Covid-19 cannot be solely blame for increase in insurance prices: Naval Goel
COVID-19 Cannot be Solely Blame with the growing casualties due to the covid-19 pandemic & it has become pretty challenging for reinsurers to manage their losses.
The rise in premium prices will help reinsurers manage their losses to an extent.
Should covid-19 be blame for the increase in insurance prices?
It is pertinent to note that the annual increase is a common practice follow by all insurance companies.
Where they are allow to revise their premium amount during any time in a year wherein it primarily takes place at.
The beginning of the financial year with the renewals of contracts with reinsurers, which has happened this year as well.
The Insurance Regulatory and Development Authority of India (IRDAI) shared that out of 388 products.
Premium rates had been increase by general & health insurers by up to 5% of the then prevailing rates only for 55 products as on September 30, 2020.
And the price of term life insurance products had gone up in April 2020.
Changes in reinsurance rates the premium for term policies by 25-30%.
While Covid-19 claims on the health insurance sector can be one-off factor to influence the prices of health insurance.
Where the excessive number of unprecedented claims have been borne by them & which has hit them hard.
If market reports are to be believed then the premium increase may continue like this for the next 2-3 years to come.
But I would like to highlight that it is not only the price increase but there are some additions .
New ailments in the policy coverage which makes it equally beneficial for the customers.
Which companies have increased prices so far?
According to the Insurance Price Index Quarter 1 2021 released by PolicyX.com, out of 10 insurance companies.
4 companies increase their term insurance premium in Q1 2021 and a 4.4% of increase was witnessed which means there was an increase.
The average price of the term insurance premium to ₹21,913 in the index value.
This was quite a wide jump in the term insurance category which were constantly falling in the last decade.
The biggest jump observe in premium prices is about 19%, which is follow by 18.7%, 5.5% & the minimum is 2.6%.
Accordingly, the term insurance average price of ₹5 lakh sum insured has gone up to ₹15,553 and of ₹1 crore has reached ₹27,150 in the last quarter.
Since the increase in mortality rates is the biggest factor consider in deciding the premium prices,
how will Covid-19 second wave impact the insurance company?
Indeed, this pandemic has opened various opportunities for the insurance sector where the penetration.
health insurance has grown multifold & new innovative products have been designed which are leading to a new way of insurance and various other good things.
On the contrary, the past year has been tough for the health insurance sector due to an unprecedented scenario that unexpectedly increased the claims burden on insurance companies.
If this continues then it will certainly increase the liquidity challenges for insurance companies.
The insurance sector hasn’t been able to come to its actual price and allow the coverage under active healthcare policies.
This is the root cause of the burden on the insurance companies & finally leading to the sharp price rise.
Covid-19 and its relate medication & but there have been several theories present that various other health problems.
New diseases have been experience by people for a long time, which is also leading to the medical cost to the higher side.
Therefore, it is suggest that people should take necessary precautionary measures to avoid catching this virus.