IndiaFirst Life Insurance Company Ltd (IndiaFirst Life) has sought approval from the regulator for an increase in policy premium for term plans for the next year due to a higher claims ratio, according to a top company official.
"That''s right," IndiaFirst Life Managing Director & CEO R M Vishakha told PTI when asked about any such proposal and having written to the Insurance Regulatory and Development Authority of India (Irdai) for approval.
However, the official said it was not possible to share the quantum of premium price hike sought as it depends on the regulator, adding approvals generally come within a month.
"We will be able to share it (quantum of price hike) after we get the confirmation from the regulator," she added.
She said premiums normally change if there is an adverse claims ratio and there are accumulated losses that are not getting recovered.
"Nobody really looks at it from a short duration perspective. The pandemic has increased the claims ratio (of the company) by almost 30 per cent. And 30 per cent ratio, kind of, tends to wipe out a lot of earlier profits also because typically the assumptions and the pricing are very finely priced.
"We always want to charge the best price to the customer. So most of us (industry players) price it very finely," Vishakha said.
She said a 30 per cent rise in claims ratio can have a sizeable impact on the portfolio.
IndiaFirst Life has one of the most competitive term insurance plans in the market in the last few years, Vishakha claimed.
"We have not increased our term plan rates since December 2018 while other life companies have had multiple revisions and upward variations in price points over past few years. IndiaFirst Life stands by its ''CustomerFirst'' ideology. The existing COVID situation however requires us to consider marginally increasing rates while remaining competitive," she added.
HDFC Life, which already hiked prices during the current year due to emerging trends and re-insurance price revisions said the company may look to price revisions depending on the evolving situation.
"Based on emerging experience and reinsurance price revisions, we have re-priced our protection products during the year. Our flagship term product Click 2 Protect Life was launched in January 2021, as per the new pricing.
"This product offers multiple innovative features thereby providing all-round protection coverage to our customers," Vibha Padalkar- MD & CEO, HDFC Life said.
She said the company has always maintained a risk calibrated approach when it comes to product re-pricing.
"We take into consideration our target segments, claims experience, cost of reinsurance and competitive dynamics and the price increases have varied for each segment. If there is a need for further repricing, depending on the situation that emerges in the future, we will take a call," Padalkar said.
However, ICICI Prudential Life said the company is not looking at any immediate price revision as it already did so last year.
"As a risk management mechanism, life insurance companies enter into re-insurance agreements. A few re-insurers who may not have previously revised rates seem to be doing so now. We don''t see any change in our product pricing for now, as the new product we launched in July 2020 reflects the new rates," Satyan Jambunathan, Chief Financial Officer, ICICI Prudential Life Insurance Company Limited said.
A Bajaj Allianz Life spokesperson said the company is not contemplating price revisions. Likewise, Canara HSBC OBC Life Insurance Co. Ltd is also not understood to be doing anything on the pricing front as of now.
Queries sent to Aegon Life Insurance did not elicit any response, while a few others declined to comment on the issue.
The Insurance Regulatory and Development Authority of India (Irdai) in its annual report 2019-20 released last month said the Covid-19 crisis will hit the insurance industry, forecasting a near 3 per cent point slowdown in annual average global premium growth in 2020 and 2021 from the pre-crisis growth trajectory.
The life sector will be more affected than the non-life. There is a possibility of contraction in premium levels in 2020, followed by a bounce-back, Irdai said.
Global reinsurer Swiss Re expects total global direct premiums written will reach pre-crisis levels in 2021, a strong outcome, considering recession in 2020 will be the deepest since the 1930s.
"There will be challenges to industry profitability. Investment returns will remain subdued as interest rates stay low for longer, impacting life and long-tail lines in non-life, and rising corporate defaults could lead to losses on invested assets.
"In life, falling sales and fee income due to restricted in-person interactions on account of the lockdown measures imposed to contain virus spread will likely also weigh on profits this year," the Irdai report said.
During 2019, life insurance premiums in India increased by 9.63 per cent (7.30 per cent inflation adjusted real growth) and the non-life insurance sector witnessed a growth of 7.98 per cent (5.70 per cent inflation adjusted). PTI KPM MR
Disclaimer :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI