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In this week's edition of Beshak's Insurance Roundup, we discuss an upcoming challenge for insurance companies as they prepare to move over the Covid19 phase. Also covering, how health insurance continues to the help non-life insurance sector achieve growth, despite incurring heavy losses. 

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• Now Reinsurers report losses due to Covid19📉
• The increase in Non-Covid claims, a new challenge to the insurers  ☔
• Health continues to drive premium growth for non-life insurers 🏥 
• Delta variant hovering in places with less vaccination coverage 🦠
• Life Freedom Index report released by HDFC Life Insurance 🔥
• Plum and RazorPay X join to provide insurance to SMEs 👔

• While insurance companies continue to report losses for a few quarters, reinsurers too, have started reporting losses now. 
• Reinsurers are ‘the insurers of insurers’ - the big daddies of the insurance industry across both term & life insurance businesses. 
• Amid rising Covid19 claims, the state-owned General Insurance Council of India (GIC Re) - the only reinsurance company in India, witnessed a surge of over 100 percent in its Incurred Claim Ratio, for both health and life insurance. 
• Incurred Claim Ratio is the ratio of the total value of claims settled to the total value of premiums collected by the insurer in a given period. 
• The incurred claim ratio of the reinsurer as per the quarter ended on 30 June 2021 was 104.3 percent, which is higher than the last year’s incurred claim ratio which was 94.2 percent and 81.9 percent for the quarter that ended on 31st March 2021.
• Losses in the April-June quarter were ₹771.73 crores.
• GIC Re, in a disclosure to the stock exchange, said that the pandemic is a concern for all reinsurers as the market will remain exposed across the entire business spectrum.
• Devesh Srivastava, chairman, and managing director, GIC Re said that the underwriting performance was impacted due to the challenges faced during the pandemic. However, they are taking the necessary steps to decrease the incurred claim ratio and increase the overall profitability. He added that the company will focus on bringing the incurred claim ratio to 100, although this might take time because of the current situation.
• The only way reinsurers like GIC can control their losses is by increasing prices, and implementing stricter underwriting measures. We are already seeing price hikes, coupled with stricter underwriting. 
• People with lower quality of life - medical conditions, COVID19 history or lower declared income will have to go through several filters before they can get a policy.
• Even though the losses on the health side were higher, the health portfolio has grown as there was an increase in demand during the pandemic.

Source: The Telegraph India

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• The insurance sector took a huge hit during the pandemic and now when insurers are slowly moving towards the recovering path, a new challenge awaits them.
• Compared to the year 2020, this year there is an increase in planned hospitalisations. Procedures such as cataract surgeries, kneecap replacements, and cardio-vascular treatments which were delayed during the lockdowns, are already on a rise in August 2021.
• As per Vivek Chaturvedi, Head of marketing and direct sales, Digit Insurance, in the last two years people have been postponing  planned procedures and getting hospitalised only in cases of utmost emergency. He said they expect people to go for their planned procedures in November as the market will open up by then. 
• Amit Chhabra, Business head, Health, Policybazaar states that the June quarter saw hospitals loaded by a sudden surge in Covid-19 Hospitalisations. Further, he said that except in Kerala, Covid-19 related claims have gone down significantly since June, and most of the insurers are now getting Non-covid related claims which were postponed in the previous year.

Source: The Economic Times

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• Health Insurance on one hand is the reason why insurers are making losses, on the other hand the same category is responsible for insurers being able to report growth in their numbers. 
• COVID-19 has resulted in increased losses for insurers, but is also the reason for increased demand. 
• Growth for non-life insurers is mainly driven by health insurance. Experts believe that this is mainly because people are getting aware of the importance of insurance during this pandemic.
• Bajaj Allianz General Insurance’s CTO, T.A. Ramalingam stated that the current growth is because of the increased awareness among people as well as coverage upgrades by existing policyholders. He attributed the whopping 40 percent growth to the increase in the Covid cases during the second wave. However, he expects that this might go down and stay around 25 percent once this surge declines. 
• On the other hand, Motor insurance seems to be a laggard, Motor Insurance is driven by various factors like overall demand in the economy, constraints on manufacturing, supply chain, and logistics.
• The auto industry has taken a major hit because of the pandemic as there are disruptions in the supply chain and an increase in input cost. People have been worried about getting out of their houses during the lockdowns, and many found it difficult to renew their motor insurance due to the financial crisis which came along with the pandemic.
• Across the non-life sector, insurers will attract customers with a good quality of life, fitness and zero medical history to ensure they are able to grow at the same time sustain profitability, in the midterm. This could mean there will be attractive products hitting the market, but they might not be easily available for people with chronic medical histories. 

Source: Moneycontrol

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• Reuters reported a surge in the Delta variant of Covid in areas where the vaccination cover is low.
• Maria Van Kerkhove, a WHO epidemiologist, stated that the Delta Variant is surging in areas where there is low coverage of vaccination, coupled with the limited and inconsistent use of public health and social-distancing measures.
• On the other hand, WHO chief scientist Soumya Swaminathan said that in areas with adequate access to vaccines, a decrease in severe illness and death due to delta variant was noted. 
• According to the Union health ministry, the national recovery rate increased to 97.52 percent in India which is the highest since March 2020. A decline in active cases was also seen.
• India recorded 35178 new Covid cases and witnessed 440 fatalities in a day on August 18th. This was much lower than (almost a third of) the cases registered on 7th June 2021 which was 1,00,636 cases and 2427 deaths. (which too was the lowest recorded number  then, compared to the previous two months.)
• This drastic fall in Covid19 infections and deaths might be rightly attributed to the vaccination drives held across the country to address the spread and lowering the incidence and severity of the disease. The importance of taking the vaccine cannot be stressed more. It’s the best solution for mitigating financial risk and damage, in addition to protecting lives and long-term well-being of families. 
• Having said that, this pandemic has surprised every analyst with new, unexpected trends, and an impact that seems ongoing and never-ending. While some amount of damage-control can be done through vaccinations, social distancing and other practices - it is very difficult to predict what might happen next. Hence, the need for an insurance cover will remain, as a dependable back-up to deal with such financial uncertainties.

Sources: Livemint | Hindustan Times

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• HDFC Life has released its findings on Life Freedom Index (LFI). LFI is a proprietary study by HDFC Life which measures the financial freedom of the customers by checking four aspects of their financial life and the current state of their financial freedom. 
•  Financial Awareness Index measures the customer’s knowledge about financial products and their awareness about the events which can impact their financial plan.
• Financial Planning Index measures the ability of the financial plan to meet the financial needs, also measures the level of confidence of customers in managing their finances and their adherence to their financial plan.
• Financial Sufficiency and Adequacy Index measures the entirety of the consumers financial planning and their regular review of the plan.
• The Financial Liberty Index measures what the consumer feels about their financial security and freedom.
• Below are some key findings of the Life Freedom index:
  • Compared to the findings from 2019 the Life Freedom Index has dropped by 4.8 Pts from 66.6 pts in 2019 to reach 61.8 in 2021. 
  • This drop in the points means that consumers have become more concerned about their financial stability, since the last two years. This can be attributed to the effects of the ongoing pandemic. 
  • Further, it was found that the impact of the pandemic is much more severe in Metro cities compared to Tier-II & Tier-III cities. 
  • Also, joint families seemed to be more stable than nuclear families. As per the report, it was suggested that this could be because they had a better support system and financial help as compared to nuclear families.
• Covid 19 has brought awareness among consumers about the importance of life insurance. The report states that 41 percent of the respondents have purchased life insurance as a precautionary measure.
• As per this year’s report, we can conclude that the confidence of consumers in their current financial planning has reduced a lot. This is despite them becoming more aware of financial products, their importance and more willing to invest in products that can help them financially secure their families, in the long-run. 

Source: Livemint

Original report: HDFC Website

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• While the pandemic has taught the importance of Insurance, startups with teams as small as two members are facing difficulty in providing employee insurance as the expense for the same is huge.
• Plum and RazorPay X have come together with a payroll-cum-insurance product - Razorpay X Health Insurance to provide group insurance facilities for companies with a team size as low as 2 members.
• Startups can enrol into insurance for their employees from the back-end control panel provided by RazorPayX. 
• With this launch, Plum and Razorpay aim to cover thousands of Startups and SMEs with insurance in the next year.
• The Insurance plan had three options:
  • Starter Plan: This will cover the basics and will be a low-cost option
  • Essential Plan: Includes pre-existing illness cover since day one. 
  • Premium plan: Covers benefits like maternity from day one. 
• Technology, partnerships, integrations like these, offering insurance products at source is a channel that will contribute a large volume of personal insurance business in the future, even through small organizations with less than 10 employees.  However customers need to be made aware about the importance of personal insurance as an important backup to be bought for old age, or when they may be between jobs. 

Source: Free Press Journal

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