Weekly Insurance Round-up Tuesday, September 28, 2021

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We're back with the latest edition of Beshak's Weekly News Round-up - an analysis of all Insurance News & Updates, straight from our in-house research team! 🧐
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- Stricter underwriting rules for Life Covers. 📝
- Agents make suggestions to IRDAI to amplify the insurance business across India. 📜
- Nova Benefits to partner with QubeHealth with an aim to provide employee health benefit products. ☂️
- 32 General Insurers witnessed a hike in their net profit in FY21. 📈
- Buy Now Pay Later Startup Zest Money raises $50 Mn. 💰
- Munich Re, a German Insurance company that provides reinsurance, primary insurance, and insurance-related solutions across the world, has asked all insurers to tighten their underwriting process.
- The reinsurer witnessed a spike in claims during the second wave of the pandemic due to the delta variant, which is one main reason why the underwriting process for high-value term plans is going to get stricter from October.
- There will be stricter conditions put on both medical and financial underwriting.
- In order to make sure that there are no primary causes of illnesses that may trigger the risk, insurers will now ask for a full medical check-up before accepting any proposal. Tele/Video medical underwriting which was considered for certain profiles, might get stopped from now on.
- As for the financial underwriting, insurers will now ask for bank statements along with the salary slips to check if the applicant is financially sound to justify the high-value cover. Earlier, applicants only had to provide 3 months salary slips as income proof but now, insurers might ask for salary proof of more months.
- Beshak Take: While the pandemic brought each and every sector into a fix, the Insurance sector took a relatively huge blow due to the increase in the claims. Medical experts believe that there are chances of the third wave of Covid-19. If that happens, there will be a spike in claims again, making it worse for the insurers and forcing them to increase their premiums and bring in even stricter underwriting rules.
Source: The Times of India

- Agents have suggested various improvements to IRDAI to enhance the insurance business all across India. Below are the few reforms suggested by the agents -
- Lesser intervention of IRDAI with regards to commission:
- Currently, IRDAI provides approval for the new product including the cost structure, commission, overhead expenses, etc. to be paid to the intermediaries.
- Agents have suggested that the commission and other expenses that need to be paid to the agents/intermediaries should be entirely decided by the insurance companies.
- Reinforce “Sub-Brokers” under insurance agents and “Sub-Agents” under the Corporate agents model:
- Sub-agents are those who are appointed by the original agents and can sell insurance products on behalf of them, whereas sub-brokers act as a mediator between the main broker and the clients.
- The inclusion of sub-brokers and sub-agents is suggested with an aim to increase employment and tap areas that haven’t been represented till now like rural areas, small towns, and villages.
- This will also help in increasing the overall insurance penetration by offering both life and health insurance products to smaller towns and villages.
- As of FY2020, the insurance penetration in India was 3.76% and insurance density was $78.
- Allow complete free-hand in having tie-ups:
- IRDAI allows the composite corporate agents(CCA) with a net worth of ₹50 Lac and above to have tie-ups with three insurance companies each of life, health, and general insurers.
- Agents have suggested that a CCA having a net worth of ₹5 crores and above should either have a completely free hand in tie-ups or be allowed to work with nine insurance companies each of life, health and general insurers.
- Not allowing banks to sell insurance:
- Since insurance companies are not allowed to sell bank products, agents were of the opinion that even banks should not be allowed to sell insurance products.
- Bankers who sell insurance products over the counter have some set of targets to be met and in an aim to achieve those targets, they sell insurance products without proper explanation, resulting in an increase in complaints on mis-selling.
- Agents believe that banks should be concentrating more on their core products like NPAs and giving loans rather than selling insurance.
- Lesser intervention of IRDAI with regards to commission:
Source: Millennium Post
- QubeHealth is going to partner with Nova benefits and launch a full coverage, employee health benefits cover.
- Nova benefits is a technology-led employee wellness and insurance platform, and Qubehealth is a healthcare financing and marketplace platform.
- Both these companies, with their complementary strengths, plan to bring a better way to look at the employee health benefits post-pandemic.
- As per a conversation with a customer care executive, it was found that while the product is still a work in progress, they are already done with the beta version of the app and will be launching it soon.
- This is an employee benefit product which will be available for the employees via their employers.
- Employees will be able to add their family members to the policy provided by the employers via the app. They will also get a preapproved credit amount in their health credit cards which were launched by Qubehealth in August 2021.
- All details about the insurance provided by these companies will be available on the app.
Source: Livemint

- As per the data of the General Insurance Council, net profit of 32 general insurance companies increased to ₹3,868.77 Cr. from a loss of ₹1,402.53 in 2019-20, indicating a growth of 57%.
- The non-life insurance industry received a gross premium of ₹206,360.96 Cr. in FY21 which was 5% more than the gross premium of ₹196,133.44 Cr. received in FY20.
- The Gross incurred claim was ₹148,163.37 Cr. which was 3% lesser than ₹152,938.20 Cr. in FY20.
- The underwriting result (difference between the premium received and claims paid) also saw a positive result where the loss went 15% down from ₹22,859 Cr. in FY20 to ₹19,416.41 Cr. in FY21.
- Beshak Take: While the pandemic has hit the insurance industry adversely, it has also created awareness among the customers about the importance of insurance - the profit made by the insurers is proof of this. The insurers have adapted to the changing times by launching improved products and doing 100% online business.
- The pandemic has led many people, who did not have insurance, to medical debt due to the excessive hospital bills. Healthcare in India was always inadequate and the pandemic has made it even worse. People were forced to take treatment in private healthcare due to the lack of facilities in government healthcare which burnt a hole in their pockets. Many people have turned to insurance to prevent something like this from happening again.
Source: The Free Press Journal

- In a Series C funding, Zest Money - a Buy Now Pay Later (BNPL) startup has raised $50 Mn from Australian BNPL fintech Zip Co.
- The Startup will be using these funds in expanding the product suite, increasing the transaction network and launching its new business lines in Insurance and savings.
- This funding series marks the entry of Australian BNPL fintech Zip Co into the Indian markets.
- The company will be acquiring a minority stake in the company as well as a board seat. It has also negotiated to increase its shareholdings over time.
Source: Moneycontrol
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