Insurers under pressure from reinsurers to raise term life insurance premiums

Term life insurance premiums are likely to increase as reinsurers have revised their premiums upward because the number of claims has increased over the past year.

The rise in reinsurance premium is primarily due to an increase in mortality rate during the COVID-19 pandemic, reported LiveMint. Thus, with the increase in the reinsurers' premium rates, insurers may raise the premium of term life insurance policy for buyers.

According to the earlier reports, premiums for term insurance plans were expected to rise by up to 40% in 2021 as insurers take into consideration the emerging risks.

Ms Sonia Notani, CMO, IndiaFirst Life Insurance, said that in the last 12 months, the pandemic has had an impact and the number of deaths has gone up globally. Reinsurers have a well-spread portfolio across geographies, enabling them to cushion the impact of any calamities or large incidents causing death. “However, this is a unique situation where the impact of the pandemic is global. This has impacted the mortality assumptions made by the reinsurers, causing them to re-assess the risk and modify assumptions," said Notani.

Mr Bharat Kalsi, CFO of Bajaj Allianz Life, said, "Across the life insurance industry, term plan premiums are being revised due to several reasons, one of them being reinsurers revising their prices based on the actual mortality experience vis-a-vis what was expected."

Source: Asia Insurance Review