LIC has witnessed a 4% growth in renewal premium transactions and 13% jump in renewal income during this pandemic-hit fiscal till September 12 compared to the year-ago period. The life insurance behemoth is hoping to come back to normal shortly, feels its managing director Raj Kumar.
Kumar also feels that the life insurers should now look for more ‘less capital intensive’ products in the new normal because solvency margin would be an issue for which the regulator may not relax. He was at a webinar ‘Indian Insurance Post Covid Challenges’ with the members of MCCI.
Kumar pointed out that the renewal premium in the first five months of 2020-21 till
September 12 was Rs 87,000 crore compared to Rs 77,000 crore during the same period of last fiscal. He explained that growth of premium income was more than the growth of transactions because renewal was more for big-ticket premiums compared to small-ticket ones. “High networth individuals (HNI) have renewed while the smaller one I think would do it later,” he added.
Elaborating on reduction of solvency margin for life insurers, Kumar added that it is unlikely to be done by the regulator. “The life companies have to see how to resolve the issue. One may look at a lower number of guaranteed products which has higher capital requirements,” he added.
However, he added that LIC has a healthy solvency margin of 155%.
Non-guaranteed products like ULIPs are less capital intensive with lower solvency requirements in the absence of guaranteed returns. On the contrary conventional plans had assured returns with higher solvency requirements.
Commenting on Covid death claims, he added that LIC has so far settled 911 Covid death claims with a sum of Rs 42 crore. “This is minuscule compared to total claims we settle every year,” he added.
The LIC MD also pointed out that the moratorium sought by the customers on premium payment so far for pandemic is only to the tune of Rs 500 crore. “This is just a fraction of the total premium income (new and renewal) of the company,” he added.
Replying to a question on the investment of LIC in stock market during this pandemic, he added that it has already booked profit of Rs 13,000 crore from the stock market during this fiscal and it is one of the few net investors in the stock market.