India, traditionally, has been an underinsured country with an insurance density (premium per capita USD) of 74 for FY19. With any crisis, there is always a rush to increase one’s life cover. COVID-19 was no exception either, with consumer confidence in the stock market hitting an all-time low when the market plunged 26%, more and more people turned their heads toward traditional life insurance policies. According to Swiss Re’s Sigma report on World Insurance, insurance contribution to GDP has risen to 4.2% in FY21 from 3.76% in FY20 while in India, 3.2% from 2.82%.
Impact of COVID on Life Insurance
Pure risk cover insurance like Term Insurance saw a significant boost in demand since this is largely an online market. In FY22, premiums from new businesses of life insurance companies in India stood at US$ 20.7 billion and renewable premiums stood at US$ 53.7 billion. In the first half of FY22, the life insurance industry recorded a growth rate of 5.8% compared with 0.8% in the same period last year. In September 2021, new premiums of life insurers registered 22.2% growth in September 2021, up from 2.9% in September 2020.
This is mainly because long-term guarantees attracted many consumers and the plummeting interest rates of FDs and other guaranteed savings instruments, compelled consumers to explore other safer options like Life Insurance.
This was quite evident from the fact that 44.3% of the total premium collected by life insurers in 2020 was from new policies. The life insurance industry recorded a premium income of Rs 6,28,731 crore during 2020-21, as against Rs 5,72,910 crore in the previous financial year, registering a growth of 9.74 percent. While renewal premium accounted for 55.7 percent of the total premium received by the life insurers, new business contributed the remaining 44.3 percent,” stated the survey.
This is how COVID helped the Insurance industry boom in a short span of time. People are now much more aware and know the importance of Life Insurance. So if you need any further guidance, our trained insurance advisors at MyInsuranceClub will assist you with all your queries. You can Compare Term Insurance Online at myinsuranceclub.com.
