HDFC Life’s chairperson Deepak Parekh on Monday said that the Indian economy is expected to make a strong rebound in FY22, registering economic expansion of 8-10% albeit on a low base.
Speaking about the impact of the second wave, Parekh said that he feels that the impact of the deadly second wave of covid is expected to be less than that of the first wave. “In the first wave of the pandemic, India had a significantly lower number of cases but in the second wave, it witnessed a shortage of basic necessities such as oxygen and medical supplies,” said Parekh.
“It might appear that the second wave has peaked out with daily cases coming down, but the country has already lost over 4 lakh precious lives…The overall impact of the second wave of the pandemic on India’s economy is expected to be milder and largely restricted to the June quarter,” he added, addressing the shareholders of HDFC Life during a meeting.
Parekh also said that life insurance companies must be held accountable only for the expense management limit by the regulator.
Addressing shareholders during the company’s annual general meeting (AGM), he said that there should be sole focus on expense management limits, rather than have numerous rules on what they (life insurers) can or cannot invest into.
“This would be similar to a TER, which is the total expense ratio followed by mutual funds as introduced by Sebi,” he added. Parekh also said that discussions are on with the insurance regulator IRDAI on this matter.
Coming to the financial results, he explained that the brand presence, technological solutions and diversified distribution network helped improve the business. Parekh said that HDFC Life has ranked consistently among top two private sector companies by new business premiums.
“The pandemic heightened the awareness of life insurance, especially among youth. Further, the insurance FDI hike to 74 percent is also a positive move for the sector,” he added.
Insurance Company’s June quarter showed the flipside of the pandemic on an insurance company’s performance. A surge in claims prompted the insurer to set aside more reserves towards them.
The private sector life insurer paid off 70,000 claims in the June quarter, totalling Rs 1598 crore on a gross basis, and said that peak mortality claims were three-four times that of the corresponding quarter last year. It anticipates claims to stay elevated in the September and December quarters too with the threat of a third wave. Ergo, HDFC Life set aside Rs 700 crore as an excess mortality reserve towards these anticipated claims.
