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Allow Insurers To Sell Pension, Health Policies: Deepak Parekh To Irdai

The second wave of COVID-19 impacted growth for the company in the first quarter, but the same will return back from the September quarter onwards, Parekh said, adding that everybody, including the millennials, have become more serious about life covers because of the pandemic.

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HDFC Life Chairman Deepak Parekh on Monday pitched for insurers to be allowed to sell pension and health covers to deepen risk coverage in the country.

Parekh also asked the Insurance Regulatory and Development Authority of India (Irdai) to assess a life insurer's performance by capping expense limits, the way capital markets regulator Sebi has done for mutual funds with the total expense ratio (TER).

'Today, life insurance can only sell life insurance policies at their branches and through their employees. They cannot, for example, sell NPS under the National Pension Scheme or health indemnity covers such as mediclaim,' Parekh said, speaking at the company's annual general meeting (AGM) here.

He added that globally, both pension and health covers are very much part of life insurance as they protect people from longevity and morbidity risks.

'Allowing life insurers to distribute products such as health indemnity and NPS would help improve the much needed insurance reach across our country,' Parekh said, adding that a proposal to the effect has been put before the Irdai.

Meanwhile, on the issue of costs, Parekh, a veteran in the Indian finance sector, pitched for a TER-like arrangement for the life insurance industry as well.

'We continue to engage with the regulator to hold life insurers accountable towards only one parameter i.e. the expense management limits rather than have numerous goals over what they can or cannot invest or spend on,' he told shareholders.

He said the impact of the third wave will not be as high because of an increase in vaccination, and added that the economy is likely to grow between 8-10 per cent in FY22.

The second wave of COVID-19 impacted growth for the company in the first quarter, but the same will return back from the September quarter onwards, Parekh said, adding that everybody, including the millennials, have become more serious about life covers because of the pandemic.

The outspoken industry veteran also said the second wave of the infections witnessed a shortage of 'basic necessities' like oxygen and medical supplies.

'It might appear that the second wave has peaked out with the number of daily cases coming down, but we have lost over 4 lakh precious lives. We should not be complacent and lower our guard,' he said.

Parekh said the company lost 17 employees and 38 'financial consultants' to the pandemic over the last 15 months and asked everybody not to be complacent about the virus.

There has been a steep rise in death claims during the second wave, he said, adding they were 3-4 times higher and stood at 70,000 during the June quarter.

The gross claims stood at Rs 1,598 crore and the net claims were at Rs 956 crore, he said.

Answering questions from shareholders, Parekh said the company will be investing in technology, skilling and distribution going forward.

Parekh also said the company, which has provided Rs 700 crore towards possible COVID-related claims, raised debt last year after which its solvency ratio came down to 201 per cent while the dividend payout reduced it further to 195 per cent. He, however, affirmed that it will never breach the regulatory cap of 150 per cent.

The company's overall attrition stands at 38.6 per cent, he said, but declined to answer a shareholder's question on rival ICICI Prudential's superior performance. 

(PTI)