Term insurance premium rates are set to rise by up to 40 per cent after re-insurers tightened underwriting norms in the wake of Covid-19.
While Munich Re has tightened the screws on underwriting, GIC Re hiked rates earlier this year.
“GIC, hiked rates in March and they came into effect from April. While till now we have not passed on the increased rates to customers, now we feel the need to raise the tariff on term plans taking into consideration our profitability. We will be increasing our rates on the term side this calendar year in the range of 1520 per cent, depending on age, sum assured and quality of life of the individual,” said Rushabh Gandhi, Deputy CEO, IndiaFirst Life Insurance.
Vighnesh Shahane, MD and CEO, Ageas Federal Life Insurance, pointed out that over the last 18 months of the pandemic, and especially during the second wave, re-insurers were badly hit by the surge in claims, and there has been a lot of pressure on them to hike rates.
“We estimate that term plan prices are likely to rise by 20-40 per cent across the board. However, the exact rise will vary from company to company, and from re-insurer to re-insurer. It will also depend on the Claims were up 2-3 times over the first wave amount of business the company does with the re-insurer,” he said.