365telugu.com, online news,august19th, 2020, New Delhi:The corona epidemic is not only showing a severe negative impact on the health and income of the people but it also shows a negative impact on the insurance sector.Until February 2020, the insurance sector was in good shape. The non-health insurance segment grew by 13 per cent till February in the 2019-20 financial year. The life insurance segment grew by 18 percent. But then the corona comes out as a huge problem. People’s incomes have dropped significantly due to corona. It reduced the number of new insurers, while those who already have insurance have been postponing policy renewal.
Given the current situation, for almost 2-3 years, insurers have been able to focus solely on claims.Corona impact on the auto insurance sector: Auto insurance growth has slowed somewhat since 2019-20 due to declining new vehicle sales.This impact was not so great on the auto insurance sector as the renewals were huge. Vehicle sales have plummeted since the lockdown was imposed due to the corona epidemic. With this, the auto insurance sector is currently on a losing streak. They are just the tip of the iceberg. Currently, people are not renewing their existing policies which is the main reason for the loss of auto insurance companies. Lockdown due to corona has reduced the need for automobiles.. As a result, accidents are reduced and the percentage of claims are greatly reduced. This is a matter of concern to auto insurance companies. However, now that the claim method has also become difficult, consumers are not interested in buying auto insurance policies. The auto insurance sector is currently recovering as new claims are low despite the purchase of new insurance policies.
‘It is imperative to adhere to the social distance in the current circumstances. With this, private transport is likely to outpace public transport in the coming period. This is expected to increase private vehicle sales and policy purchases. In addition to new vehicles, there is a huge demand for old two-wheelers and cars. That’s a decent thing. “ —- Naval Goel, CEO, PolicyX.com
Corona impact on the health insurance sector:
Various state governments have allowed private hospitals for the treatment of COVID-19 as the corona epidemic is booming rapidly in the country. However, COVID-19 treatment in private hospitals can be costly. On the other hand, the percentage of claims is also increasing as the number of cases is also increasing. This is putting a financial burden on the health insurance companies. However, it is important to note that even those who have not yet taken out policies are taking out health insurance policies in view of the corona epidemic.
This is hopeful to some extent. However, this is very low compared to the percentage of claims.
With this, health insurance companies are moving towards losses. In our country, 18 percent of urban dwellers have health insurance policies while 14 percent of rural dwellers have health insurance policies. ‘Corona treatment is costing heavily in private hospitals. Claims are also on the rise as cases increase. This is putting a financial burden on health insurance companies. The number of people taking out new health insurance has grown. Renewals are also at the expected level. However, insurance companies are at a disadvantage as purchases of new policies are lower than the claims percentage. ‘ Naval Goel, CEO, PolicyX.com
Claims percentage is increasing: It is a known fact that Covid-19 treatment has been brought under the purview of health insurance policies by some insurance companies. On the other hand, the percentage of claims is also increasing at the same rate as the corona cases are increasing massively. This places a financial burden on health insurance companies. Insurers, on the other hand, are wrapping up losses as renewals expire. However, with the introduction of Corona Rakshak and Corona Kavach policies by insurers as per IRDAI directives, the situation is likely to change slightly.
New Policies : While many companies have already introduced Corona Rakshak and Corona Kavach policies, others are focusing on designing policies related to Corona. More insurance companies will soon be introducing Corona special insurance policies.
Reduced interest rates:
The government has lowered interest rates and repo rates on bonds as the corona epidemic booms. This makes it difficult for insurance companies to accumulate large sums. Amending certain rules on storage amounts would benefit insurance companies to some extent. Corona has put many challenges ahead of the health insurance sector. Corona, however, has raised awareness about health insurance among the public. It is imperative that everyone has a corona insurance policy at the time of this epidemic boom. On the other hand, with the increase in the percentage of claims, the financial burden on insurance companies is increasing.
However, with the purchase of new health policies, the insurance sector is likely to recover in the near future.
Corona impact on the life insurance sector:
In general, the life insurance industry derives high returns from life insurance policies as well as term policies, investment-linked policies and semi-guaranteed policies. However, the life insurance sector is currently at a loss as the purchase of these policies has stalled.
Consumers are not interested in term policies that cover a higher amount as revenues decline.
With this, the purchase of term policies fell. Also, medical tests are mandatory before taking out more covered term policies. Some users are reluctant to undergo medical tests. This is one of the reasons why sales of term insurance policies are declining.
Impact of interest rates on long term policies:
Interest rates are the main reason why consumers are interested in long term policies. The purchase of these policies has also come down drastically as interest rates have now fallen.
The same is true for investment linked policies:
Consumers are not making big expectations on the stock markets in the current circumstances. This is because it is not possible to say when the Corona will show its prowess in the stock markets, leading to uncertainty over the purchase of investment-linked policies.
How to proceed?
1. Insurance companies should immediately issue policies to those who have not yet taken out a health insurance policy. As a result, the insurance industry recovers and the policyholder receives both health and financial protection.
2. Focus on the category most susceptible to corona effect. i.e. public workers, medical staff, sanitation staff, police.
3. The limit of network hospitals should be increased.
4. Pre-authorization and certification rules should be relaxed.
5. Co-payment terms should be corrected.
6. Insurers must have constant communication with consumers.
7. Insurers should take steps to digitize their operations.
8. Renewal terms of life insurance, pension policies, long-term policies need to be amended to take into account the current situation.