SynopsisMax Life, PNB MetLife, ICICI Prudential Life, HDFC Life, Kotak Life and Tata AIA are among the firms that are reportedly enforcing stricter underwriting norms for companies seeking life covers for their staff. Higher mortality risks due to the pandemic may be discouraging them, leading distributors and brokerages said.
Many Indian businesses, regardless of size, are facing difficulties in either renewing or buying fresh term-life covers for their employees. Several top private-sector life insurers are either quoting significantly high premiums or unwilling to extend fresh mortality benefits.
Max Life, PNB MetLife, ICICI Prudential Life, HDFC Life, Kotak Life and Tata AIA are among the firms that are reportedly enforcing stricter underwriting norms for companies seeking life covers for their staff. Higher mortality risks due to the pandemic may be discouraging them, leading distributors and brokerages said.
Insurers also want smaller businesses to buy individual term plans instead of group insurance for their staff. Individual plans can be differently priced based on individual risks. ET has also seen letters of temporary deferments by some of the insurers cited above.
Insurance industry executives, meanwhile, said that even though underwriting has become stricter, temporary deferments must not be construed as rejections. Insurers have to balance death-claim settlements worth millions of dollars and maintaining solvency funds at 150% of total liabilities.
“Group term (insurance) is a highly competitive, annually renewable B2B segment,” said Niraj Shah, Chief Financial Officer, HDFC Life, one of India’s leading private sector insurers.
“Our pricing and risk evaluation approach considers factors such as industry, employee demographics, attrition, geography and past mortality. Corporates base their decision on proposals from multiple insurers. We continue to approach Group term in a calibrated way,” Shah said.
HDFC Life has settled more than 290,000 lakh death claims, with payouts in excess of ₹3,000 crore. These also include Covid-19 claims.
An ICICI Prudential spokesperson said that the company “continues to offer group term quotes to all our group term schemes when they come up for renewal.”
Spokespersons at Max Life, PNB MetLife and Kotak Life didn’t comment. Industry regulator Insurance Regulatory and Development Authority (IRDAI), too, didn’t respond to ET’s queries.
“Our group policies have been renewed in line with underwriting practices that reflect the emerging realities and continue to remain judicious,” said a Tata AIA spokesperson.
As reported by ET last week, life insurers have been tightening the scrutiny on term covers and seeking higher premiums since April.
“With term covers, the risks are largely transferred to the books of reinsurers unlike other policies,” an industry executive said. “Hence, there is a large say by the reinsurer supporting insurance companies as well that dictates the business policies of a life insurer.”
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