COVID-19 has changed the insurance industry
A report by PwC says that the pandemic has changed the way the industry operates and led to companies depending heavily on their digital architecture.
March and April are usually very busy months for the insurance industry. These are when most life insurances are bought and non-life corporate renewals are done. But these have been hit severely by the coronavirus, to the tune of 15-30%. In a report titled COVID-19: Impact on the Indian Insurance Industry, PWC details how health insurance, general insurance and life insurance in India have been affected by the upheavals of the past few months.
Demand for health insurance has gone up with inquiries for policies increasing by 30-40%. But the reach is still quite low with private medical insurance covering only 18% of the population of urban India and 14% of rural India. So even COVID-19 patients with insurance who are getting treated outside of government hospitals are not causing much of a strain on companies. Besides, other expenditures like planned surgeries are down at the moment.
And general insurers also are saving on low motor claims and personal accident claims because of the lockdown. But they have other problems because they are dependent on industries and businesses like hotels, travel and automobile, which are hurting badly due to the lockdown. Even before the pandemic, the automobile sector was doing poorly but with sales dipping in April-May, no is buying auto insurance and many are delaying renewals of existing insurance. With life insurance, there is a rush to increase cover with long-term guarantees doing well. But the low interests rate and market volatility could also reduce their appeal. The same goes for investment-linked products which are being viewed with caution by consumers due to the fluctuating stock market.