Life insurers take cover in loans to avert surrenders, improve persistency

With lack of funds being the main reason for people not renewing their policy, insurance firms are providing loans and using tech to find such customers

Of the many parameters to gauge a life insurance company’s performance is persistency, especially 61st month persistency. In insurance parlance, this means policies that are retained after five years. This is one of the most important metrics that drives a firm’s profitability.

So far, Indian life insurers have struggled to boost their persistency levels with even the top four private life insurers’ 61st month persistency hovering around the 50 -55 per cent mark. This means of every 100 policies issued by the life insurers, only half are renewed after five years.

A low persistency coupled with extremely low penetration makes