Wednesday, 23 January 2019

Health cover may get dearer, life insurance cheaper – Times of India

MUMBAI: Buying life insurance is likely to get more affordable, while health insurance could get dearer. Improved life expectancy among the insured population will keep the cost of life cover down, but the cost of health covers is expected to move the other way because of various court directives asking insurers to cut out exclusions.
According to Sanket Kawatkar, head of life insurance at actuarial consulting firm Milliman, there is an improvement of around 10% in the new mortality table, which is prepared by the Institutes of Actuaries of India. Insurance companies base their pricing on these mortality tables, which give the life expectancy starting from infancy for every year.
According to Kawatkar, insurers may choose not to reflect the new tables because prices are already the lowest in the region. “Term insurance rates are cheaper in India compared to Australia. Although the life expectancy is higher there,” said Kawatkar. He added that one of the reasons why insurers can provide term insurance at low rates is because global reinsurers are supporting them.
Global reinsurers are bullish on India as it is seen as the market with the highest latent demand. “The ‘protection gap’ in India is estimated at $9 trillion, making it one of the biggest markets in terms of potential,” said Heerak Basu, consulting actuary with Milliman. The term ‘protection gap’ as defined by Swiss Re is “the shortfall in the amount of cover necessary to maintain the current living standards of dependents”. Basu added that the use of technology for shortening and streamlining the sales and underwriting process is bringing down the cost of life insurance operations.
While life insurance premiums are coming down, health insurance — the faster growing business for the industry — is expected to see an increase in rates. According to Lalit Baveja, senior health management consultant at Milliman, the scope of health insurance in India is set to increase due to court interventions for covering hitherto excluded illnesses like HIV, mental ailments and congenital defects. “Insurance companies will have to rework all their existing products to address these exclusions and file them with the insurance regulator with revised pricing,” said Baveja. Source:

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