Several prominent private sector life insurance firms, such as HDFC Life, ICICI Prudential, Bajaj Allianz, and Max Life Insurance, have raised their term insurance rates by 4-7 percent due to changes in bond yields, worries about inflation, and modifications in reinsurance costs, as per industry insiders familiar with the matter. It is anticipated that numerous other insurers will also make similar adjustments, as stated by the sources.
An insurance distributor mentioned that significant increases in term life insurance rates have been observed among leading life insurance companies. Bajaj Allianz Life, ICICI Prudential Life, Max Life, and HDFC Life have all made adjustments to their rates in the recent past.
Vaibhav Kumar, head of product management and ecommerce channel at Max Life Insurance, announced that term insurance rates were adjusted for the first time in April of FY25, with changes ranging from 3 to 6 per cent.
Kumar informed Business Standard that close to half of our clients choose policy terms exceeding 40 years. Consequently, the rates for term insurance are influenced by long-term interest rates. Fluctuations in long-term interest rates, particularly when they decrease, are mirrored in term insurance rates. Our mortality experience remains steady and aligns with our initial assumptions. The yield on the bond due in 2063 has decreased by 31 bps to 7.086 percent from 7.39 percent over the past year. Similarly, the yield on the bond maturing in 2051 has decreased by 32 bps in the same period.
Insurance companies are major buyers of longer-tenure bonds. The government had introduced a 50-year bond in H2FY24 on the demand of insurance companies.
Further, the benchmark 10-year government bond yields have softened significantly following the announcement by JP Morgan that Indian government securities (G-sec) issued by the Reserve Bank of India (RBI) under the fully accessible route will be included in its widely monitored GBI-EM. Since September last year, the yield on 10-year bonds has dropped by 19 bps.
Emails sent to HDFC Life, ICICI Prudential Life Insurance and Bajaj Life Insurance did not elicit a response till the time of going to the press.
Kuldip Bonyal, secretary general of the Life Insurance Agents Federation of India, stated that the majority of private life insurers have raised term insurance rates by 5-7 percent. However, SBI Life Insurance and LIC have not implemented any rate increases at this time.
HDFC Life, Bajaj Allianz Life, ICICI Prudential Life, and Max Life have increased term insurance premium rates by 4-7%, citing reasons such as moderating bond yields, inflation concerns, and adjustments in reinsurance rates. Meanwhile, longer tenure bond yields have decreased by over 30 basis points in the span of one year. It is worth noting that SBI Life and LIC have not followed suit in raising their term insurance rates at this time.Read More
