The Indian insurance business is generally well prepared for major loss events, such as pandemics; nevertheless, the financial ramifications will take time to unfold and will be made clear by insurers. Insurers are responding to the COVID-19 epidemic in a variety of ways, including as claim payors, owners, and investment managers. Each has its own unique challenge, not just for the insurance business, but also for the global economy and the general population.

A year that might have been a watershed moment for the Indian insurance market in terms of premium growth is now looking at a point where matching the previous year's record appears to be a daunting task. The industry's peak collecting months have traditionally been the most recent three months of the financial year.

Premium collections are starting to suffer as a result of the significant shutdown in the latter week of April. The blow is significant since most cities are currently under lockdown. Customers are not purchasing travel insurance as a result of airline cancellations. Purchasing new insurance that need insurers to do medical testing takes time and results in a delay. For NRIs and individuals with recent travel histories, no new policies are being issued. As a result, the insurance industry has been hammered from all sides.

The Battle of Insurance Premiums vs. Death Claim
Aside from the loss of new business premiums, the insurance industry is dealing with an increase in death claims. Even before the death toll reached double digits, the administration took positive steps and declared a 21-day complete lockdown. Nonetheless, nothing can be taken for granted, given the early evidence of community spread and the breadth of the nation. Insurance companies believe it is too early to comment on the exponential increase in life insurance death claims at this time. If India can effectively limit the spread, there may be a lessening of the impact on life insurance claims. When it comes to life insurance plans, a lot of companies will continue to fulfill claims on existing policies, but the cost of new premiums will rise, and the number of policies that provide full coverage may decrease.

Clarification from the IRDA
Corona will be the most significant threat the Indian insurance industry has ever faced. The illness has spread across India, and there is a real danger of it spreading exponentially. COVID-19 treatment may necessitate lengthy hospitalization, which might be costly. Many people have health insurance, whether it's via their employer or on their own. Because this virus is so new, it's unclear whether or not corona cases will be covered by existing health insurance coverage. On March 4, the insurance regulator IRDA issued guidelines to insurance firms in response to policyholder concerns and to clarify the coverage of coronavirus. According to the IRDA law, if hospitalization is covered, insurance companies must guarantee that situations involving COVID 19 are addressed quickly.

The Journey Ahead
Despite the fact that insurance businesses are included on the registry of exempted services and are subject to common mobility limitations, there is little prospect of new business. If there is a sharp increase in COVID-19 instances, insurance companies with strong digital infrastructure could do better than others (as observed in China and Italy). One of the most significant issues facing insurers may be enabling alternative work arrangements for their workers and sales force, allowing them to be more flexible and capable of dealing with growing claims and faster reaction times.