It was when COVID-19 virus started spreading in India, the insurance regulator IRDAI had a discussion with life insurance companies regarding the launch of COVID-specific products. But the discussion halted after realising the fact that all life insurance products cover the pandemic deaths in their products. “When we thought of having a COVID-specific product, we had a discussion with the regulator. Finally, we decided that it didn’t make sense to launch a specific product as coronavirus is already covered in all life insurance products. Source of the death is not an issue in the life insurance products sold in India,” said Tarun Chugh MD & CEO, Bajaj Allianz Life Insurance.
The life insurance industry has witnessed a degrowth of 45 per cent in April. Usually, March is a big month for the industry and April-May are not so significant. “After the lockdown, 95 per cent of the product sale is happening digitally and the rest we get from aggregators. The digital sale has increased by seven-eight times during the lockdown. The ticket size has fallen, but the number of products sold has been increased. People are committing lesser amount for insurance as there has been an increasing tendency to keep cash,” Chugh said. Bajaj Allianz witnessed a flat growth in the lockdown.
Chugh said that the demand for the traditional term insurance is rising after the pandemic started spreading across the world. If 45-50 per cent customers preferred traditional plans earlier, it has increased to 65-70 per cent right now. The demand for wealth products, which are deployed in government securities, bonds and stock market, has fallen, he added.
“We are in uncertain situation. Normally, we plan for the full financial year in March. But this year, it doesn’t make sense to put a plan. We reopened 300 of the 600 branches of Bajaj Allianz in green and orange zones. About 2,000 customers come to the branches everyday nowadays. In fact, we are using the time to transition our business model. We are ensuring that we adopt digital processes and the customer is getting used to it. We will not be depending on the face-to-face sale so much. We are training our advisors to get to selling and servicing through online. We will have to co-exist with COVID-19. In this context, you cannot have the plan for the year. You should have the plan for the month or the quarter,” he said.
The insurance business is seen to be impacted in the first quarter of FY20 due to the coronavirus pandemic. However, rating agency CARE Ratings said that insurance space will record strong performance, especially digitally going forward. The data given by CARE suggests that overall life insurance industry recorded a first-year premium income of Rs 2.6 lakh crore during FY20 against Rs 1.1 lakh crore during FY10. The CAGR growth is 8.2 per cent between FY10 and FY20
