Term insurance premiums set to surge as Munich Re hikes rates

Reinsurance rates jump by up to 40%; premiums may rise by 30%

Term insurance policy premiums are set to rise by 25 to 30 per cent with Munich Re, the largest reinsurer for the Indian insurance market, increasing its rates for underwriting portfolios of pure protection plans by up to 40 per cent.

According to a senior executive of a private life insurance company, the global reinsurer has communicated its decision about increasing rates. About 8-10 insurance companies have been informed about the move, sources said. The new rates will come into effect from December. “The reinsurer has increased its rates for term policies by 30 to 40 per cent across various companies. This will lead to an increase in the premium rates by 25-30 per cent,” said the executive. This is the second time reinsurance rates have been hiked in 2021. In March, the rates were raised by 45 per cent. In June last year, there was a steep hike of 20-25 per cent.

Munich Re has been studying the long-term mortality trends for the past few years. Apart from increasing reinsurance rates, the German multinational insurance company has also tightened underwriting standards.

A spokesperson for Munich Re declined to comment on the issue. Insurance industry insiders said experience from term policies that were sold in the past without proper medical check-up had not been satisfactory.