAD MINISTRY FORMALISES MOVEMENT OF FOREIGN PERSONAL VEHICLES
The Ministry of Road Transport and Highways on Sunday said it has formalised
movement of personal vehicles, registered in other countries, when entering or
plying in Indian territory.
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The Ministry of Road Transport and Highways on Sunday said it has formalised
movement of personal vehicles, registered in other countries, when entering or
plying in Indian territory. In a notification, the MoRTH said under the Motor
Vehicles Non-Transport Vehicles Visiting India Rules, 2022, a valid registration
certificate should be carried in the vehicle operating under these rules while
in the country.
A valid driving licence or international driving permit, whichever is applicable
should be carried in the vehicle. Also, an insurance policy and pollution under
control certificate should be carried in the vehicle, the notification stated.
In case these documents are in a language other than English, then an authorised
translation, duly authenticated by the issuing authority, shall be carried along
with the original papers, it said.
Motor vehicles registered in any country other than India shall not be permitted
to transport local passengers and goods within the territory of India, it added.
PTI BKS BKS NSD NSD
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EXCLUSIVE
INSURERS MAY PASS ON COMMISSION COSTS
Last week, Irdai proposed to lift the ceiling on commissions on individual lines
of non-life business subject to an overall cap of 20%. There is also an overall
expenses cap of 30% for non-life and 70% for life companies.
* Mayur Shetty
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MUMBAI: Former members of the Insurance Regulatory and Development Authority of
India (Irdai) fear that the regulator's proposal to grant flexibility to
insurers on commissions might result in them passing on related costs to
policyholders.
Last week, Irdai proposed to lift the ceiling on commissions on individual lines
of non-life business subject to an overall cap of 20%. There is also an overall
expenses cap of 30% for non-life and 70% for life companies. Linking commissions
to the overall expenses cap also ensures that only the efficient insurance
companies with lower costs will have the headroom to pay more commission.
Similarly, in the life sector, there are relaxations on commissions on certain
lines.
Analysts tracking insurance companies have broadly welcomed the relaxations.
However, former regulators have some concerns.
"Even in a rapidly changing economic world, there are some fundamental
principles that remain unchanged. All the expenses that insurers incur are paid
out of policyholders' funds. The restrictions on commission and management
expenses in the law were to ensure that insurance companies conduct their basic
function of managing the pool of policyholders' funds at minimal cost," said
Irdai's former non-life member K K Srinivisan. He added that if some companies
recklessly increased commission, it would defeat the purpose. "Ultimately, it is
the policyholders who have to pay for the exorbitant costs of insurers, which
will result in an abnormal increase in premiums," he added.
According to Irdai's former member (life) Nilesh Sathe, there was a commission
ceiling of Rs 10 lakh on group-funded policies like gratuity and annuity or
superannuation. Removing the cap may result in higher churn and unhealthy
practices for businesses of large companies. "Short-term premium products'
commission rates are enhanced and will apply to new policies. For a 5-year
premium-paying term policy, the commission payout will be 25% higher. It will
impact the internal rate of return of these policies," he added.
Sathe pointed out that it is not clear what is the clawback mechanism for
companies that promise to meet the statutory expense ratio to avail the
flexibility on commission but fail to do so.
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EXCLUSIVE
BIMA LOKPAL SETTLES 40,527 COMPLAINTS IN FY22
New Delhi, Sep 2 (PTI) The Insurance Ombudsmen offices across the country
settled a total of 40,527 complaints related to policyholders' grievances in the
last 2021-22 financial year. In FY21, the Insurance Ombudsmen offices had
disposed of 30,596 complaints.
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New Delhi, Sep 2 (PTI) The Insurance Ombudsmen offices across the country
settled a total of 40,527 complaints related to policyholders' grievances in the
last 2021-22 financial year. In FY21, the Insurance Ombudsmen offices had
disposed of 30,596 complaints.
The Delhi centre office of the Bima Lokpal or the Insurance Ombudsmen settled
3,830 complaints in 2021-22.
The Bima Lokpal at the Delhi office told reporters here that it is an
alternative grievance redressal platform set up by the Insurance Regulatory and
Development Authority of India (Irdai).
It is also a platform for speedy and cost-effective disposal of customer
complaints. Constituted under the Insurance Ombudsman Rules, 2017, there are as
many as 17 Insurance Ombudsmen (IO) centres in the country, covering all the
states and union territories (UTs).
The Delhi centre strives to dispose of the complaints within 30 days of
registration, Sudhir Krishna, Insurance Ombudsman said. The complainants should
register their plaints with the grievance department of the insurance company.
They can reach the Bima Lokpal within one year from the decision of the insurer
or after the expiry of one month from the date of sending writing to the
insurer, if the insurer fails to reply to the complaint.
Among others, the Bima Lokpal takes up cases where the amount of relief sought
does not exceed Rs 30 lakh.
Sounding alert, the Lokpal said consumers should not fall prey to unrealistic
returns or offers like interest-free loan, revival or portal of policy, bonus or
commission.
For the Delhi centre, the Ombudsmen Office said over 50 per cent of the
complaints registered were resolved by conciliation/settlement.
The Bima Lokpal also conducts online hearings and complaint filing, with a
majority now being done through this channel only.
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EXCLUSIVE
CENTRE MULLS PMFBY REVAMP AS INSURERS REAP HUGE PROFITS
The participation of insurance companies in the Pradhan Mantri Fasal Bima Yojana
was on declining mode, leading to a lack of competition that allowed existing
insurers to charge high premium rate.
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The Centre is planning to revamp Pradhan Mantri Fasal Bima Yojana (PMFBY) to
rationalizenalise premium rate and encourage participation of more insurers amid
reports of some insurance companies making profits in the government's flagship
crop cover scheme.
The need to further revamp the scheme was felt because exposure of insurance
companies in the PMFBY was on declining mode. This led to lack of competition
allowing the existing insurers to charge high premium rate.
The likely key changes to the scheme will be implemented from 2023-24 crop year
(July-June) after the cabinet approval.
The scheme
The PMFBY, launched in February 2016, aims to provide financial support to
farmers suffering crop loss/damage arising out of natural calamities.
Under this scheme, maximum premium payable by farmers is 2 per cent for all food
and oilseeds crops grown in the kharif (summer) season, 1.5 per cent for same
crops grown in rabi (winter) season and 5 per cent for commercial and
horticulture crops.
The difference between premium and the rate of insurance charges payable by
farmers is shared equally by the Centre and states.
The scheme was last revamped in 2020 to enable voluntary participation of
farmers and make way for reporting crop loss within 72 hours of occurrence of
any event.
As per the policy, insurance companies are empanelled for three crop years via a
tender process. Around 18 insurers were empanelled for a period from 2019-20
till 2022-23. However, eight of them exited and 10 companies are participating
in the scheme now.
The issue
Eight firms had exited in 2021-22 crop year, including four each from government
and private sector, due to heavy losses following high claim ratio.
However in the absence of competition, insurance firms which were left in fray
fixed higher premium. As a result, some companies made huge profit during the
last crop year as the claims for crop losses were less.
This made few state governments believe that the PMFBY was benefiting only
insurance companies and not the farmers, sources added.
To tackle this problem, a working group -- constituted in 2021 by the
agriculture ministry -- examined the whole issue and submitted a detail report.
The solutions
The working group has recommended two approaches for implementing the PMFBY.
One is the "risk transfer approach", being followed currently, wherein complete
risk is transferred to implementing insurance companies. This will involve
bearing entire claim liability by the insurance company.
Second is the "risk participation approach", under which three alternative
models are recommended to states for adoption wherein the claims as well as
surplus premium amount (earned after clearing the claim) is shared between
implementing states and insurer as per the mutually agreed formula.
The three models are: profit and loss sharing model; cup and cap model (60:130);
and cup and cap model (80-110).
Under the profit and loss sharing model, sources said a state specific risk band
would be created to share the profit and loss between insurance companies and
government. For instance, the band for Bihar will be different from Maharasthra.
Under the cup and cap model (60:130), the insurance companies would pay if the
claims are between 60 and 130 per cent of the gross premium. Suppose the claims
are below 60 per cent of the gross premium, it will be refunded by the
government, and if claims are above 130 per cent of the gross premium then the
government will pay claims via insurance companies.
The third model
The third model suggested is the cup and cap model (80:110) which is same as
above but insurance companies would clear claims if it is between 80 and 110 per
cent of the gross premium. This model is currently being implemented in
Maharastra and Madhya Pradesh.
The working group has also suggested use of latest technology like drone for
quick assessment of crop loss and early payment of claims to the farmers.
According to official data, the claim ratio in 2020-21 stood at 62.3 per cent of
the gross premium. The reported claims were Rs 19,022 crore, out of which 17,676
crore has been paid till date.
During the 2022-23 crop year, the claims under PMFBY were at Rs 9,867 crore, out
of which Rs 8793 crore has been cleared so far, the data showed.
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EXCLUSIVE
INSURANCE SECTOR DRIVES HIRING ACTIVITY IN INDIA, UP BY 87%: NAUKRI JOBSPEAK
Naukri JobSpeak Index shows Insurance sector on a dream run showing a steep YoY
jump of +87% in the hiring activity, with a flurry of job opportunities as the
overall index grows by 6% in August 2022 over last year. The BFSI sector as a
whole also saw a notable uptick in jobs, securing third place in the list.
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Hiring activity in India remained stable with 6% YoY growth in August 2022
according to the latest findings of the Naukri JobSpeak Index. The growth in
hiring was driven by the Insurance sector which grew by +87% last month compared
to the year-ago period.
The Insurance sector continued to grow in hiring over the last year for the
seventh time in a row, with a flurry of job opportunities. Within the sector,
maximum traction was seen for the 4-7 years' experience band (+103%) followed by
0-3 years (+99%).
Looking at cities, the sector showed a significant jump in hiring activity in
NCR (+136%) and Mumbai (+129%) in August 2022 vs. last year, the index added.
The Naukri JobSpeak is a monthly Index that calculates and records hiring
activity based on the job listings on the Naukri.com website month on month and
year on year.
“After witnessing an extravagant growth rate in the last 2-3months, hiring
activity is seeing signs of stabilization, it would be interesting to see how
the trend continues. Insurance as a sector has been flourishing since the start
of this year with continuous growth in hiring, creating opportunities across
experience bands with over 100% YOY growth in 0-7 years' experience band,” said
Pawan Goyal, Chief Business Officer, Naukri.com.
Apart from the insurance sector, the report shows a positive intent to hire in
other sectors, including Travel and Hospitality (+56%), BFSI (+43%), Auto/Auto
Ancillary (+29%), Real Estate (+24%), and Retail (+18%) in August 2022 compared
to the same time last year. Pharma/Biotech remained flat, the IT/Software sector
recorded degrowth of (-10%) YoY in last month.
Emerging cities drive hiring
Amongst tier-II cities, Coimbatore led the charts at +28% YoY growth, followed
by Kochi at +27%. Barring Chandigarh (-17%) and Vadodara (-11%), other emerging
cities recorded double-digit growth in hiring activity last month. Ahmedabad and
Jaipur maintained their momentum with (+20%) and (+15%) YoY growth respectively,
the index showed.
Amongst metros, Mumbai led the charts at +21% growth in August, whereas
Delhi/NCR, Hyderabad, and Pune remained flat. Bangalore showed a dip of (-10%).
Experience levels
Demand for professionals across all experience bands remained positive in
August. Hiring activity showed a single-digit jump across all experience
brackets such as 0-3 years (+7%), 4-7 years (+5%), and 8-12years (+6%), 13-16
years (+7%), and >16 years (+7%) when compared with August 2021.
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EXCLUSIVE
FUTURE GENERALI INDIA AIMS FOR 20PC GROWTH IN FY23
In the previous fiscal, the private general insurance major had registered a
growth of 8 per cent with a gross written premium (GWP) of Rs 4,210 crore.
* PTI
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With revival in the motor insurance business, Future Generali India Insurance
(FGII) is looking at a growth of around 20 per cent in the current fiscal, a
company top official said on Thursday.
In the previous fiscal, the private general insurance major had registered a
growth of 8 per cent with a gross written premium (GWP) of Rs 4,210 crore.
In the current fiscal, health has taken a backseat compared to last year's sharp
spike in demand due to the Covid pandemic, a top official said.
"With the revival of the motor business on the back of higher sales in vehicles,
we expect a growth of around 20 per cent at a company level. Motor is the
largest contributor with 65 per cent of the retail portfolio," FGII managing
director & CEO Anup Rau said.
He was in Kolkata for a roadshow of the new health insurance product FG Health
Absolute.
"Though health will grow at a faster pace than motor due to lower base, motor
will continue to remain the largest," Rau said.
FGII retail business accounts for 60 per cent, while corporate is 20 per cent
and another 20 per cent is crop insurance of the GWP.
The general insurer said new areas like pet (dog) insurance which is at a
nascent stage but catching up fast, the official said.
Rau said that there was no plan to change in corporate identity as of now amid
JV partner and global insurance major Generali had raised its stake to 74 per
cent in the company.
"There is no capital infusion plan even if we grow at 20 per cent as we are well
capitalised and solvency ratio is 166 per cent," he said.
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EXCLUSIVE
LIC INTENDS TO RAISE MARKET SHARE IN NON-PARTICIPATING BIZ, DIVERSIFY CHANNEL
MIX: CHAIRMAN
"We intend to increase our market share of non-par business as well as diversify
the channel mix while ensuring that our agents stay as the main distribution
pillars of our products," LIC chairman M R Kumar told shareholders in company's
annual report for FY22. With its agency count of 13.3 lakh, the insurer has a
large section of them working in rural areas of the country.
* PTI
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Country's largest insurer LIC intends to raise its market share in
non-participating insurance products as well as diversify the channel mix, a top
company official said. Having a market share of 65 per cent, the state-owned
life insurer offers 17 individual participating products, 17 individual
non-participating products, 11 group products and 7 products with rider
benefits.
Non-participating life insurance products do not offer any bonuses or add-ons
such as dividends to the policyholders. A pure term life insurance policy is
non-participating product offering a fixed cover against payment of the policy
premium.
"We intend to increase our market share of non-par business as well as diversify
the channel mix while ensuring that our agents stay as the main distribution
pillars of our products," LIC chairman M R Kumar told shareholders in company's
annual report for FY22.
With its agency count of 13.3 lakh, the insurer has a large section of them
working in rural areas of the country.
It has ensured a pan-India presence across various socioeconomic segments, Kumar
said.
More than 95 per cent of LIC's individual business in terms of premium is
sourced through agency force. It is less than 3 per cent through bancassurance
channels.
The insurer which got listed on the bourses during the year, reported an
increase of nearly 40 per cent in its standalone net profit at Rs 4,043 crore in
2021-22.
It has recommended a dividend of Rs 1.50 per share subject to approval of
shareholders.
"Awareness of the need for insurance to meet life exigencies is at an all-time
high. We will continue to explore and expand into newer areas keeping in mind
the changing needs of our customers.
"Digital interventions, data analytics and process flow changes to leverage the
potential of the changing times will be embarked upon to cater to the choices of
the myriad segments with existing and emergent needs," the chairman said.
He said the company believes its aggressive diversification by adding more
non-par products suited to customer needs will yield the desired results.
"Within that framework, we intend to sharpen the focus on Bancassurance to
steadily and considerably increasing its volume and thereby its share in our
overall business. Our ties up with banks continues to be robust.
"We intend to work with all partner banks and at the same time strengthen the IT
processes between the banks and LIC."
The insurer has a dominant business mix coming from the participating business
(par products). For fiscal ended March 2022, share of par business within the
overall individual business, in terms of annualised premium equivalent (APE),
was as high as 93 per cent.
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EXCLUSIVE
LIFE INSURANCE PREMIUMS IN INDIA TO CROSS $100 BN FOR FIRST TIME IN 2022: SWISS
RE
Although the geopolitical risk and rising inflationary pressure doesn't paint a
flowery picture for the global economies, according to the latest findings by
Swiss Re Institute, India is expected to reign as the world's fastest-growing
economy in 2022. The data also shows how the Insurance sector is emerging as one
of the biggest growth catalysts.
* Sheersh Kapoor
* ETBFSI
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Ukraine conflict worsened the near-term economic outlook, and the global economy
is on the brink of inflationary recessions, with policymakers facing an
increasingly difficult inflation-growth trade off.
However, according to the latest findings by Swiss Re Institute released on
Thursday, India is expected to reign as the world's fastest-growing economy in
2022 and the Insurance sector presents itself as one of the biggest growth
catalysts.
Although inflationary pressures because of the War pose significant challenges
for the insurance industry in the medium term, and global life insurance
premiums growth could be flat this year, data shows that Indian life insurance
industry is expected to show resilience and grow at an exceptional rate of 6.6%
(in real terms) in 2022 and further grow at 7.1% in 2023.
Considering the projected growth rate, the life insurance premiums in India are
set to cross USD 100 billion for the first time in 2022, it added.
Swiss Re forecasts over USD7 trillion global premiums by the end of 2022. It
expects the stalling of premium growth in the global insurance markets this
year, and a stronger, but still below-trend in 2023.
In the non-life insurance space, the company expects a notable slowdown in
personal lines growth this year. In India, the non-life insurance market
returned to a growth of 5.8% (in real terms) in 2021 after a slight contraction
in 2020.
"The growth will slow down slightly in 2022 to 4.5%, mainly due to high
inflation. However, the sector is further expected to witness a growth of close
to 8% CAGR (in real terms) between 2023 to 2032," said Jérôme Jean Haegeli,
Group Chief Economist, Swiss Re.
Also Read: India surpasses China, UK to become 10th largest life insurer
globally
One of the driving factors for the sectoral growth is the systematic change to
India’s non-life insurance sector brought by the pandemic.
According to the report, It resulted in a greater risk awareness leading to
higher demands in health insurance, making it the biggest LoB (Line of Business)
by premium volume in 2021.
"In 2021, Health overtook motor to become the biggest Line of business (LoB) by
premium volume. India will see continued rise in Medex (health insurance)
business," it added.
The press note release by Swiss Re, further highlighted that Inflation and
monetary policy tightening are driving the long-term sovereign bond yields
higher, with markets pricing in both higher real yields and inflation
expectations. Insurers will, over time, benefit from higher investment returns
that will help offset the higher claims cost.
"Insurance sector is facing a mix of long-term tailwinds and short-term
headwinds with impacts across segments, investment performances and the balance
sheet. On the positive side, investment income is set to improve gradually as
the rise in yield curve feeds into bond portfolio returns," Jerome said.
For life insurers, the profitability of large legacy books of saving products
with guarantees also stand to improve under a gradual tightening, he added.
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