Covid second wave has hit the insurance industry. The general insurance companies have slipped to the red mark while there are pending claims piling up for health insurers.
Mumbai: COVID-19 enormously hurt India’s insurance sector, with most of the general insurance companies slipping to red, the profitability of life insurance companies shrinking, and health insurers unable to settle the ever-growing claims.
The underwriting losses of the general insurance industry increased by 6.27% year-on-year (YoY) in FY20 to Rs 23,720 crore, according to the IRDAI Annual Report 2019-20.
The public sector insurers’ underwriting losses increased to Rs 18,741 crore from Rs 18,533 crore in the year-ago period, while the private sector insurers reported a 26.2% YoY increase in underwriting losses to Rs 3,647 crore in FY20.
According to the report, the underwriting losses of the standalone health insurers also widened 14.6% to Rs 651 crore compared to Rs 568 crore in the year-ago period.
The general and health insurers slipped to a loss of Rs 1494 crore in the last fiscal compared to a profit of Rs 683 crore in the year-ago period.
According to the report, nine of the 21 private sector general insurance companies were in red, while three of the four government-owned general insurance firms booked losses in the last fiscal.
The losses forced the public sector general insurance companies, standalone health insurance companies, and specialized insurance companies not to pay any dividends during FY20.
Comparatively, life insurance companies were profitable in the last fiscal, but with a lower margin as rising claims and enhanced provisions for COVID-19 impacted their bottom line.
Life insurers also face the risk of swinging to red as the second wave of COVID-19 is hitting India hard with over four lakh daily news cases and about 4000 people dying every day, taking total infections past 21 million and the overall death toll to 230,168, according to Health Ministry data.
As of May 5, 2021, the General Insurance Companies in India received 11.39 lakh cases with claims worth Rs 15,988 crore. The companies settled 9.51 lakh cases with claims worth Rs 9141 crore.
It leaves 1.87 lakh pending cases with unsettled claims of Rs 6848 crore. The general insurance companies have rejected or withdrawn 47898 cases.
When asked for comments, M N Sharma, secretary-general, General Insurance Council, told ABP News, “Accounts have to be closed yet. Overall, insurance companies are incurring losses, and the claims ratio has gone up substantially. The number of cases pending appears to be higher because, along with hospitalization, we pay the further treatment costs up to 60 days from discharge from the hospital. So, until the completion of 60 days, the claim cannot be closed.