Covid eats into insurers profit

A steep rise in death claims during the second Covid wave has hit life insurers' profitability but rising awareness about insurance has boosted sales of individual new policies. Of the three listed private life insurers, SBI Life Insurance and HDFC Life Insurance reported lower profits for the June quarter while ICICI Pruden-tial Life Insurance reported a loss.

On Monday, SBI Life reported a 43 per cent slump in its net profit to Rs

220 crore for Q1, hit by higher Covid claim payouts. It had posted a net profit of Rs 390 crore in the year-ago quarter. The number of claims reported in April-June 2021-22 is 1.28 times of that filed in the whole FY21, SBI Life said. The total number of Covid claims in Q1 FY22 stood at

8,956 and the Covid-19 claims, as net of reinsurance, stood at Rs 570 crore. But individual new business premium jumped by

37 per cent to Rs 184 crore against Rs 134 crore.

Similarly, HDFC Life earlier reported a 33 per cent year-on-year fall in net profit for Q1 to Rs 302 crore as it raised reserves for claims expected in the second and third quarters. HDFC Life said its claims soared three-to-four times during Q1 against the peak claims volumes in the first wave of the

Covid-19 pandemic. It paid over 70,000 claims in the first quarter of the current financial year with gross and net claims amounting to Rs 1,598 crore and Rs 956 crore, respectively. It has set up an additional reserve of Rs 700 crore to service the claims expected to be received in Q2 and Q3.

The largest private life insurer, ICICI Prudential Life Insurance, reported a net loss of Rs 186 crore for the June quarter on account of higher Covid related provisions and death claims settlement. The insurer had reported a net profit of Rs 288 crore in the year ago period. It settled Rs 1,119 crore of Covid-19 claims in Q1FY22. It has created provisions of Rs 498 crore towards future Covid-19 claims.