LIC granted a mortality reserve of Rs 7,419 crore for Covid-19

            14th February, Chennai the Life Insurance Corporation of India (LIC) has set aside Rs 7,419.56 crore as a separate mortality reserve for the Covid-19 pandemic from April to September 30, 2021.

According to the LIC’s Draft Red Herring Prospectus (DRHP), a separate mortality reserve of Rs 2,344.59 crore and Rs 7,419.56 crore was established for the Covid-19 pandemic on a consolidated basis for fiscal 2021 and the six months ended September, 2021, respectively.

The mortality reserve will be evaluated as the epidemic progresses, according to the life insurers.

According to LIC, mortality claims rose during the Covid-19 epidemic. On a consolidated basis, the life insurer paid net death benefits of Rs 17,128.84 crore, Rs 17,527.98 crore, Rs 23,926.89 crore, and Rs 21,734.15 crore for the fiscal years 2019, 2020, 2021, and six months ended September 31, 2021, respectively, representing 6.79%, 6.86%, 8.29%, and 14.47% of its total insurance claims.

Because of the predicted duration of the pandemic, the LIC feels the mortality loading in premium rates is appropriate in the long run.

The pandemic uncertainties are presently being handled through our Covid-19 reserve and by comparing actual to projected claims experience.

The LIC further stated that the performance of the life insurance market may be harmed in the near run if there is a considerable increase in Covid-19 cases over a prolonged period of time due to the Omicron variation and a spike in mortality rates.

On Sunday, the DRHP was filed with the Securities and Exchange Board of India (SEBI).