Covid proves a losing business for insurers

Health insurance may be a fastest growing business for the general insurance sector in the pandemic season, but a significant surge in the number of claims and their immediate settlement have led to companies incurring heavy losses on health cover.

Since the Covid-19 outbreak, the health insurers have earned revenue of Rs 450 crore through the sale of corona-specific products, but they have settled a large number of claims on Covid-19 during the period, paying out Rs 1,430 crore, almost over three times the premia they have earned. This was revealed by Insurance Regulatory and Development Authority of India chairman S.C. Khuntia during a CII virtual summit on Thursday.

"There has been a surge in health insurance claims relating to Covid19 with a total of 2.38 lakh claims. Of these, 1.48 lakh claims amounting to ?1,430 crore have already been settled," Khuntia said, adding that the sector has still witnessed a positive growth of 2.4 per cent between April and August end 2020 as compared to a year ago.

The Irdai is working on a risk-based solvency margin system for the insurers in the next three years' time. "As of now, insurers are supposed to maintain solvency margin to the tune of 1.5 times of their total premium. As the risk varies segment-wise, the regulator is working on varying solvency margins for various segments," he said.

Khuntia said the Irdai is working on standard products for insurance of dwelling units and term insurance as well.

He asked all insurers to ensure repeat purchase and renewal of healthrelated policies. The Irdai is monitoring the persistency levels (volume of business retained) of life insurance companies.