Pressure on insurers to increase provision for Covid-19 claims

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MUMBAI: The second wave of the Corona epidemic has created a major problem for insurers and has resulted in large-scale provisioning. ICICI Prudential Life Insurance and HDFC Life Insurance, two of the largest private sector insurers, have made substantial provisions for Covid-18 claims.

HDFC Life Insurance Company has made an additional provision of Rs 200 crore in its balance sheet in case of possible mortality. This reserve exceeds the calculation of policy level liabilities subject to IRDA regulations in force. That is more than Rs 15 crore more than the provisions. The company's solvency position remained stable at 206 per cent in the June quarter, while the structural minimum requirement was 120 per cent.

According to a report, HDFC Life's peak claim during the second wave of the Corona epidemic was about 2-3 times the peak claim volume of the first wave.

So, ICICI Prudential Life Insurance Company has made a net loss of Rs 12.5 crore in the June quarter due to claims and provisions of Covid-17. The company had posted a net profit of Rs 4.5 crore in the same quarter a year ago.

Following the Covid-12 claim, the insurer has made a provision of Rs 4.5 crore for such claims during the quarter ended June. The insurer said that at the end of the June quarter, there were claims for Covid-12 worth Rs 1,117 crore. So the reinsurance claims were worth Rs 500 crore.

According to media reports, there is a huge discrepancy between the actual death and insurance claim figures. According to the Reserve Bank's Financial Stability Report, life insurers have received Rs 12 crore worth of Covid-17 death claims during FY21.


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