Describe the Crisis being faced by the insurance companies during the pandemic and the shortage | RBI Grade B Phase 1 Preparation - Bank Exams PDF Download

Describe the Crisis being faced by the insurance companies during the pandemic and the shortage of funds with the government to give ex-gratia to the victims

COVID has been harsh on every sector in the economy. The insurance industry is facing boundless challenges. The basic premise on which the insurance industry itself works is ‘Risk’ but how will it tackle the uncertainties and risks if it were itself stuck? The pandemic has put many lives in danger, and at the same time, with a noticeable decline in salaries, individuals are unwilling to invest their money anyplace since survival has taken precedence. The pressure is rising in both directions. Many offices have shifted their bases and moved to remote working locations as their survival and reputation both depend on the way they handle the claims in this hour of emergency. Many companies have already started making changes in their exclusion policies and the fact that they already suffer a poor customer reputation is not new.
In this context, the epidemic has caused more than 4.5 lakh deaths in the nation. The kin of those affected by COVID were previously to get an ex-gratia payment of Rs. 4 lakhs.But, due to the huge number of deaths this amount has now become impossible to be given as the state finances are already under a severe strain and the entire account of SDRF (State Disaster Relief Fund) cannot handle this as there are other health and related emergencies to be met by the state during these tough times. Even the government has its own limits. The SC however has stated that the government cannot shy away from fulfilling its responsibility of disaster management and hence must fix an amount that it can bear to which the government has responded that it will be able to provide an amount of Rs. 50,000 per person and not more than that. Since the pandemic's onset, several states have made it a priority to aid the sufferers, but nobody could have predicted that the situation would balloon to such enormous proportions and become uncontrollable.