Impact of COVID-19 on the Indian Insurance Sector

Potential long-term impact on Insurance companies; Key questions executives and boards should be asking; Practical next steps. Understanding Covid-19 pandemic in India.

The Indian insurance sector is generally equipped for key loss incidents, including pandemics. Yet, the financial implications will take time to take part in and can be insurer explicit.

Insurers are acting in response to the increasing COVID-19 outbreak on many fronts-as claims payers, owners, and investment executives. Everyone has his personal confront, not for the insurance industry. However, for the worldwide economy and the public at large.

12 months which could have been a tough year for the Indian insurance sector when it comes to premium growth in a state where harmonizing. The lasts 12 months figure appear an intimidating challenge. The most recent three months of financial years have been the months that noticed peak collection for the industry.

Now given the lockdown in the serious last week of April, premium collections are beginning to suffer significantly.

The blow is enormous for the reason that most cities are actually under lockdown. Owing to flight annulments, travel insurance is not being purchased by customers.

Purchasing new insurance policies where insurers need to take up medical tests are consuming time and has a delay. There is no more new policy issuance for NRIs or those with current journey history.

Generally, the insurance section has been hit in many directions.

Insurance Premiums Vs Death Claim challenge

In addition to the loss of new business premiums, the insurance sector is a problem of enhanced death claims. Although the government has proceeded and gone for a complete lockdown of 21 days. Even before the number death toll ascent to double digits.

Even so, given the early indicators of community spread turning into obvious and the size of the nation. Nothing can be taken for granted.

Insurance companies feel it would be too early at this stage to remark on exponential augmentation in death claims in life insurance. If India can handle the spread, subsequently, there could be a slighter effect on life insurance claims. Talking about life insurance policies.

A lot of organizations will persist to honour the claims on current insurance policies. The price of future insurance policies will see a rise in rates and the number of insurance policies that offer complete coverage may witness a fall.

The IRDA Clarification

Corona is going to the major challenge the Indian insurance sector has seen so far. The infection has a pan-India reach and there is a very genuine threat of its distribution. Remedy of COVID-19 may need extended hospitalization which could be expensive.

Many people have some type of health coverage, be it an organization or personal health cover. Although, as this virus is new, there is a lot of uncertainty if corona cases could be covered under offered health insurance policies or not.

To deal with the concerns of the policyholders and to bring clearness on the coverage of coronavirus. insurance regulator IRDA came up with instructions for the insurance companies on March 4 2020. The IRDA regulation stated: that if the hospitalization is covered then the insurance companies must ensure that the cases related to COVID 19 must be handled.

The Road Ahead

Though insurance companies under the register of exempted services under lockdown with common restrictions on movement there is any chance of new business. Insurance players with strong digital infrastructure should fare superior to others if there is a rise in COVID-19 cases (as noticed in China and Italy).

One of the major challenges for insurers could be empowering substitute work arrangements for their employees and gross sales pressure. such that they are more flexible and capable of deal with rising claims and quicker response times.