As pandemic eases, insurers hopeful of more reinsurance support

In some relief to customers, insurers are hopeful that reinsurance support will now come back for products like term insurance and group insurance with the Covid-19 pandemic showing signs of easing

While there is no action on the ground as of now, there is expectation that the stricter underwriting norms and exposure norms will now be reviewed.

However, players are clear that premium rates that were hiked over the last 12 to 18 months are unlikely to be revisited. Fresh increases may not be on the cards for most insurers.

“Unfortunately, in the pandemic, reinsurance had been affected globally and it impacted their capacities. This led to more stringent pricing and conditions,” noted an industry source.

He however, said that coming out of the pandemic now, reinsurers have begun to extend more support, which should translate into some easing on the ground in coming months.

‘Double whammy’

“It has been a double whammy for insurers. Reinsurers hiked rates by as much as 40 per cent in some instances but insurers can’t increase premium by more than 25 per cent,” noted another insurer, but added that term prices, especially for online products, were extremely low in India earlier.

Following high claims in the second wave of the Covid-19 pandemic, reinsurers had called for stricter underwriting norms and many life insurers now require medical tests and checks on education and income of prospective customers for term policies.

Insurers have also increased premium for such products, following higher rates from reinsurers and had also capped exposure to certain sectors and segments.

“We are hopeful that things will settle down, without any further revision in premium but we will have to wait for the cue from the reinsurers. To some extent, some of the price revisions have already happened across the pandemic and one is hopeful that we’ll be able to sustain these levels of pricing as of now,” said an executive with another insurer.

The expectation is that there will be some easing in underwriting norms in the next three to six months.

Insurers attributed the lower Covid- 19 case load, milder infections and mortality as well as higher pace of vaccination for this easing.

A recent report by SBI Ecowrap had noted that death claims paid by the life insurance industry increased by 40.8 per cent to ₹41,958 crore in 2020-21. The rise in death claims seems due to the increased deaths during Covid-19, it had said.

Most life insurers had reported elevated claims even in their first and second quarter results for 2021-22.