According to the Times of India, Munich Re has revised its terms for supporting the reinsurance programs of insurance companies.
The publication stated that Munich Re has also proposed to raise its rates by as much as 50%. The increase wouldn’t het fully reflected in term insurance premium as only a portion of the risk is reinsured.
Alongside reinsurance rates, Indian insurers price policies are based on the industry’s experience in respect of mortality.
Abhay Tewari, MD & CEO, Star Union Dai-ichi Life Insurance said: “Insurers have been pricing their term policies on the back of reinsurance support. Even with the increase in rates, the premiums are lower than what the rates would have been if they were based on mortality rates for the general insured population.
“Companies have been pricing high-value policies aggressively with the expectation that the experience in this category would be better than the general segment.”
He added that as insurers expand, their mortality experience tends towards the mortality rates for the general population. Moreover, the Rs 1-crore policy, which was considered high value a decade ago, is now very common.
The reinsurer had already tightened medical underwriting requirements in light of COVID-19, and now more proposals are being subject to pre-medical.
Insurance companies have also put in place a cooling period for those who have recovered from the virus.
