HDFC Life on Friday reported a 3.3 per cent year-on-year (YoY) rise in net profit to Rs 273.7 crore for the quarter ended December due to a decline in income from investment.
Its gross premium income remained healthy with a 27 per cent increase to Rs 12,255 crore, led by traction in renewal premium and new business premium. On an annualised premium equivalent basis, premiums increased by 20.4 per cent YoY to Rs 2576 crore.
A number of life insurance companies recently increased their premiums on the prodding of their reinsurance partner, Munich Re. HDFC Life has increased its term plan prices by 15–25 per cent and ICICI Prudential has increased it by 10 per cent.
“We should continue to expect pricing and underwriting norms to evolve over time in line with expanding geographic and demographic coverage. The recent increase in protection plan prices is a result of the above-mentioned factors and can be expected to be business as usual events from time to time to reflect the widening market,” said Vibha Padalkar, managing director and chief executive of HDFC Life.
Traditionally, term plan premiums in India were among the lowest in the world for a long period of time. But, since the pandemic started, term plan rates have gone up between 25 - 30 per cent and if the current increase by insurers is factored in, the increase in term plan rates will be anywhere between 50 - 60 per cent.
“…few years ago, the term plan prices were a lot higher and they fell about 30 – 40 per cent and people got used to low rates for quite some time. If we were to look at the prices in the last 7–8 years versus inflation, the term plan prices have still not caught up. We need to put it in the context of a basket of goods that an individual consumes and accepts that there is going to be inflation. Term insurance has gone into that basket of goods,” said Padalkar.
However, the increase in term plan price is unlikely to impact the demand for such products because the awareness has grown among consumers. “As awareness grows on the need to protect one’s family, we expect that the demand for protection products will continue to be robust in the years to come,” Padalkar said.