The novel coronavirus and its spread affect every person in the world. The impact is not just a micro-level impact but it has affected the whole world in aggregate. Industries across the world are facing many challenges and many companies are on the verge of the shut-down stage. The insurance company is one such industry that faces multiple challenges. The challenges are not short term but it has raised a lot of long-tail questions for the insurance company stated in the report published by PWC. For some products like health insurance which is long term renewable contract where more attention has to be paid for portfolio decline. In the case of life insurance and pension viability of investment returns and margins will have to be improved.
Let’s have a look at how the COVOD 19 crisis has impacted on motor, health, and life insurance companies.
- Impact on the motor insurance industry.
According to the report, the entire automobile industry was facing a plunge in 2019-2020. New automobile purchases include a major portion of the premiums which would add up the additional cost in purchasing a vehicle. In addition to that due to the lockdown and virtual stoppage of business may aggregate the situation? Normally that would be covered by increasing the coverage net of the existing vehicle majority of which would fall under the insurance net by the third and fourth years.
- Impact on health insurance:
As per the report to settle any general misconceptions regarding the applicability of health insurance policies to COVID 19, IRDAI has permitted insurers to accept COVID 19 related claims under the current health insurance policies. But the claim is applicable only if the policyholder is treated in the government hospital.
- Impact on the Life Insurance industry: In the wake of COVID 19 life insurance industry likely declines to 0.9% in 2020, compared to the growth rate in 2019 which is about to 8.8%., due to the outbreak of COVID 19 and related lockdown. According to the Insurance Regulatory Development Authority of India (IRDAI), in April, new business premium declined 32.6% to ₹6,728 crores as against ₹9,928 crores for the same period of last year.
