Life insurance sees good growth, claims fall post second wave

The life insurance industry is slowly coming back to normal after facing a high claim burden in the first five months of the current fiscal following the second wave of the Covid-19 pandemic.

“The industry is doing well. With every passing month, business is improving. Private sector life insurance companies are doing well and public sector bank-led banca companies are doing especially well,” said Rushabh Gandhi, Deputy CEO, IndiaFirst Life Insurance.

In an interaction with BusinessLine, Gandhi said there are green shoots across the industry as well as for the insurers and there continues to be strong demand amongst consumers for life insurance.

“A large part of our portfolio is non-participating products; the contribution of protection business is growing. Quotations for term life are increasing. It is a visible and sustainable trend,” he noted. Claims, which shot up by nearly two to three times in the second wave of the pandemic compared to the first wave, have also come down for life insurers, he further said.

“In the first five months of the year, claims have been very high. Peak deaths happened in May and intimations came in June and July; now it seems to be easing,” he added.

Burdened by high claims, a number of life insurers have reported losses for the first quarter of the fiscal and have also been increasing premium rates.

According to IRDAI data, life insurance companies registered a 22.21 per cent growth in first year premium in September on a year on year basis. Of this, private sector companies registered a growth of 42.42 per cent while LIC recorded a growth of 11.55 per cent last month on an annual basis. IndiaFirst Life Insurance grew by 71.05 per cent in September.


Analysts too expect the life insurance sector to continue to stage a full comeback in the second half of the fiscal.

“We have seen a healthy pick-up in growth in the past few months, with September 2021 witnessing healthy trends across most players. We believe premium growth would see strong traction over FY22, with continued focus on non-participating, annuity, while ULIP would see gradual recovery,” said Motilal Oswal in a recent report.

Care Ratings said that while Covid claims are likely to remain elevated in the second quarter, the impact should be minimised compared to the first quarter.

“In the first quarter of the fiscal, the growth in premiums, albeit muted, was driven by unit-linked products and protection plans. However, the life insurance sector witnessed significant claims in the first quarter due to the second wave of the pandemic and profitability suffered as companies made provisions and reserves to alleviate the impact of the claims,” it said.

Growth strategies

Commenting on growth strategies for IndiaFirst Life Insurance, Gandhi said the insurer has been focussing on credit life insurance and expects premium of about ₹300 crore from the segment this year.

“We have managed in our partnership with Bank of Baroda to get attachment rates of over 70 per cent and have started doing covers for all loan products,” he said, adding that the insurer is working on tie ups with a number of other lenders as well.

“Our strategy remains intact. We will remain a multi-channel distribution company with bancassurance as our main focus and contributing 80-85 per cent of premium. On agency, our focus will be on quality not quantity, while on banca our focus will remain on penetration,” he further said.