Insurers settled 15.87 lakh policies, paid Rs 45,817 crore in death claims

On the other hand, insurers shelled out a total of Rs 41,631 crore towards health insurance claims and death claims due to Covid during the year.

Life Insurance Corporation (LIC), India’s largest life insurer, paid out Rs 28,408 crore involving 13.49 lakh policies towards death claims in 2021-22 as against Rs 18,295 crore in the previous year. ICICI Lombard settled claims worth Rs 2,977 crore and HDFC Life Rs 2,608 crore, among private players, during the year.

Interestingly, life insurers repudiated life claims worth Rs 448 crore involving 1,550 claims due to Covid in FY2022.

Out of Rs 41,631 crore claims involving Covid, Rs 24,362 crore was paid by general and health insurance companies towards Covid hospital treatment claims and Rs 17,269 crore was paid by life insurers towards Covid death claims to the families.

There were 530,695 deaths due to Covid in India so far, according to the Ministry of Health data. However, the IRDAI report said 2.26 lakh death claims were settled by life insurers during 2021-22, indicating that around 3.14 lakh people who died due to Covid did not get any insurance benefit.

Health and general insurers settled 26.54 lakh claims even as hospital expenses shot up in the wake of Covid pandemic. Health claims worth Rs 7,223 crore were disallowed by insurers during the year, IRDAI said.

Meanwhile, LIC’s overall claim settlement ratio was higher at 96.02 per cent as against 94.13 per cent of private players, according to the IRDAI report.

Covid-19 pandemic hit the general insurance industry’s performance in FY2022. With a record underwriting loss of Rs 28,500 crore in FY 2021-22, the Rs 2.23 lakh crore industry with 31 players has been pushed into red, leading to a hike in premium in many segments. With the Covid pandemic prompting people to go for health insurance, premium collection under this route has gone up by 22.54 per cent to Rs 58,176 crore, making it the largest segment in the industry.

The loss occurred despite insurers reporting a higher investment income during the year. The industry reported underwriting losses of around Rs 19,400 crore in the previous year. “The high underwriting loss has led to a hike in premium by 5-10 per cent in many segments, especially health in the last six months,” said an insurance official.

The IRDAI has already proposed issuing composite licenses, which is a common license to operate in both the life and general insurance markets. This means a life insurer can enter the non-life segment like motor or heath business, and vice versa, which is banned as of now. It’s also in favour of reducing the minimum capital requirement from Rs 100 crore in order to enable the entry of smaller players, like micro insurers, to serve niche markets.

The government has decided to embark upon a comprehensive amendment of the legislative framework governing the sector – Insurance Act 1938 and IRDA Act 1999 – which is expected to take the reform agenda in the segment to the next level, facilitating the entry of more players, reduction in the capital requirement and issue of composite licences. While insurance penetration in India was 3.2 per cent in the life sector and one per cent in non-life, the figures for the US were 2.6 per cent and 9.1 per cent respectively.