An Increase In LIC Claims Due to the Pandemic?

BloombergQuint has an interesting article out recently which cites a rise in Life Insurance Corporation’s (LIC) life insurance policy claims settled during the period April to December 2020.

According to regulatory data disclosed by LIC, it settled 8.09 lakh claims in the nine-month period from April to December 2020. In the same nine-month period of 2018, it settled 6.88 lakh claims, implying an increase of 17.6% in 2020.

Separately, we also have data from 2018 of India’s overall mortality rate: 7.234 per 1000 people. India’s population is roughly 1.36 billion people.

If we do a back-of-the-envelope extrapolation of the LIC data for 2020, a 17.6% increase in death rate could mean that 6.38 per 1000 people died in the Apr-Dec period (8.507, annualised). This is (6.38/1000) x 1.36 billion = 86.77 lakh deaths, versus 73.75 lakh deaths in Apr-Dec 2018: a difference of 13.02 lakh deaths.

Clearly, this is a very rough estimation and could be adjusted up or down for factors such as higher demand for life insurance, less traffic accidents, etc.

Even so, this 13 lakh number is an order of magnitude different from the reported estimates for total Covid deaths (1.75 lakhs) as of April 2021, a time when India faces a much stronger second wave of the pandemic.