Life Insurers Continue To Grow Despite Covid-19 Claims
While a spike in claims dented profits of life insurers, they continue to grow.
While Covid-19 disrupted almost all businesses, life insurance companies suffered a direct impact. A spike in death claims due to a deadlier second wave of the pandemic dented the profits of insurers in the first half of ongoing fiscal 2021-22. Yet, they continue to grow.
Net profit tumbled 56% over a year earlier for ICICI Prudential Life Insurance Co., dropped 32% for SBI Life Insurance Co. and fell 26% for HDFC Life Insurance Co. in the first half ended September.
But the value of new business for the three companies, which together account for 58% of the private market share, rose over a year earlier to above pre-pandemic levels of FY19. The metric is a measure of profitability of new policies.
The companies also saw VNB margins expand over the corresponding period last year. However, HDFC Life’s margin is still below pre-pandemic level.
The companies operating cost ratio, or what a company spends to generate every Re 1 of operating income, rose over a year earlier, with SBI Life reporting the lowest reading.
Solvency ratios fell in the first half but they are well above the statutory requirement of 150%.
The 13th-month persistency of all insurers improved year-on-year. HDFC Life’s 61st month persistency improved, ICICI Pru’s remained unchanged, while SBI Life's witnessed a decline.
Sale of retail protection was impacted due to supply-side constraints, inability to conduct medical and tightening of underwriting standards amid rising claims, said Prithvish Uppal of AMSEC.
HDFC Life and ICICI Pru, however, increased the sale of group protection policies.
ICICI Pru registered a growth in credit protect and group term insurance.
SBI Life benefitted from unit-linked insurance policies and non-participating policies, according to Uppal. They also increased their share in retail protection.
During the half-year ended September 2021, HDFC Life was the worst affected and incurred claims of Rs 2,466 crore followed by SBI Life of Rs 1,340 crore and ICICI Prudential to the extent of Rs 862 crore.