Life insurance companies settled 2,27,268 Covid death claims, paying Rs 17,362.48 crore since the pandemic hit the country in March 2020, according to data obtained by The Indian Express through a Right to Information (RTI) application.

Compensation towards Covid death claims were reported under individual, group policies and the PM Jeevan Jyoti Bima Yojana (PMJJBY). Back-of-the-envelope calculations indicate that the average claim per person was Rs 7,63,965.

The 2.27 lakh Covid deaths whose insurance claims have been settled would seem to account for 43 per cent of India’s current official Covid death toll of about 5.24 lakh. In a country where barely 4 per cent of the population has life insurance, this would point to a disproportionate number of Covid deaths in the insured group.

But the manner in which insurers classify a death as a Covid death may be different from how the government counts a Covid death.

Responding to news reports in February which interpreted claims settled by state-owned LIC as suggestive of under-reporting of Covid-19 related mortalities, the Ministry of Health and Family Welfare said these were speculative.

It said, “The Government of India has adopted a globally recognised categorization to classify COVID deaths. In the model so adopted, compilation of the total deaths in India is undertaken by the Centre based on the independent reporting by the States.”

The IRDAI’s data received from life insurers on Covid death claims are also based on self-declaration of claimants. Life insurance claim forms usually ask the claimants about the cause of death, or the last illness, of the insured person. The only mandatory document required for settling life insurance claims is the death certificate, which, incidentally, does not mention the cause of death. As such, the data on Covid deaths from the insurance companies cannot be directly compared with the official Covid death count.

When contacted, IRDAI Chairman Debasish Panda said, “The figures mentioned relate to Covid death claims. These are actual cumulative figures. Whether it’s because of some illness due to Covid, I don’t know.”

A top insurance source said, “If a Covid patient dies of heart attack or some other complications arising from Covid, that’s treated as a Covid death. Claim will have to be paid once the insured person dies of heart attack and is Covid positive. It’s immaterial for the insurance company as the claim will have to be paid anyway after death.”

Under India’s regulatory laws, life insurance policies cover death due to Covid. Some plans also include hospitalisation and diagnosis costs. Since 2020, IRDAI has been collecting data from insurers on claims made due to Covid deaths.

“If a person who is undergoing Covid treatment in the hospital dies of a heart attack, that’s treated as Covid death. We settle the claims within four or five days. We submit data on Covid death claims to IRDAI regularly,” said Lalitha Bhatia, Chief Operating Officer, Ageas Federal Life Insurance.

LIC’s Covid death settlement numbers were followed by ICICI Prudential’s, which paid Rs 2,526 crore for 16,818 claims. SBI Life paid Rs 2,333 crore for 33,864 claims, HDFC Life Rs 1,730 crore for 18,513 claims and Max Life Rs 1,462 crore for 12,092 claims.
According to the IRDAI data, total death claims shot up from Rs 29,793 crore in 2019-20 to Rs 41,958 crore in 2020-21. Of this, LIC accounted for Rs 23,878 crore and private players Rs 18,079 crore.

In the case of individual life insurance, during 2020-21, of the total 11.01 lakh claims, life insurers settled 10.84 lakh claims, with a total benefit amount of Rs 26,422 crore. Insurers repudiated 9,527 claims worth Rs 865 crore and rejected 3,032 claims worth Rs 60 crore.

The IRDAI figures also show that insurers have not settled 1,929 claims worth Rs 516.49 crore — these could either be rejected or pending claims.

Life insurers mobilised Rs 3,14,262 crore as new business premium income, witnessing a rise of 12.93 per cent on a year-on-year basis during the year ended March 2022. LIC alone accounted for Rs 1,98,759 crore in new business premium income.

IRDAI says insurance penetration in India increased from 3.76 per cent in 2019-20 to 4.20 per cent in 2020-21, registering a growth of 11.70 per cent. Globally, insurance penetration for the life segment in 2020 stood at 3.30 per cent for the life segment and 4.10 per cent for the non-life segment, according to the Swiss Re Sigma report.

During the first decade of the liberalisation of the insurance sector, insurance penetration went up from 2.71 per cent in 2001-02 to 5.20 per cent in 2009-10. The numbers then fell until 2014-15 due to a decline in life insurance penetration. However, insurance penetration started increasing from 2015-16 and reached 4.20 per cent in 2020-21.

While the penetration of life insurance has gone up from 2.15 per cent in 2001-02 to 3.20 per cent in 2020-21, non-life insurance penetration has gone up from 0.56 per cent to 1 per cent during the same period, says the IRDAI Annual Report.