Life Insurance Corporation (LIC) has disclosed that the total number of individual and group policies has witnessed a decline due to the COVID-19 pandemic.
“Our total number of individual policies and group policies (in terms of lives insured) issued in India decreased by 16.76 percent from 75 million for fiscal 2019 to 62.43 million for fiscal 2020 and further decreased by 15.84 percent to 52.54 million for fiscal 2021,” according to the draft red herring prospectus (DRHP) filed by LIC.
The pandemic and the related lockdowns adversely affected sales of individual policies primarily in the fourth quarter of the financial year 2019-20, down 22.66 percent to 6.35 million policies from 8.21 million policies in the year-ago period, it said.
At the same time, the impact was visible in the first quarter of fiscal 2021 and fiscal 2022 as it came down from 46.20 percent to 1.91 million policies to 34.93 percent to 2.31 million policies.
LIC sold 3.55 million policies in the first quarter of fiscal 2019, it said.
In a bid to beat the lockdown, LIC commenced the issuance of electronic policies from 2020.
In the wake of the emerging COVID-19 situation and in view of adopting digital means of doing business in the interests of policyholders and other stakeholders, IRDAI allowed an exemption from the requirement to issue the policy document and copy of the proposal form in physical format, it said.
The persistency ratios decreased as of March 31, 2020. Persistency ratio is the proportion of business that is retained from the business underwritten and is measured in terms of the number of policies and premiums underwritten.
The insurance claims by death increased during the pandemic, it said.
It added that for the financial year 2019, fiscal 2020, fiscal 2021, and the six months ended September 30, 2021, insurance claims by death in benefits paid (net) were Rs 17,128.84 crore, Rs 17,527.98 crore, Rs 23,926.89 crore, and Rs 21,734.15 million, respectively, on a consolidated basis, which was 6.79 percent, 6.86 percent, 8.29 percent and 14.47 percent of total insurance claims, respectively.
“The extent to which the pandemic will continue to affect our business, financial condition, results of operations and cash flows in the future will depend on future developments, which are uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic,” it said.