Allow life insurers to sell pension-based health policies: HDFC Life chief

Regulators should allow the life insurance firms to sell pension and indemnity based health policies, as it will lead to greater penetration of insurance, HDFC Life chairman Deepak Parekh said

Regulators in India should allow the life insurance firms to sell pension and indemnity based health insurance policies, as it will lead to greater penetration of insurance in the country, HDFC Life chairman Deepak Parekh said on Monday.

Today, life insurers can only sell life insurance policies at their branches and through their employees. They cannot sell, for example, NPS under the National Pension System or health indemnity covers such as mediclaim, Parekh said while addressing the shareholders at the company's annual general meeting (AGM).

"Across the world, both pension and health cover are very much part of life insurance, as they protect people from longevity and morbidity risks.

"Hence, allowing life insurers to distribute products such as health indemnity, NPS would help improve the much-needed insurance reach across the country," he said.

An indemnity-based health cover reimburses the policyholder the cost of medical expenses.

Speaking about the fiscal ended March 2021, marred by the pandemic, he said HDFC Life insured close to 4 crore lives and settled over 2.9 lakh death claims in FY2020-21 despite operational challenges.

"That resulted in beneficiaries being paid over Rs 3,000 crore in total (during FY21)," he added.

He also informed that the company lost 17 employees and 38 financial consultants over the past 15 months.

However, Parekh said that India is at the cusp of recovery after being battered by the second wave of COVID-19.

The economy is expected to grow in the range of 8-10 per cent in financial year FY22 on a low base of FY21, he said, adding the resilience of HDFC Life's differentiated business model, supported by the diversified distribution network, marketing reaching innovation, customer focussed technology and the brand trust helped the company in soliciting its business.

"We ranked consistently among the top two companies in the private sector in terms of new business premium closing the year at Rs 21,110 crore with a market share 21.5 per cent.

We closed financial year 21 with an embedded value of Rs 26,617 crore and an operating return on embedded value of 18.5 per cent on account of higher volume, higher value of the new business (among others)," Parekh noted.

HDFC Life on Monday reported a 33 per cent decline in its net profit to Rs 302 crore in the first quarter ended June this fiscal, mainly due to the adverse impact of the coronavirus pandemic.

The insurer had posted a net profit of Rs 451 crore in the same quarter previous fiscal. The total premium during Q1 FY22, however, increased by 31 per cent to Rs 7,656 crore as against Rs 5,863 crore in the same period of FY21, HDFC Life said in a regulatory filing.

The insurer witnessed a 20 per cent growth in renewal premium in April-June of 2021-22.

"In the quarter gone by, we witnessed a steep rise in death claims with peak claims in wave two at around 3-4 times of the peak claim volumes in the first wave. We paid over 70,000 claims in Q1.

"The gross and net claims provided for amounted to Rs 1,598 crore and Rs 956 crore, respectively. It appears that claims on individual business have peaked in June and expect them to normalise in the coming months with more people getting vaccinated and a fall in the absolute number of infections," HDFC Life said on the impact of the pandemic on the business during the quarter.

HDFC Life said it has created Rs 700 crore of the excess mortality reserve. It has also provided for Rs 165 crore additional COVID-19 reserve for the current fiscal year.

The chairman said the company will enhance the reserve as and when any such need arises.

HDFC Life is resilient enough to absorb the impact of the pandemic, he added.