Insurers should be able to wipe out de-growth by end of FY21, says IRDAI chairman

As green shoots have started to emerge in the insurance sector amidst the Coronavirus (COVID-19) pandemic, Insurance Regulatory and Development Authority of India (IRDAI) chairman Subhash C Khuntia said that the industry should be able to get back to pre-COVID-19 growth levels by the end of FY21.

Speaking at the virtual CII Insurance and Pension Summit, Khuntia explained that compared to the steep de-growth that the industry witnessed in April 2020 soon after the lockdown was announced, there is a revival in sight.

“By the end of September, the growth for insurers will be better. The industry will be able to wipe out the downturn by the end of FY21,” he added.

From July onwards, both life and general insurance sector is seeing a revival of premium growth. Segments like term and health insurance are among the most popular among customers.

Talking about the COVID-19 situation, the IRDAI chairman said that both life and general insurers are well equipped to deal with the claims. However, he added that insurers must prepare a dynamic board-approved business continuity plan to look at the risk mitigation measures that need to be taken.

“Risks like cyber security due to remote working has to be looked at. Insurers need to maintain adequate liquidity and cut down expenses,” said Khuntia.

Restructuring of loans where insurers are creditors is also an area where IRDAI is working on. While Reserve Bank of India has come out with guidelines on the loan restructuring and has allowed one-time restructuring of loans.

“RBI has made provisions for certain arrangements in the interest of creditors. Since insurance companies are also part of intercreditor agreements, we are looking into these proposals” he said.

Coronavirus claims

Since all health insurance policies that cover hospitalisation due to COVID-19, insurers have been flooded with claims ever since the pandemic broke out.

Khuntia said that so far a total of 2,38,160 COVID-19 health claims have been filed. Of these, 1,48,298 claims worth Rs 1,430 crore have been settled.

IRDAI also came out with a standard Corona Kavach plan that covers hospitalisation due to COVID-19. Here, Khuntia said that 3.2 million lives have been covered and Rs 1.15 lakh crore is the sum insured.

New products on anvil

Khuntia said that apart from the standard health insurance plans like Corona Kavach and Aarogya Sanjeevani, insurance plans for MSMEs, small dwellings and standard term plan is also on the anvil.

“Protection is a key need right now. So we will be coming out with guidelines on having a standard term plan. Further, insurers should also look at job-loss and income loss covers,” he added.

IRDAI has also asked insurers to ensure that the persistency or renewal in the product portfolio is maintained.

For life insurers, IRDAI has said that ideally the 13^th month persistency should not be below 90 percent and for 65^th month not below 65 percent.

“Only a handful of insurers are close to these figures. The idea is not exploit policy surrenders but to give more value to customers. For general insurance as well, companies must look at data for repeat purchase of product after the one-year policy period,” said Khuntia.