Weekly Insurance Round-up Tuesday, May 10, 2022
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- As per the Indian Health Insurance report by Motilal Oswal Financial Services Limited (MOFSL), India has the highest medical inflation rate among Asian countries in 2021.
- The medical inflation rate of India stood at 14%. Despite the high medical inflation rate, demand for health insurance remained robust in FY22.
- However, in spite of the high demand for health insurance, only 3.5% of the population is covered under retail health insurance plans in the country.
- The rise in loss ratio along with the medical inflation has forced the insurance companies to increase the prices of both retail and group health insurance plans.
- While new customers have been impacted by the increase in prices, existing customers have had to bear the brunt of price increases as well as age-related increases.
- The major factors for the price hike are -
- Medical inflation
- Adverse underwriting experience
- Higher demand from smaller corporations as employers are now realising the need to offer protection to employees.
- The report also stated that growth in retail insurance will continue to rise and that the prices will remain stable as long as there are no more Covid waves.
- According to the India Insurtech Landscape and Trends Report, health and life insurance penetration in India remains low.
- The report was launched at the IIA (Indian Insurtech Association) annual event 2022. It identifies the important trends and perspectives of key stakeholders in the Indian insurtech sector.
- As per the report, to increase insurance penetration in India, it is important to reimagine distribution through existing and newer channels.
- The report also talks about the rapid growth of global funding in the insurtech sector which has grown 7X in the last 5 years i.e. to $14 bn in 2021 from ₹2.5 bn in 2017.
- Insurtech funding in India has also seen a growth in the last two years from $380 mn in 2019 to $800 mn in 2021.
- Experts feel that Indian insurtech is well-positioned to meet customer needs, and that collaboration between insurtech and insurers, as well as innovation is required to address concerns such as enhancing insurance penetration, customer health, and wellness, among others.
- HDFC Ergo recently launched a distance-based insurance package called "Pay as you Drive."
- This program, which is under a regulatory sandbox, is applicable for 10,000 policies or ₹50 lakhs of premium - whichever happens first, and is only available through Maruti Suzuki Insurance Broking Private Limited.
- According to HDFC Ergo, a lot of customers do not use their vehicles on a regular basis. But they still have to pay the same premium as those who use their vehicles frequently.
- With the ‘Pay as you drive’ program customers will get an opportunity to pay the premium based on the actual usage of the vehicle.
- The distance driven will be tracked by a telematics device in the vehicle, which will help the customer save between 10% and 20% of their 'Own Damage' premium.
- The program will be open for New Maruti Suzuki car owners in some selected cities up to 14th May 2022.
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