So you thought corona was good for insurance companies?
New Delhi: Health insurance may be the fastest growing business segment in the general insurance sector due to popular awareness about the Covid-19 pandemic, but a significant surge in the number of claims is a cause of concern for insurers.
Insurers have earned revenue to the tune of Rs 450 crore through the sale of corona-specific products, whereas they settled a huge number of claims, paying out Rs 1,430 crore -- almost three times the premia they earned.
This fact was revealed by Insurance Regulatory and Development Authority of India (Irdai) chairman S C Khuntia during a virtual summit held by CII on Thursday.
"Life insurance claims relating to Covid-19 are being settled by insurers within a week’s time. There has been a surge in health insurance claims relating to Covid-19 with a total of 2.38 lakh claims. Of these, 1.48 lakh claims amounting to â‚¹1,430 crore have already been settled," Khuntia said, adding that the sector has still witnessed a positive growth of 2.4 per cent between April and August end 2020 as compared to a year ago.
The insurance regulator, however, will be introducing the risk-based solvency margin for insurers in the next three years. "As of now, insurers are supposed to maintain solvency margin to the tune of 1.5 times of their total premium. As the risk varies segment wise, it is why the regulator is working on varying solvency margins for various segments," he said.
Khuntia also further asked all general insurance companies to ensure repeat purchase and renewal of policies as these are largely for a one-year time period. "This should be an indicator of your efficiency and customer relationship,” he said, adding that the Irdai is working on standard products for insurance of dwelling units as well as term insurance which would be introduced by all insurers.
The insurance regulator is monitoring the persistency levels of life insurance companies and is also working on standard products for dwelling unit insurance and term insurance as well. The Irdai also wants 13th month persistency at at least 90 per cent and 61st month persistency at a minimum of 65 per cent. “I would urge all of you to move towards this at the earliest. The Irdai would be monitoring this and has also asked all life insurers to try and meet these targets," he added.