Life Insurance Corporation of India (LIC) has provided Rs 7,419.56 crore as a separate mortality reserve for April -September 30, 2021, for Covid-19 pandemic.
The LIC in its Draft Red Herring Prospectus (DRHP) has said for fiscal 2021 and the six months ended September 2021, a separate mortality reserve of Rs 2,344.59 crore and Rs 7,419.56 crore was provided for the Covid-19 pandemic on a consolidated basis, respectively.
The life insurers said the mortality reserve will be reviewed as the pandemic evolves.
According to LIC, during the Covid-19 pandemic the death claims increased. The life insurer had paid net death benefits of Rs 17,128.84 crore, Rs 17,527.98 crore ad Rs 23,926.89 crore and Rs 21,734.15 crore for the financial years 2019, 2020, 2021 and six months ended September 31, 2021 respectively on a consolidated basis, which were 6.79 per cent, 6.86 per cent, 8.29 per cent and 14.47 per cent of its total insurance claims, respectively.
The LIC said it believes the mortality loading in the premium rates is adequate for the long term due to the expected duration of the pandemic.
The uncertainties related to the pandemic are currently being addressed through our Covid-19 reserve and by comparing the actual to expected claims experience.
The LIC also said the life insurance industry performance may be affected in the short run if there is a significant rise in Covid-19 cases for a sustained period of time owing to the Omicron variant and a rise in mortality rates.
The DRHP was filed with the Securities and Exchange Board of India (SEBI) on Sunday.