Life insurance premiums are set to increase in 2022 as large reinsurance companies are likely to raise charges that are likely to be passed on to customers.
Higher premiums may mean higher profitability for insurers but could also impact demand for policies at a time that awareness about insurance is at a peak.
Expectations are that premiums will rise between 20% and 40% as reinsurers will look to cover for increased losses due to higher claims.
Many companies have already applied to the Insurance Regulatory and Development Authority of India (IRDAI) seeking permission to hike charges while some are negotiating with global reinsurers to minimise the hikes. The hike in premiums is likely to impact both online and offline policies and will be the first time the online market will witness a shake-up in at least six years.
“The price increase has been talked about for six months and now looks inevitable. Higher claims due to Covid have hit reinsurers as a result of which prices have increased. We have already filed for an increase with the IRDAI on some plans and depending on the products the increase has either been implemented or to be shortly implemented,” said Vighnesh Shahane, CEO, Ageas Federal Life Insurance.