Not too long ago, life insurers were grappling with high claim ratios amid rising Covid-19 fatalities. Not only the older population, but even young people were severely affected during the pandemic, throwing decades-old mortality estimates of life insurers under the bus. This had led to a sharp rise in the premium rates of term insurance plans.
However, now that life is returning to a semblance of normality post Covid-19, claims ratios of life insurers have also started stabilising. Does this mean that term insurance premium rates will be stable in 2023?
Citing the few rounds of mortality rate revisions over the past two to three years, Rushabh Gandhi, Deputy CEO of IndiaFirst Life Insurance, says that pure protection premiums have increased by 50-100 per cent from the pre-Covid-19 lows at the industry level. “Going forward, we are expecting [pure protection premium] rates to remain largely stable. That, combined with the relaxations in Covid-19 related guidelines, will potentially rev up the individual protection business once again,” he says.
Tarun Chugh, MD and CEO of Bajaj Allianz Life Insurance Co., agrees. “Term insurance rates are expected to remain stable in 2023. The premium rates were revised over the past two years due to a rise in Covid-19 claims. But now they are expected to stay stable,” he says.
Term insurance plans are pure protection policies that pay the sum assured to a nominee if a policyholder passes away during the term of the policy. The primary reason behind the increment over the past few years can be attributed to the increase in Covid-19 deaths leading to humongous pressure on term insurance providers. “Apart from this, the term insurance rates were said to be a tad under-priced before Covid-19. This increment brings a balance to it,” says Naval Goel, CEO and Founder of insurance comparison portal PolicyX.com.
While life insurers are talking about stable premium rates, several general insurance companies have witnessed a surge in health insurance claims post-Covid-19, as apart from elective surgeries, the frequency of even regular medical and critical cases has increased. Because of the rise in claims burden on insurers, your health insurance policy may see a rise in premium rates, while term insurance rates are expected to remain stable in 2023.
@teena_kaushal
