Continuous supply-side constraints following the pandemic and the rate hikes taken by reinsurers in the past two years have impacted growth of the retail protection business of life insurance companies, reported Business Standard.
Yet, the protection segment, overall, has seen decent growth, mainly because of strong traction in the credit life business, buoyed by disbursement from banks and NBFCs.
Two of the largest private sector life insurance companies, which announced their earnings recently, have witnessed a contraction in their retail protection business.
While HDFC Life’s saw a 34 per cent year-on-year (YoY) decline in Q1 on an annualised premium equivalent (APE) basis, ICICI Prudential Life’s individual protection business witnessed a fall of nearly 40 per cent YoY, the report said.
ICICI Prudential and HDFC Life saw their protection APE grow by 22.2 per cent and 31 per cent, respectively. During an analyst call, N S Kannan, MD & CEO, ICICI Prudential Life Insurance, said: “We have had supply-side challenges during the pandemic to run the retail protection business. However, we have come to a stage now where sequentially, the numbers have stabilised, it further said.
The retail protection business had gained traction when the pandemic was at its peak. But tighter underwriting standards adopted by life insurers, at the behest of reinsurers and to protect their balance sheet because of the mounting Covid-related death claims, meant the demand for term products by retail consumers was not fully met by insurers.
During April 2020-May 2022, the life insurance industry received 235,000 claims aggregating to ₹18,135 crore for Covid-related deaths. Of these, about 234,000 death claims, amounting to ₹17,606 crore, were settled.