Life insurance companies may need to raise their premium rates on the basis of a new industry-wide study on mortality to revise 15-year-old data.
New data show that emerging risks from urban lifestyles and the spread of new strains of diseases in congested areas are putting more men and women in the working age at risk. This means while the average life expectancy of Indians has improved dramatically since the 1990s, more younger people in urban areas are falling prey to stress and related diseases. Since they are also the largest segment of people who take out life insurance policies, the premium that insurance companies need to charge them will rise.
This has put the Insurance Regulatory and Development Authority in a fix. If it allows the insurance companies to adopt the new table, the new rates will certainly will have to be brought in.
The mortality table has been prepared for the Indian insurance industry by the Mortality and Morbidity Investigation Centre set up by the Life Insurance Council and the Institute of Actuaries of India. The study was made by noted actuary KP Sharma.
The centre studied data furnished by 15 insurers for three years to come out with the first mortality table after the sector was opened up to private companies. The last mortality table was prepared by the Life Insurance Corporation (LIC) in 1996 and was used by the new players with the regulatory permission.
An improvement in the mortality risks would have benefited the life insurance and pension customers in the country as they would have paid much lower premiums and would have received bigger maturity and death claims. But based on the new report, the mortality risks in India on an average has remained almost same.
For instance, it shows life risks of all females have improved below age 24 and above age 45, but has deteriorated between ages 25 and 44. The maximum deterioration for all females has occurred at the age of 34.
Similarly, the life risks of all males have improved in the age category of 20 to 26 and above age 52, but between 27 and 52 (the productive working years), such risks seem to have increased.
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