Term insurance premiums set to surge

Term insurance policy premiums are set to rise by 25 to 30 per cent with Munich Re, the largest reinsurer for the Indian insurance market, increasing its rates for underwriting portfolios of pure protection plans by up to 40 per cent. The new rates will come into effect from December.

This is the second time reinsurance rates have been hiked in 2021. In March, the rates were raised by 4-5 per cent. In June last year, there was a steep hike of 20-25 per cent.

Munich Re has been studying the long-term mortality trends for the past few years. Apart from increasing reinsurance rates, the German multinational rates, the German multinational insurance company has also tightened underwriting standards.

Insurance industry insiders said experience from term policies that were sold in the past without proper medical check-up had not been satisfactory.

In addition, there was a rise in mortality rates due to the Covid-19 pandemic, particularly after the second wave. The increase in reinsurance rates will be passed on to customers. The extent of premium hike will, however, vary from one insurer to another.

“Most insurance companies will have to pass on the rate hike. They will not be able to absorb a rate hike of 30-40 per cent. Some insurers may postpone it for a few months, but it will always come to customers, sooner or later”,

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