Lockdown affects insurance industry

The coronavirus crisis is likely to hit insurance businesses hard this year in premium growth. The constant rise in Covidrelated claims is likely to shrink the balance sheet of both life and non-life insurers in the coming quarters. The two key months— March and April when the complete lockdown were enforced by the government—were said to be worst for the insurers, officials of public sector insurance companies said.

Generally, March is the most productive month for life insurers and April, for non-life insurers.

A PwC report said corporate renewals had seen a significant hit of around 30 per cent for life insurers and 15 per cent for non-life insurers, respectively, in March and April.

"The life insurers get most of their business in March, the last month of any financial year, when people invest in insurance for tax savings. Similarly, general insurers get most of their businesses through renewals in April," said a senior official.

Investment income, which acts as a face-saver for the insurers which incur heavy underwriting losses, has come down significantly for all the listed life and non-life insurers.

Motor insurance is the largest portfolio for any general insurer while health insurance constitutes the second largest chunk. The general insurance industry is set to grow by just 4 per cent in

2020 compared to 10 per cent in 2019, due to Covid19-related disruptions, according to GlobalData, a data and analytics company. It is expected that the significant decline in activities in key sectors such as auto, manufacturing and constructions will dent insurance income.