The life insurance industry has also been reporting claims to the ministry and so far has reported 100 death claims of 6,088 people who died of coronavirus in India — which is just 2% of total deaths. This has led to a debate between IRDAI and insurers that life insurance in India could be under-penetrated in comparison to health; and whether public policy in the era of Coronavirus has to be reframed to ensure adequate financial protection in case of the loss of the primary breadwinner of the family.
So far, insurance penetration is measured as premium collected as a percentage of GDP – under which metrix life insurance penetration as of 2019 is at 4.6% and non-life penetration 2.74%. As Covid-19 cases are across income groups and geographies in India, a debate has arisen if number of lives or insurance per population density would be a better metrix – even with the difficulty of double or triple counting of those individuals with multiple policies.
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Health insurers said, today Indians are more likely to be covered under a state health insurance scheme or a national health insurance scheme like Ayushman Bharat, employers’ insurance or private insurance — compared to life, which is still a largely push product for tax savings, investment, etc.
But, insurance officials also said that more claims could come under life insurance and the claims percentage might go up in the coming months. “It has been our experience that during natural disasters, the family might have other immediate concerns. They’d be dealing with extreme grief and it would take them time to sort out the papers. Also, if the person died of Covid-19, then it is likely the family is under quarantine and unable to file for claims … so we could see more trickling in – in the coming months,” said an IRDAI official.
But, be it health or life a claims experience between 2-4% shows the severe underpentration of insurance, said officials. And the regulator is intending to take steps to push insurers harder – and highlight the need for financial protection in a pandemic.