What started off as an infectious disease affecting the respiratory system, soon took over the world and brought the economy to its knees. The Covid-19 pandemic is solely responsible for the global economy crashing and multiple sectors around the world taking a major financial hit. The ill-effects of this virus have shut down several hundreds of businesses, disrupted the functioning of various conglomerates and resulted in a number of industries being stuck in a slump.
A fast-developing country like India is now finding itself in the midst of a fragile economic conundrum. India is like most countries in the world and has been severely impacted with Coronavirus cases spiking even after a strict nation-wide lockdown. The first lockdown or complete cease of all activities began in the month of March with stringent rules to be followed during this pandemic. However, this meant the halt of most economic activities and soar in unemployment for daily wage earners, migrant labour and businesses in the large unorganized sector of the country.
Revenue streams have become increasingly narrow for almost all sectors. The pandemic has changed the course for most sectors and the way they operate and the insurance industry is one of them. A major chunk of the insurance industry is dependent on the functioning of other industries like the automobile, travel, hospitality, aviation industry and general infrastructure. With these businesses struggling to maintain their momentum, the insurance sector is facing challenges. However, despite being in the downturn, the future prospects of the insurance industry seem brighter than the others. This stems largely from the fact that the fear of Covid-19 is so deep in the hearts of the common people that it has pushed the masses towards buying more life & health insurance policies.
Insurance companies have started depending heavily on their digital infrastructure. Digitization has accelerated during this pandemic and the industry is prepping for a major transition. India has generally been an underinsured country when it comes to buying an insurance policy. Owing to the pandemic, the demand for life insurance and health insurance policy is expected to increase. Seeing the nature and duration of the crisis, the Insurance Regulatory and Development Authority of India (IRDAI) has issued a mandate for all general and health insurance companies to introduce a new offering around the Coronavirus. These indemnity and fixed benefit health insurance policies will help customers by covering for their hospital and medical expenses borne out of the virus.
The life insurance sector is responsible for protecting a person’s financial security in case of uncertainties in the future. This is directly correlated to a person’s income and net worth as the premium for life insurance plans are calculated on this basis. Since the onset of the Coronavirus pandemic, it has been observed that people are increasing and extending their life insurance plan cover. Witnessing the slow but gradual boost in demand for this sector, many insurance companies are training their insurance agents to provide the required support to their customers through digital means. Customers are also encouraged to reach out digitally in case of any assistance.
Non-Life insurance, barring Health Insurance, has been one of the most affected market segments in the insurance industry. This sector mainly relies on the performances of other industries and individual businesses by undertaking the valuation of their assets and overall economic activity. Hence, this sector is subsequently underperforming and is expected to revive once the consumption in the country starts increasing leading to the economy reviving again. Likewise, the automobile insurance sector is also in the doldrums due to the pandemic in India. The automobile industry in India was already going through a slowdown even before Covid-19 struck and after the outbreak, there was significant loss of revenue in the sector. This directly impacted the sale and renewal of automobile insurance policies.
From settling claims online to selling new health and life insurance plans, the lockdown in this pandemic has pushed the insurance industry to switch from their traditional way of operating and interaction with their customers. Updated guidelines and new methods of functioning are not just being applicable to this industry, but majorly all industries in India. Although government policies are being implemented to alleviate liquidity problems in SMEs and supporting families under financial distress, the large consumer base of the country is still shaky and more cautious about their investments.
For the GDP of India to pick up once again, the various industries of the country have to choose solutions that are pragmatic and capable of meeting the future challenges. The economy needs a robust and resilient frame to function and the disrupted supply chains need to be strengthened as means of adapting to this new normal.
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