Insurance Themes To Watch In 2022

The insurance industry suffered during the pandemic, led by the life segment as claims stemming from Covid-19 surged. Analysts now expect health, farm and cyber insurance to drive growth for the sector in 2022.

New business premium of life insurers grew 19% over a year earlier in 11 months through November, according to BloombergQuint's calculations based on regulatory filings. General insurance premium rose 13% during the period.

"The global demand for insurance has seen tailwinds in 2021," Abhishek Poddar, co-founder and chief executive officer of Plum Benefits Pvt., a group healthcare insurance startup, told BloombergQuint. Apart from the health and well-being needs of employees and their families, companies are evaluating protection against "disruptions, loss of profits and cybersecurity".

Still, the growth in 2021 was aided by a low base as the 2020 lockdown froze economic activity, drying up business. Healthcare infrastructure was overwhelmed during the second and deadlier wave of Covid-19. And it also prompted higher claims related to deaths and Covid-19 medical expenses.

Poddar said a majority of health insurers in India saw loss ratios—or losses compared with premium collected—rise above 100% in the first half of FY22.

Also, premiums for all lines of insurance are set to rebound at 3.3% for the full year of 2021 and 3.9% for 2022, according to a Deloitte report. China is predicted to lead with 9% growth followed by other emerging markets at 4.9%.

"Reinsurers globally are set to raise renewal premiums by 6-8% or even 10% from Jan. 1, 2022 depending on their portfolios and impact over the past year," Sanjay Radhakrishnan, chief executive officer at Hero Insurance Broking India Pvt., told BloombergQuint.

Yet, Prithvish Uppal, insurance analyst with AMSEC, expects the sector to grow in India in the coming year due to pent-up demand.

Poddar, quoting a Fitch Ratings report, said the outlook for the global reinsurance sector is improving because of:

• Higher prices improving financial performance.

• A strong rebound in economic activity and lower pandemic-related losses.

These factors, the report said, should outweigh the negative effects of declining investment returns, increasing natural catastrophe claims due to climate change, and a temporary pick-up in inflation.

With the Omicron threat looming, demand and supply tugs for insurance are set to continue in 2022.

General insurance in India in 2022 may continue to grow at similar rates as seen in 2021, said Radhakrishnan. "However, if motor insurance picks up and the shortage of chips for auto manufacturers is reduced, we could expect over 15% growth."

"Health, cyber and agricultural insurance are going to be the centre of focus for general insurance in 2022," said Radhakrishnan.

Health Insurance

Radhakrishnan said amid increased awareness, demand for health insurance will continue to grow. "A single-digit price hike could be expected in the next round of renewals in April 2022."

Poddar expects penetration to rise from current levels of around 20% to 80%+ coverage over the next 10-15 years. "This growth will likely be driven by employer-sponsored and government-sponsored health insurance schemes."

Since the impact of the new variant on hospitalisation and claims is uncertain, assuming no major spike, Poddar said he doesn't expect any major price hikes on health policies.

Cyber Insurance

Cyberattacks in the first half of 2021 surpassed the total number of cases reported in the whole of 2020 globally, according to Radhakrishnan.

Accordingly, demand for cyber insurance will continue to grow in the coming year due to heightened susceptibility on account of flexible working. "Due to increased risks and claims, the capital flowing into the cyber liability reinsurance space has seen a considerable reduction which may lead to this policy getting dearer," he said, adding the hike in premiums may be in the teens if not more.

Crop Insurance

Talks around the government revamping and introducing new schemes in agriculture may lead to more farmers enrolling under the insurance schemes, said Radhakrishnan.

Apart from these, Poddar highlighted certain industries, such as hospitality and tourism, that would seek better risk assessments and expect insurance coverage for loss of income or business interruptions in 2022. In the case of airlines, risk assessment will be required to protect them in case a passenger contracts Covid-19 while travelling, he said.

"Reinsurers incurred severe losses on their India life insurance portfolios during the first and especially, the second wave of the pandemic," said Plum's Poddar.

Insurance analyst Uppal said the January-March quarter of 2022 is expected to see a "10-40% hike" in premiums. But despite the hike, Uppal expects growth in life insurance business due to pent-up demand.

Group term protection plans have fared relatively better this year; while retail protection policies with higher sum assured are facing severe supply-side issues, Uppal said.

The November 2021 report by the India Brand Equity Foundation estimates the life insurance industry in India to grow 12-15% annually over the next three to five years.

Still, for retail policies with a high sum assured of over a crore rupees and group term protection products, insurers and reinsurers have been cautious, said Radhkrishnan. And while it seemed like the market was opening up post-Diwali, he said reinsurers are again being conservative due to the Omicron threat.

(Corrects an earlier version that misstated designations of Abhishek Poddar and Sanjay Radhakrishnan.)