It was when COVID-19 virus started spreading in India, the insurance regulator IRDAI had a discussion with life insurance companies regarding the launch of COVID-specific products. But the discussion halted after realising the fact that all life insurance products cover the pandemic deaths in their products. "When we thought of having a COVID-specific product, we had a discussion with the regulator. Finally, we decided that it didn't make sense to launch a specific product as coronavirus is already covered in all life insurance products. Source of the death is not an issue in the life insurance products sold in India," said Tarun Chugh MD & CEO, Bajaj Allianz Life Insurance.
The life insurance industry has witnessed a degrowth of 45 per cent in April. Usually, March is a big month for the industry and April-May are not so significant. "After the lockdown, 95 per cent of the product sale is happening digitally and the rest we get from aggregators. The digital sale has increased by seven-eight times during the lockdown. The ticket size has fallen, but the number of products sold has been increased. People are committing lesser amount for insurance as there has been an increasing tendency to keep cash," Chugh said. Bajaj Allianz witnessed a flat growth in the lockdown.
Chugh said that the demand for the traditional term insurance is rising after the pandemic started spreading across the world. If 45-50 per cent customers preferred traditional plans earlier, it has increased to 65-70 per cent right now. The demand for wealth products, which are deployed in government securities, bonds and stock market, has fallen, he added.
"We are in uncertain situation. Normally, we plan for the full financial year in March. But this year, it doesn't make sense to put a plan. We reopened 300 of the 600 branches of Bajaj Allianz in green and orange zones. About 2,000 customers come to the branches everyday nowadays. In fact, we are using the time to transition our business model. We are ensuring that we adopt digital processes and the customer is getting used to it. We will not be depending on the face-to-face sale so much. We are training our advisors to get to selling and servicing through online. We will have to co-exist with COVID-19. In this context, you cannot have the plan for the year. You should have the plan for the month or the quarter," he said.
The insurance business is seen to be impacted in the first quarter of FY20 due to the coronavirus pandemic. However, rating agency CARE Ratings said that insurance space will record strong performance, especially digitally going forward. The data given by CARE suggests that overall life insurance industry recorded a first-year premium income of Rs 2.6 lakh crore during FY20 against Rs 1.1 lakh crore during FY10. The CAGR growth is 8.2 per cent between FY10 and FY20.
CARE pointed out that private players continue to gain market share in individual insurance business from the government-owned LIC. Market share of LIC has declined compared to the private players in April 2020 as well. LIC has lost share from 53.3 per cent in April 2019 to 44.4 per cent in April 2020. Private life insurance companies have gained a 7 per cent share in sum assured as compared to LIC which gained only 0.5 per cent share. CARE data reveals that the market share of private insurers in total sum assured for individual first-year premium has been improved to 67.7 per cent in FY20 as compared to 61.9 per cent in FY18, while LIC's share declined to 32.4 per cent in FY20 compared to 38.1 per cent in FY18. CARE concluded that the insurance business is expected to witness muted growth in the first quarter of FY21 due to COVID-19 and subsequently extended lockdown, however, protection plans could witness an increase due to rising awareness and the online channel could see robust growth.
The regulator IRDAI, in April 2020, released life insurance business numbers where it was observed that private life insurers such as Aditya Birla Sun Life, Aviva Life, Bajaj Allianz Life, Edelweiss Tokio Life and Tata AIA Life have reported growth in new premiums in April 2020. In terms of the number of new policies/schemes sold, there was a decrease of 67.6 per cent year-on-year to 416,200 during the same period.
Bajaj Allianz Life has leveraged their tech infrastructure and enabled all business functions to work smoothly. The customers connect with the company for most of their policy services through digital touch points, such as WhatsApp, BOING - a chat bot on the insurer's website, life assist mobile app and customer portal.