Vivek Law: Hello and welcome to this very special series Finance Made Simple. Joining me today is Akshay Dhand who's the appointed actuary at Canara HSBC Life Insurance. Thanks very much Akshay pleasure talking to you.
Akshay: Thank you, Vivek.
Vivek Law: Akshay, we keep reading reports about insurance premiums going up because of the pandemic. You are the right person to answer that as the appointed actuary. How do you see premiums moving from here on? On the one hand we know for a fact that premium rates are fairly low in India.
Akshay Dhand: Yeah.
Vivek Law: There are catch-up already expected is COVID. The reason this catch-up will happen how do you predict premium rates going from here on say for example over the next one year?
Akshay Dhand: Okay. So, basically I'll split the question into two parts. What is the general trend in premiums as far as insurance is concerned and then what has COVID done to it. So, if you look at the general trend in insurance premiums - I'll cover both savings and non protection elements separately. On the saving side what's happening is as you notice that the interest rates have been falling over there and I don't see them rising anytime soon. And when interest rates fall in the economy generally for the same amount of benefit in an insurance product also the insurance company will have to unfortunately charge a higher cover higher premium. So, there would be some impact of falling interest rates on the premium in case of savings traditional savings or guaranteed savings products are concerned. So, I see that happening at some stage during this coming year. When we look at the protection sites of what has happened over the last few years like you said the protection premiums in India had really gone down. The competition was fierce. There were a lot of players in the market vying for that space and it had really taken it had gone to a very low level. Now some course correction is happening and this was kind of bound to happen because when the premiums went down so low the protection went to the masses and when protection goes to masses obviously the mortality experience does just go a little worse or adverse. So, as a result of that, what's happening is - now there's a course correction and you will find term assurance premiums going up not because of COVID. This is purely because the fact that over the last few years the production market has become wider and wider. It has reached the masses and when it reaches that kind of segment, it is bound to increase a bit. So, that’s why the increase is happening. It's already happened in parts last year and it will continue to happen for this year as well. So, the other two aspects are happening besides COVID now. What COVID has done actually and initially we thought that the mortality cost of COVID is going to be fairly low but what we are noticing is that it is contributing somewhat more than what we initially thought it would contribute. So, I guess there will be some impact always. Not very significant, but there will certainly be some impact of COVID on life insurance premium because it has caused an upsurge in mortality. Not just because of COVID but because a lot of people after having contracted COVID and recovered from COVID are actually becoming more prone to their existing vulnerabilities. So, their probability of the mortality expected out of that population is somewhat increasing. So, as a result you will find some increase in mortality premiums at some stage over the coming year because of COVID as well. So, does that answer your question?
Vivek Law: Yes absolutely. And thank you very much Akshay for coming by and sharing your perspective with the viewers as always a pleasure talking to you. Thank you very much.
Akshay Dhand: Thank you so much.
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