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The number of Covid related claims for life insurers in the second wave of the pandemic is likely to be three to four times of the first wave, believes Sumit Rai, Managing Director and CEO, Edelweiss Tokio Life Insurance.
“Claims have increased significantly but typically they come with a lag,” Rai said, adding that most life insurers had anticipated it and are prepared for it.
“I don’t expect the impact to be very adverse and don’t think it will set the industry back very significantly,” he said in an interaction with BusinessLine . The impact of the higher claims will be visible on aspects like term pricing, he added.
Edelweiss Tokio settled 87 Covid related claims amounting to ₹10.3 crore in 2020-21. In the first quarter of this fiscal, it has settled 82 such claims of ₹10.36 crore.
RBI report
According to the Reserve Bank of India’s Financial Stability Report, July 2021, the life insurance industry received 22,205 claims worth ₹1,644.56 crore during 2020-21 where death was due to Covid and related complications, which amounted to 0.3 per cent of total premium income of the year.
“The pandemic did not have a significant impact on death claim settlement rates,” it noted.
However, there is concern among analysts that the spike in claims in the second wave could put pressure on the bottomline of insurers in the quarter ended June 30, 2021.
Kotak Life Insurance had said it expects to incur a loss of up to ₹275 crore in the quarter ended June 30, 2021 due to increased Covid claims.
Rai is, however, optimistic about the prospects of the life insurance sector and expects the industry will grow by 12 per cent to 15 per cent in the next few years. “This pandemic has given a fillip to life insurance. On a long term basis, industry will continue to do well,” he said.
Edelweiss Tokio expects to grow at a higher rate than the industry. “Our goal is to grow better than the industry at between 15 per cent to 20 per cent over the next two to three years,” he said, adding that the focus will be to be multi-channel. The insurer plans to launch a new term product as well as a guaranteed return product this fiscal.
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