In its latest annual report, IDBI Federal Life Insurance has said that it expects significant impact of COVID-19 pandemic on life insurance industry in the current financial year, as erosion in disposable income and possible delay in people’s financial decisions will hurt new business premium.
The life insurance industry had witnessed growth in most part of 2019-20 till the COVID-19 pandemic struck in March 2020, the company said in its annual report.
By the end of FY19- 20, the life insurance industry had witnessed a growth of 3.9% (6.5% growth in FY18-19) in individual new business and 34.5% (14.9% growth in FY18-19) in group new business.
But, life insurance sector witnessed a decline in premium of 32.6% and 27.9% in April and May, respectively. In June quarter, the life insurance industry’s growth fell 18.6% compared to last year in business premium collection.
All the distribution channels are affected by total or partial lockdown and also social distancing norms which are expected to continue for a longer period, it added. The adverse effect will also be observed on renewal premium, said the IDBI Federal.
However, the insurer believes that due to the COVID-19 pandemic Indian population will value life insurance even more.
In the long-term, the industry is expected to gain with increased demand for protection plans due to this pandemic.
The company said that digital platforms are a big part of its new strategy; the pandemic and the lockdown have given a huge push to digitalisation and the company intends to build on this advantage.