New Delhi: 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, its Managing Director and CEO R M Vishakha said.
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.
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 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.The existing COVID situation however requires us to consider marginally increasing rates while remaining competitive,” she added.
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.
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