Lockdown cost insurers ~45,000 crore in premiums

The disruption caused by the coronavirus’ spread and the pandemic-induced lockdown resulted in the life insurance industry losing around four million policies and premiums of around ~45,000 crore, said Raj Kumar, managing director of Life Insurance Corporation (LIC).

Speaking at an event organised by the Merchants’ Chamber of Commerce and Industry on post-covid challenges and opportunities for the industry, Kumar said: “The industry as a whole lost four million policies and around ~15,000 crore of new business premium. Since the lockdown happened, people were saving money for necessities. So, around ~30,000 crore of renewal premium did not materialise.”

Traditionally, the second fortnight of March is the most productive period, as it accounts for around 15-18 per cent of the entire business. The industry reported a contraction in new business premiums for four straight months from March.

But it seems to have got back on track from July as premium collection has turned positive, boosted by increased interest in insurance.

“As of August 31, LIC’S premium income is back to previous year’s level. So, we have covered the gap that was there in April, May when the premium went down by about 32 per cent,” said Kumar.

LIC’S renewal premium is also showing growth. Till September 12, LIC collected ~87,327 crore in renewal premiums,

“AS OF AUGUST 31, LIC’S PREMIUM INCOME IS BACK TO PREVIOUS YEAR’S LEVEL. SO, WE HAVE COVERED THE GAP THAT WAS THERE IN APRIL, MAY WHEN THE PREMIUM WENT DOWN BY ABOUT 32%” RAJ KUMAR

MD, LIC

against ~77,176 crore the previous year, up 13.15 per cent. However, the number of renewals has grown by only 0.4 per cent, which means only high value and ticket size renewals are coming.

On LIC’S proposed initial public offering (IPO), Kumar said, “Dipam (Department of Investment and Public Asset Management) has appointed two transaction analysts. Now they are in the process of engaging an actuarial firm and purchase of software. We have already started valuation of our properties. It is done every three years. But as per the Irdai (Insurance Regulatory and Development Authority of India) regulation, the valuation is done for the commercial property.”