Vighnesh Shahane, MD & CEO, Ageas Federal Life Insurance
With the hike in rates by reinsurers, term plan prices are set to rise, but they still remain one of the most important and crucial investments in one’s financial portfolio
In India, a third wave could potentially lead to a spike in claims which could have a direct adverse effect on the solvency margin, embedded value and the profits declared in the medium- to long-term
By
Vighnesh Shahane, MD & CEO, Ageas Federal Life Insurance
While 2021 was a difficult year, especially during the second wave, one of the positives that emerged out of the Covid situation was an increased awareness about insurance, especially term and health insurance. People now have a much better understanding of the need for financial protection against life’s uncertainties.
With the hike in rates by reinsurers, term plan prices are set to rise, but they still remain one of the most important and crucial investments in one’s financial portfolio.
People also showed greater interest in guaranteed products such as savings plans, retirement and annuity plans, especially due to the economic uncertainty and falling interest rate regime in the country. ULIPs too, saw greater traction due to the buoyant stock markets over the past 18-20 months.
While life insurers explored proprietary channels such as agency, group, digital, broking and DST, Bancassurance continued to contribute in a big way to the growth numbers posted by the industry during the year.
Digital journey
Another positive to come out of the pandemic was the acceleration of the digital journey of the entire insurance industry. In the Life insurance industry, we have four touchpoints with the customer – policy sourcing, policy servicing, policy renewals and most importantly, claims.
During the pandemic, we have been able to digitalise these touchpoints effectively through measures such as remote sourcing of customers, digital upload of required documents, and usage of electronic modes like email and WhatsApp for delivery of policy documents.
The regulator also took a number of laudable steps during the pandemic such as making wet signature not mandatory and allowing for digital processing of claims by permitting customers to upload the scanned images of the required documents on the life insurance company’s website. All these steps helped us to reach out to customers more effectively and efficiently and greatly enhanced the customer experience.
Claims situation
On the claims front, Covid claims rose drastically post the second wave in March-May, but this dropped as the pandemic situation came under control during the second half of the year.
However, while Covid claims have decreased, we have seen an increase in non-Covid deaths which have risen even more than past levels due to co-morbidities being triggered by Covid. The life insurance industry would yet post a 200-300% increase in claims this year. This would seriously impact the profitability of most insurance companies.
Outlook for 2022
The emergence of the Omicron variant has significantly halted the march towards normalisation that characterised the second half of 2021. As we head into 2022, the pandemic situation is still uncertain as countries cautiously re-impose lockdowns and curbs to halt the spread of this highly transmissible variant.
In India, a third wave could potentially lead to a spike in claims which could have a direct adverse effect on the solvency margin, embedded value and the profits declared in the medium- to long-term.
There could also be an effect on persistency and new business depending on how the
pandemic pans out and any further lockdowns.
However, we are continuously monitoring the situation to understand what impact a third wave or any subsequent waves could have on the parameters mentioned above.
In a bid towards resuming normalcy, the life insurance industry is also looking at adopting a hybrid model in the workplace from the new year. In this model, a percentage of the non-sales workforce will resume working from the office premises on alternate days while continuing to work from home on the remaining days.
Outlook for 2022
The emergence of the Omicron variant has significantly halted the march towards normalisation that characterised the second half of 2021. As we head into 2022, the pandemic situation is still uncertain as countries cautiously re-impose lockdowns and curbs to halt the spread of this highly transmissible variant.
In India, a third wave could potentially lead to a spike in claims which could have a direct adverse effect on the solvency margin, embedded value and the profits declared in the medium- to long-term. There could also be an effect on persistency and new business depending on how the pandemic pans out and any further lockdowns.
However, we are continuously monitoring the situation to understand what impact a third wave or any subsequent waves could have on the parameters mentioned above.
In a bid towards resuming normalcy, the life insurance industry is also looking at adopting a hybrid model in the workplace from the new year. In this model, a percentage of the non-sales workforce will resume working from the office premises on alternate days while continuing to work from home on the remaining days.