In general, the Indian insurance industry is well equipped to deal with key claims, including pandemics; however, the financial implications will take time to grasp and will be explicit to insurers. Insurers are acting in response to the growing outbreak of COVID-19 on numerous fronts: as claims payers, property owners, and investment executives. Each has its own confrontation, not only for the insurance industry, but also for the global economy and the general public.
A year that could have been surprising for the Indian insurance industry in terms of premium growth is suddenly in a state where matching last year’s figure seems a daunting challenge. The last three months of the financial years have traditionally been the months in which the collection peak for the industry has been observed.
Now, given the severe lockdown in the last week of April, premium collections are starting to suffer considerably. The blow is huge because most cities are now on lockdown. Due to flight cancellations, clients do not purchase travel insurance. Purchasing new policies where insurers are required to perform medical tests is time consuming and leads to delays. New policies are no longer issued to NRIs or those with current travel history. So overall, the insurance segment has been affected in many directions.
Death Claim Insurance Premium Challenge
In addition to the loss of premiums from new companies, the insurance industry faces the challenge of rising death claims. Although the government has proceeded positively and opted for a full 21-day lockdown even before the death toll hit double digits. However, given the early signs of community spread and the size of the country, nothing can be taken for granted. Insurance agencies feel that it would be too soon at this stage to comment on the exponential increase in death claims in life insurance. If India can manage the spread efficiently, there could be less of an impact on life insurance claims afterwards. Speaking of life insurance policies, several organizations will persist in honoring the claims of current policies in reverse; the price of future policies will see an increase in rates and the number of policies that offer comprehensive coverage may fall,
The IRDA clarification
Corona is facing the biggest challenge the Indian insurance industry has faced so far. The infection is pan-Indian in scope and there is a very real risk that it will spread exponentially. The treatment of COVID-19 may require prolonged hospitalization, which could be costly. Many individuals have some form of health coverage, be it a personal health coverage company. However, as this virus is new, there is a lot of uncertainty as to whether corona cases would be covered by the health policies offered or not. To address policyholder concerns and clarify coronavirus coverage, insurance regulator IRDA issued instructions to insurance companies on March 4. The IRDA law said: that if hospitalization is covered, insurance companies must ensure that cases related to COVID 19 will be handled quickly.
the road ahead
Although insurance companies are listed as exempt services under the lockdown with common movement restrictions, there is hardly any chance of new business. Insurance players with strong digital infrastructure should fare better than others if COVID-19 cases surge (as seen in China and Italy). One of the main challenges for insurers could be empowering substitute employment arrangements for their employees and sales force so that they are more flexible and able to deal with increased claims and faster response times.
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