The long gestation period makes COVID-19 a highly infectious disease, which puts even healthy applicants of insurance policies at high risk of getting infected after issuance of a new policy.
With the spread of Novel Coronavirus COVID-19 continuing unabated even after the nationwide lockdown got over, premium collection of life insurance companies has taken a big hit, as insurers have got reluctant to take higher risks because deaths due to COVID-19 are covered under the life insurance policies despite its global pandemic status.
Moreover, the long gestation period makes COVID-19 a highly infectious disease, which puts even healthy applicants of insurance policies at high risk of getting infected after issuance of a new policy.
While the insurers can’t deny the existing obligations under old policies, issuance of new life insurance policies, under the shadow of COVID-19, would assume higher risk compared to normal period.
As a result, the individual weighted received premium (WRP) of the Life Insurance Industry posted a decline of 19.8 per cent YoY in May’20 (v/s -43.7 per cent YoY in Apr’20) mainly due to the COVID-19 outbreak, which continues to weigh down business performance.
WRP, which is a measure of premium received on individual products and calculated as the sum of the first-year premium on renewal policies and 10 per cent of single premium policies, has posted a huge decline of 32.1 per cent in May’20 (v/s -40.3 per cent YoY in Apr’20) for private life insurers.
However, public sector insurer Life Insurance Corporation (LIC) of India reported much lower decline of 3.1 per cent YoY (v/s -47.9 per cent YoY in Apr’20) in individual WRP, while private sector biggies take a big hit – with HDFC Life reporting 33 per cent YoY decline, SBI Life 46 per cent, IPRU Life 52 per cent and Max Life 20 per cent.
This is because the LIC of India has taken precautionary measures and instead of declining proposals, the Corporation has decided to go slow in issuing new policies and has issued a separate questionnaire to assess the proposer’s/ the life to be assured’s exposure to the virus.
The questionnaire seeks travel details of the proposers/the life to be assureds, their family members as well as of co-habitants.
The questionnaire regarding foreign travel includes questions on countries visited after November 15, 2019, duration of stay, date of return to India as well as reports on screening/ COVID-19 test/ isolation/ quarantine on arrival at airport/sea port etc. It also seeks details of the proposers’/ the life to be assureds’ plans of foreign visits within next one year.
On travel from one state to another within India by rail/road/air after May 1, 2020, the questionnaire seeks details of state visited, date of travel and whether screened, isolated or quarantined etc.
The questionnaire also includes questions like – whether the proposer/life assured is a frontline worker engaged in the fight against Covid-19, whether the life to be assured ever served or is serving a notice of quarantine, tested for and/or have symptoms of the viral infection.
In case diagnosed with Covid-19, the questionnaire asks for details like – date of diagnosis, name of hospital, where the life to be assured was admitted and treated, date of discharge after fully cured etc. In such a case, the life to be assured needs to submit the discharge summary and investigation reports as well.