Insurers raise premium: Group health, cyber cover now 40% to 100% costlier

The new financial year of 2022-23 has seen a sharp rise in renewals of insurance premiums across categories with group health policy costs rising by up to 40 per cent cyber coverage witnessing an 80-100 per cent jump.

Reinsurers led by GIC Re and general insurers led by New India Assurance (NIA) have hiked their premiums by up to 20-30 per cent in certain segments – other than health and cyber — depending on the group and customers.

The recent developments in the Indian insurance industry, which is expected to reach Rs 2.25 trillion in 2021-22, indicate there have been large premium hikes in aviation, marine, group health and liability business including cyber cover, insurers said.

“We are putting our pricing approach on a more sound technical basis and have tried pricing correction wherever we feel it is warranted,’’ said Devesh Srivastava, CMD, GIC Re.

According to Supriya Rathi, Wholetime Director, Anand Rathi Insurance Brokers, the reinsurance premium for cyber has gone up by 80 per cent to 100 per cent and the fast-rising demand for cyber insurance is met with the broker’s vast network of reinsurers in Asia and across the globe.

While the property line of business has seen some amount of stability in terms of pricing, the advantages have been largely neutralised by a cut-throat competition among the re-insurers to grab the huge SME business.

“We have seen a price increase of 40 per cent in our group health portfolio due to higher claims because of Covid-19 pandemic,’’ said Vinay Sohani, CEO & MD, Gallagher Insurance Brokers, Indian subsidiary of US based Arthur J. Gallagher & Co.

GIC Re has the first right of refusal and commands over 60 per cent of the market share in the Indian reinsurance market which had a size of over Rs 44,000 crore in 2020-21. The market has evolved to become far more segmented and sub-segmented and any broad-brush impact is increasingly difficult to see, said an official.

The aviation class is presently facing uncertainty due to major claims on leased aircraft and this will certainly impact the aviation class. However, market-wide impact is not expected to be significant, Srivastava said.

Globally, there is a churn following record level catastrophe losses during the last three-four years and the situation was exacerbated by the pandemic. It is expected that the premium hardening witnessed during the last couple of years will sustain for at least for some time, Srivastava said.

The April market continued to signal a hardening stance in general across both property engineering as well as motor third party for the markets by reinsurers, said a senior official of a foreign reinsurance branch (FRB). “However, capacity is generally available and absence of substantial losses in India point to a flat to a moderately higher renewal in non-proportional on average with significant variance between accounts,’’ the official said.

The premiums for cover have increased as cyber-attacks are on both confidentiality and availability especially in the industrial sector with 330 firms hit in the last six months, Rathi said. “The number of cyber claims has increased multiple folds with 4.5 per cent of firms with 1st party cover now making a claim with an increase in the size of the claim. “Since the pandemic we are seeing increasing demand and need for cyber cover across other sectors and in the last two quarters. We are working with large manufacturing companies as well for cyber-crime insurance coverage,’’ Rathi said.

Cyber risks present accumulation potential which is more challenging than even a pandemic since it has evaded the geographical dimension of risk accumulation. “We remain quite conservative here. The emerging segments do see robust growth and we will continue to provide capacity for such opportunities,” GIC said.

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