Around the latter half of 2019 in China, a novel virus - SARS CoV-2 was identified. This virus belonged to the family of coronaviruses and was capable of causing severe respiratory distress in affected individuals. The disease was formally given the name Covid-19 and was assumed to be transmissible through the air.
Since it is assumed to be transmitted through the air, the virus started to spread to other parts of China and then finally to other countries as well. In a bid to contain the spread, many countries including India imposed nationwide lockdowns that cut off economic activity completely for days on end. The lockdowns spared no industry and impacted almost every single one of them.
Unfortunately, the insurance industry was also one among them. Here’s an in-depth overview of how the insurance industry in India fared.
Impact on health insurance 
The health insurance industry is still in the nascent stage in India. A major portion of the Indian populace still remains uninsured and underinsured with regards to health insurance.
According to a report by PwC non-life insurance corporate renewals, which includes health insurance, declined by around 15% during the months of March and April 2020. This was the time when Covid-19 started to ravage countries such as India and in response to the growing spread, a nationwide lockdown was also announced.
Although the health insurance industry faced a major decline during the initial phase of the pandemic, the industry is likely to witness an increase in demand in the coming years. An overall increase in the awareness for health insurance and the introduction of standardized coronavirus-specific health insurance policies such as Corona Kavach and Corona Rakshak are likely to be the drivers of demand in the near future.
Impact on life insurance 
On the outset, the life insurance industry seems to have fared better than health insurance. With products like a pure term life insurance policy offering individuals substantial sum assured amounts for relatively lower premiums, the demand for the same has been on a rise ever since the pandemic hit Indian shores. The report from PwC also echoes the same sentiment.
In fact, the data from life insurance providers paint a good picture as well. Compared to the previous year (FY20), the life insurance industry in India has witnessed massive growth in New Business Premium (NBP) by about 7.5% in FY21.
At the start of the pandemic in March 2020, the NBP of life insurance providers declined by as much as 32% owing to many factors such as the ever-growing number of active Covid-19 cases and nationwide lockdowns. The decline was huge and hit the entire industry significantly. However, within just a span of a year, the NBP went up by 70% for the month of March 2021.
This growth of the life insurance industry is likely to continue in the following years as well, driven by pure term plans, low rates of premiums, and an overall increase in awareness. And while there is no COVID-19 insurance as such, regular life insurance plans cover coronavirus-related deaths too. This is another factor in favour of the industry.
What can the industry do?
Both the health and the life insurance industries are currently already in a good position. As the economy gets back on track, the insurance industry is also likely to continue with its good performance. That said, there are several challenges in front of the industry that it needs to address. Here’s a quick look at what the industry can do –
1. Increase focus on digitization
Due to strict social distancing norms and the general preference of people to stay away from physical branches, the industry should direct its focus towards providing all of its services through the digital mode.
2. Provide proactive customer support
The insurance industry must step up its efforts to connect with their customers in a more proactive manner digitally.
3. Introduce innovative customer-focused products
The industry should work towards providing its customers with products that can be tailor-made according to their needs and requirements.
4. Ensure faster claim settlements
With the transition to digital, the industry should also focus on enhancing the claim settlement process and make it as easy as possible. This would not only ensure increased efficiency, but also provide customers with faster pay-outs.
The impact of Covid-19 on the insurance industry is clear. Although it initially derailed the industry progress, it has also led to a spur in demand for insurance products. And though there are no specific COVID insurance plans, life insurance plans in general cover COVID-19 related deaths too. This has resulted in more people becoming interested in life insurance. Buoyed by the positive sentiment towards insurance, the industry is likely to further intensify its efforts in the near future to increase insurance penetration in India.