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The impact of the coronavirus on life, health and auto insurance

The coronavirus and its spread have thrown a curve ball for everyone around the world. It not only had an impact at the micro level, but also at the countries at the macro level. Industries around the world face challenges they have never seen before. One of these industries facing multiple challenges is the insurance industry.

The COVID-19 crisis has not only created immediate challenges, but has also raised many long-standing questions for the insurance sector, as PWC India mentioned in its report, the impact of COVID-19 on the Indian insurance industry. . “The industry is faced with the possibility of making claims about a policy
They are in place for the next seven years if there are any risks. For some products like health, which are considered renewable for life, extra attention should be paid to aging the wallet. For long-term life and pension contracts, the sustainability of investment returns and profit margins must be recalibrated. Ultimately, the future of doing business must be reviewed, ”he said.

Here's how the Covid 19 crisis has affected the corporate, health and life insurance campaign.

Impact on the auto insurance industry

According to the report, the entire automotive sector was already facing a recession in 2019-2020, and new car purchases account for a large portion of insurance premiums, leading to business closings and the default disruption of business. operations can aggravate the situation. The challenges facing the auto insurance industry include the following: One of the biggest challenges is not buying new cars. This is usually compensated for by increasing the coverage network for existing vehicles, the vast majority of which fall outside the insurance network in years 3 and 4. But it will be difficult to do as there are no distribution feet in the street.

Not buying new cars is one of the biggest challenges. This is usually compensated for by increasing the coverage network for existing vehicles, the vast majority of which fall outside the insurance network in years 3 and 4. But it will be difficult to do as there are no distribution feet in the street.

The closure of the claims survey will be affected as inspectors will not be able to go out to inspect the damage to the vehicle, not at all or on time. Since the survey above a certain projected value (Rs 50,000 previously, now raised to Rs 75,000) will be carried out by independent surveyors, its unavailability during closure will be a problem.

However, since the shutdown began, very few vehicles have been operational. Therefore, very few accidents are expected, resulting in very low claims on current policies.

Consequently, a short-term gain in the portfolio is expected since the lockdown began in March 2020, and year-end figures are expected to show a decrease in claims due to reduced vehicle movement in recent years. two weeks of March 2020.

Long-term continued social distancing could mean two things: There will be more private vehicles on the road than usual, as those who can afford it will avoid public transportation, which could lead to higher claims later on. Buy more two-wheelers, used cars, or low-cost cars due to traffic migration based on lower risk of infection and therefore higher business.

Impact on the health insurance industry

According to the report, to dispel any general misconceptions about the applicability of health insurance policies to COVID-19 cases, IRDAI has instructed insurance companies to accept claims related to COVID-19 under insurance policies of active health.
Since COVID-19 risks are not currently traded in active products, these claims could put an additional burden on insurance companies' books if dealt with outside of government hospitals.

The future relocation of the community could lead to affected populations from all socioeconomic classes and generate claims of up to a few million rupees, according to the report.

Since the traveler base is more prosperous than the national average and therefore more vulnerable to CoVID-19, the disease is expected to spread through social transmission, which will affect this sector less. Therefore, the claims are likely not large enough to begin pandemic coverage that may have been purchased from reinsurers immediately.

The Ayushman Bharat scheme can receive more claims compared to private health insurers due to its extensive coverage. This scheme may not have taken into account the cost of building isolation suites. Since hospital isolation is essential to prevent further spread in the community, this cost will create an additional burden for the government to bear. Several insurance companies run the scheme in a public-private partnership agreement with the government and will have to recalibrate their finances, according to the report.

Impact on the life insurance industry

According to the report, the life insurance industry generally deals with pure risk policies, investment-related documents and savings documents with long-term guaranteed / semi-guaranteed returns. There will be an impact across the board, but the causes will be different for each category.

Term Insurance: With any crisis, there is a rush to increase insurance coverage. Pure Life's hedges should see renewed interest, and since this is primarily an online marketplace, you should see an increase in demand. However, since people's cash position is precarious, there may be a reluctance to take higher coverage. Plus, the top caps bring with them check-ups, which people won't want to do. Therefore, a temporary drop in business activity is expected.

Long-term savings insurance: Long-term guarantees will seem attractive, but insurance companies will face restrictions to continue to market these products as interest rates fall. Additionally, people may also begin to assess liquidity, and thus there may be pressure on long-term retirement products. Substitution may increase and the overall long-term propensity for these products may decrease.

Investment-Related Insurance - Consumer confidence in the stock market will take a hit, so only a few of the smarter buyers who believe in buying from the bottom will start new policies now. Existing clients are advised to stick around and not try to recover prematurely as the average cost of Rs SIP will help them.

The way forward PWC India stated that Indian insurers should consider undertaking specific activities to protect the interests of society and build more trust in the community. Some of the activities that can help create a superior customer experience include:

  • Immediate offer to register more people in health schemes to cover COVID-19
  • Offer more coverage and fast-track services for those who are professionally exposed to the greatest threat of COVID-19.
  • Relax outside the network, network and preferred service provider restrictions for inpatient.
  • Extended claim filing periods
  • Reduce authentication and accreditation rules
  • Postponement of price increases, installment payments, renewals and cancellations
  • Waiver of copayment obligations
  • Develop a transparent communication process for all clients to inform them of any changes in policies and operating procedures.
  • Paperwork must be replaced in the insurance business related to underwriting and claims processing with full digitization, with all available processing methods with online authentication.