40% as a result of reinsurers tightening underwriting standards in the aftermath of the Covid-19 outbreak. The magnitude of the premium increase, on the other hand, will differ according to the insurer. The increased tariffs take effect in December.
In the first quarter, Covid-19 death claims exceeded the total claims for the whole FY21. According to the study, life insurers had already paid out INR 11,060.5 crore to resolve Covid-related mortality claims during the pandemic’s second wave. According to a media report, as of October 21, life insurance has compensated slightly more than 130,000 claims for deaths caused by Covid-19. Around 140,000 claims relating to Covid have been filed thus far, totaling INR 12,948.98 crore, with 93.57% by volume and 85.42% by value resolved.
Munich Re, the leading reinsurer in the Indian insurance industry, is likely to increase its prices for insuring portfolios of pure protection policies by up to 40% in response to the high claims load. The country’s increasing mortality experience, exacerbated by the pandemic, has forced reinsurers to re-evaluate their term plan pricing. Munich Re has notified the insurance businesses it is working with about the price increase. According to a top executive of a private life insurance firm, the global reinsurer has conveyed its plan to increase premiums. According to the media, around eight to ten insurance firms have been notified of the move.
Reinsurance rates are increased by up to 40% and premiums are expected to climb by 30%, depending on the individual’s age, sum assured, and quality of life. An official explained about the new premium plans. He said, “The reinsurer has increased its rates for term policies by 30 to 40 per cent across various companies. This will lead to an increase in the premium rates by 25-30 per cent”. Along with raising reinsurance premiums, the German global insurance business also tightened the underwriting criteria.
This is the second time in 2021 that reinsurance premiums have been increased since October 2021. Rates were increased by 4-5% in March. In June of last year, there was a significant jump of 20% to 25%. In FY 2021, life insurance firms in India received Covid-related death claims four to five times higher than the number in the previous fiscal year, resulting in massive losses for them. Following that, the insurance businesses are in negotiation with the reinsurer regarding the premium raise.
