Insurance industry acted as shock absorber during Covid-19: IRDAI’s TL Alamelu

TL Alamelu, a whole time member (non-life) at the Insurance Regulatory and Development Authority of India (Irdai), said the insurance industry in India and across the globe has shown resilience during this pandemic. Unlike the 2008 financial crisis, the industry has acted more as a shock absorber, and not as an amplifier of the shock.

Covid has exposed existing vulnerabilities and the risks hitherto lurking in the background have shown up and these could no longer be ignored, she said. The pandemic has acted as a catalyst for the insurance industry and prompted it to spur it into action on many fronts to maintain operational resilience, she said.

“We still don’t know what the long-term consequences of what we are going through right today,” Alamelu said.

Policyholders, too, had not thought of the potential risk they would face, she added.

Alemelu was speaking at the annual insurance summit, organised by the National Insurance Academy, Pune, on changing dimension of insurance risks and strategies to combat emerging challenges.

The pandemic has exposed weakness in the health system and there is not only a huge protection gap, but also there is no protection for a large section of the population, she said.

The Irdai has come out with three standardised health plans to address the issue of trust deficit in health insurance and make it simpler for policy holders and purchase health insurance without hassles, she said. “We are coming out with some more standard products which will be useful to the policy holders and the insurers.”

Speaking on the major risks the insurance industry faces, G Srinivasan, director, NIA, said risk was evolving and changing dramatically from climate risk, cyber risk to the pandemic.