About 1.5 million lives have been insured within a month under the two Covid-19 specific insurance policies, Corona Kavach and Corona Rakshak, according to Subhash Khuntia, chairman of the Insurance Regulatory and Development Authority of India (IRDAI).
âMore than 15 lakh lives have already been covered under these two products within a month. That shows what is the demand and it is important that we cater to this demand,â Khuntia said, during a conference hosted by the Federation of Indian Chambers of Commerce & Industry on Thursday.
The regulator was compelled to come out with the standardised Covid-19 policies after seeing no such initiative from the industry, Khuntia said, adding that some insurers felt these products were competing with their own policies.
âWhy is it important that your other products should sell more than the standard product? After all you have to do business,â he said.
MR Kumar, chairman, Life Insurance Corporation of India, who was part of the online panel, called for leniency in adherence to the solvency ratio for insurers during Covid crisis.
âI believe this calls for a fresh and flexible approach to solvency levels in testing times to let insurers leverage their precious and scarce capital to the best advantage of business and customers,â Kumar said.
Insurers are required to maintain a solvency ratio of 150% at all times. It is the amount of Available Solvency Margin (ASM) in relation to the amount of Required Solvency Margin (RSM).
The ASM is the value of the companyâs assets over liabilities, and RSM is based on net premiums and defined as per IRDAI guidelines.
According to Khuntia, the customerâs trust was dependent upon how financially sound the insurer was. The regulator had advised insurers to conserve capital and maintain adequate liquidity while reducing costs. âI think if it is handled efficiently, all of this will be possible,â he said.
Khuntia also brought up the issue of Indiaâs low insurance penetration compared to the global average. Total premiums collected was only 3.76% of gross domestic product in India as against the global average of a little over 7%.
He urged insurers to design micro insurance products to cater to rural and tier two, three and four cities anticipating demand as Covid spreads through the hinterland.
He also suggested job and income loss policies and focusing on group insurance policies for small and medium enterprises that would be restarting operations.
âThese opportunities we are losing because we are too conservative,â Khuntia said.