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It is an uncertain time for the life insurance sector amidst the ongoing second wave of the Covid-19 pandemic and forecast of a third wave, said Tarun Chugh, Managing Director and CEO, Bajaj Allianz Life Insurance. In an interview with BusinessLine, he said that while the industry is expecting higher claims, it is not much of a concern. Excerpts:

It is uncertain at this point of time. Normally, when we start the first quarter, we are clear about the strategy, but it is an uncertain time this year given how things have panned out in May. It is very difficult to forecast anything. This year, we are going more with scenario planning and not a forecast of the year as we don’t know when this wave will end and then there is a forecast of a third wave. The only thing we are certain about is that the usage of digital will keep increasing and we expect customers to still get life insurance in their portfolio because of the desire to cover risks.

In respect to Covid claims, Bajaj Allianz Life has settled over 1,300 claims amounting to more than ₹74 crore. We are sensing that there will be higher mortality and impact on some claims. But last year too, we didn’t get the claims very early. It takes families some time to recover. But it is not a concern for the industry. All companies are comfortably placed in reserves. This year’s number will take a hit but nothing beyond that.

Our first focus area is employee safety. We will be able to launch an employee vaccination programme soon. We are also focussing on growing our digital assets. We are also focussing on keeping our branches open and about 80 per cent of our branches are still open but with very limited staff.

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What are the products that are seeing demand?

Unlike last year, all products are in demand unlike this year. May has not been a great month due to the lockdown. However, the uptake of term and guaranteed products continues. This time, since markets are doing well, ULIPs are also popular. The Budget proposal has not impacted ULIPs too much. We have seen an uptick in ULIPs less than Rs 2.5 lakh and some dip in above Rs 2.5 lakh but not significant. There is just a three to four per cent shift. The number of customers buying ULIPs less than Rs 2.5 lakh has gone up.

Sales of ULIPs are likely to start picking up: Tarun Chugh

How have life insures made underwriting norms tougher post Covid?

It has been a tough year for claims and underwriting has become stricter. For example, we have added a Covid questionnaire. But if somebody goes for their medicals and submits documents properly and fills up the Covid questionnaire, there is not so much of an issue. For people who have had Covid, we tell them to wait for 90 days and then apply for life insurance.

Is another round of hike in term insurance rates expected?

In the last 15 to 20 year, rates for term insurance have come down significantly. The industry had hit the bottom in terms of pricing and a correction was due and Covid became the right time for the price hike. I won’t be surprised if there is a slight price hike now as well but we will have to wait and watch. The increase will vary from insurer to insurer.

Are you launching any new products?

We recently launched our pension plan and that has done very well, particularly as in pensions, we don’t need to get any medicals done and the age group of above 45 has a lot more money. This has surprised us a lot in its uptake and about 12 per cent to 13 per cent of our entire business is coming from pensions.

Any plans to use the higher foreign direct investment cap for the insurance sector?

It is more of a shareholder matter and there has not been any move in that direction. We are fully capitalised, we have the highest amount of capital and reserves. There is no requirement of money.