Term insurance premium could see a further increase this year with many re-insurers understood to be reviewing rates again.
“The second wave of Covid-19 has impacted mortality and there has been a spike in death claims, which is expected to continue for some time. Also online term insurance rates are still very low in India,” noted an executive with a life insurance company.
“There has been some talks of a fresh review in reinsurance rates this fiscal. It could possibly be in the range of 15 per cent to 20 per cent. Most insurers would have to reprice the premium for term insurance products again but having said that, term insurance premiums in India continue to remain amongst the lowest in the world,” said another executive with a life insurer.
If the move goes through, this would be the second round of increase in premium for term life products in recent years.
Many life insurance companies have since late last year revised term insurance rates after re-insurers hiked underwriting rates for such policies. Most of this hike was passed on to customers, who had to pay about 10 per cent to 15 per cent higher to buy term insurance policies.
However, notwithstanding the possibility of another price hike, most insurers expect term and protection products to continue to see demand from customers given the Covid-19 led uncertainty.
“The pandemic has created a rise in the demand for protection plans, even as the market volatility continued to affect the demand for linked plans. In 2021-22, along with the increased awareness of insurance, a digital push for insurance and any increase in term plan premiums are expected to drive the life premiums,” Care Ratings said in a recent note on first year life insurance premium growth for April 2021.