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    Life Insurance Scenario in India

    Uploaded by

    Praveen Chaturvedi
    This document provides an overview of the evolution and current state of the life insurance sector in India. It discusses the entry of private players in 2000 and how they have differentiated themselves from the dominant LIC. While private insurers grew quickly, some engaged in mis-selling of products which led to tighter regulations. Overall, penetration and density of life insurance in India remains lower than other countries, though the sector has grown significantly over time and provides an important opportunity. The document analyzes key metrics like market share, profits, claims, and distribution channels for various insurers. It also outlines challenges and changes in customer preferences shaping the future of the industry.

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    © All Rights Reserved
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    Life Insurance Scenario in India

    Uploaded by

    Praveen Chaturvedi
    134 views41 pages
    This document provides an overview of the evolution and current state of the life insurance sector in India. It discusses the entry of private players in 2000 and how they have differentiated themselves from the dominant LIC. While private insurers grew quickly, some engaged in mis-selling of products which led to tighter regulations. Overall, penetration and density of life insurance in India remains lower than other countries, though the sector has grown significantly over time and provides an important opportunity. The document analyzes key metrics like market share, profits, claims, and distribution channels for various insurers. It also outlines challenges and changes in customer preferences shaping the future of the industry.

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    life insurance present practices how to do insurances what are the current practices

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    This document provides an overview of the evolution and current state of the life insurance sector in India. It discusses the entry of private players in 2000 and how they have differentiated themselves from the dominant LIC. While private insurers grew quickly, some engaged in mis-selling of products which led to tighter regulations. Overall, penetration and density of life insurance in India remains lower than other countries, though the sector has grown significantly over time and provides an important opportunity. The document analyzes key metrics like market share, profits, claims, and distribution channels for various insurers. It also outlines challenges and changes in customer preferences shaping the future of the industry.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    134 views41 pages

    Life Insurance Scenario in India

    Uploaded by

    Praveen Chaturvedi
    This document provides an overview of the evolution and current state of the life insurance sector in India. It discusses the entry of private players in 2000 and how they have differentiated themselves from the dominant LIC. While private insurers grew quickly, some engaged in mis-selling of products which led to tighter regulations. Overall, penetration and density of life insurance in India remains lower than other countries, though the sector has grown significantly over time and provides an important opportunity. The document analyzes key metrics like market share, profits, claims, and distribution channels for various insurers. It also outlines challenges and changes in customer preferences shaping the future of the industry.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 41

    Life Insurance Scenario

    in
    India
    Amit Gosain
    - Research Associate

    Agenda
    Evolution of Life Insurance Sector
    Entry of Competition and Evolution thereafter
    Claims Ratio, Profitability, Assets under
    Management of Various Companies
    Distribution Channels
    M&A in Life Insurance Sector
    Wrong Doings
    LIC Amendment Bill
    Life Insurance Right business at the Right time

    Basic Strategy of Competitors


    Differentiate

    To compete with a strong Brand Like LIC,


    competitors need to show a difference
    Without differentiating from us, they
    cannot survive

    Evolution
    Year
    1956
    1969-70
    1979-80
    1985-86
    2004-05

    SA (Cr)
    200
    1000
    2000
    7000
    180000

    CAGR
    12%
    7%
    23%
    18%

    Evolution
    Post 1997, the interest rates started declining
    13% in 1996 to 6% in 2003 making conventional
    plans unattractive
    Some companies started focusing on Term
    Insurance plans
    Guaranteed return plans withdrawn
    During this time the Sensex started its climb.
    Apr 2003 3000
    Dec 2003 6000
    Jan 2008 21000
    Jan 2013 20000

    Private Players started aggressive marketing


    showing the growth in NAV of their ULIPs in
    comparison of the kind of products sold
    traditionally by LIC
    The general atmosphere in Economy was very
    bullish and sensex continued to climb.
    Many insurers did aggressive selling on ULIP front
    promising astronomical returns based on the
    performance since year 2003
    Post 2009, the share of ULIP policies started to
    decline

    Evolution
    Media also made lot of noise about the on going
    mis-selling
    2010 saw the SEBI-IRDA spat related to regulation
    of ULIPs
    IRDA came up with revised ULIP guidelines
    effective Sept11
    IRDA also came up with revised guidelines on
    Variable Insurance Plans and draft guidelines on
    many other issues.

    Current Scenario
    The life insurance sector has itself undergone a
    makeover, offering

    more choices
    more products
    tighter regulation and
    greater awareness

    Each player is trying to offer a variety of


    products, better services and quicker claim
    settlements; thus, making the environment
    extremely competitive. Further, service standards
    and products being more or less alike, creating a
    differentiation is becoming extremely tough.

    Current Strategy of Pvt Players


    Differentiate from LIC
    Experience

    Selling (countering Mis-selling)


    Servicing

    LICI Zindagi ke saath bhi, Zindagi ke


    Baad Bhi,
    Na Chinta Na Fikar
    Bajaj Allianz Jiyo Befikar
    Max Aapke Sache Advisor

    FIRST YEAR (INCLUDING SINGLE PREMIUM)


    LIFE INSURANCE PREMIUM (Rs. Crores)

    MARKET SHARE - FIRST YEAR (INCLUDING


    SINGLE PREMIUM) LIFE INSURANCE PREMIUM

    Life Insurance Penetration in India


    (Ratio of Premium to GDP)

    Year

    Penetration

    2001

    2.15

    2002

    2.59

    2003

    2.26

    2004

    2.53

    2005

    2.53

    2006

    4.10

    2007

    4.00

    2008

    4.00

    2009

    4.60

    2010

    4.40

    2011

    3.40

    Insurance Penetration in Select Countries


    COUNTRY

    South
    Africa
    United
    Kingdom
    France
    Switzerland
    United
    States
    India
    Germany
    Australia
    Brazil
    World

    INSURANCE PENETRATION (%)

    2010

    2011

    12.0

    10.2

    9.5
    7.4
    5.5

    8.7
    6.2
    5.5

    3.5
    4.4
    3.5
    3.1
    1.6
    4.0

    3.6
    3.4
    3.2
    3.0
    1.7
    3.8

    Insurance Penetration in Asian Countries


    COUNTRY

    Taiwan
    Hong Kong
    Japan
    South
    Korea
    Singapore
    World
    India
    Malaysia
    Thailand
    China
    Bangladesh
    Sri Lanka
    Pakistan

    INSURANCE PENETRATION (%)

    2010
    15.4
    10.1
    8.0

    2011
    13.9
    10.1
    8.8

    7.0
    4.6
    4.0
    4.4
    3.2
    2.6
    2.5
    0.7
    0.6
    0.3

    7.0
    4.3
    3.8
    3.4
    3.3
    2.7
    1.8
    0.7
    0.6
    0.4

    Life Insurance Density in India


    (Per Capita Premium)

    Year

    Insurance Density ($)

    2001

    9.1

    2002

    11.7

    2003

    12.9

    2004

    15.7

    2005

    18.3

    2006

    33.2

    2007

    40.4

    2008

    41.2

    2009

    47.7

    2010

    55.7

    2011

    49.0

    Insurance Density in Select Countries


    COUNTRY

    Switzerland
    United
    Kingdom
    France
    Australia
    United
    States
    Germany
    South
    Africa
    Brazil
    India
    World

    INSURANCE DENSITY ($)

    2010
    3666.8

    2011
    4421.0

    3436.3
    2937.6
    1766.3

    3347.0
    2638.0
    2077.0

    1631.8
    1402.2

    1716.0
    1389.0

    854.6
    169.9
    55.7
    364.3

    823.0
    208.0
    49.0
    378.0

    Insurance Density in Asian Countries


    COUNTRY

    Japan
    Hong Kong
    Taiwan
    Singapore
    South
    Korea
    Malaysia
    Thailand
    China
    India
    Sri Lanka
    Bangladesh
    Pakistan

    INSURANCE DENSITY ($)

    2010
    3472.8
    3197.3
    2756.8
    2101.4

    2011
    4138.0
    3442.0
    2757.0
    2296.0

    1454.3
    282.8
    121.9
    105.5
    55.7
    13.7
    4.4
    3.2

    1615.0
    328.0
    134.0
    99.0
    49.0
    15.0
    5.0
    4.0

    CAGR (2001-2010)
    Gross Premiums - Life
    Countries

    Growth Rate

    Luxembourg, Poland, Slovak Republic

    20-21

    Czech Republic, Turkey, Portugal, Ireland

    15-20

    Hungary, Italy, Norway, Greece

    10-15

    Finland, Belgium, Korea, Canada, Japan,


    Australia, Spain, Germany, Mexico, United States
    Iceland, Switzerland, Netherlands, Sweden
    France
    India (LIC)

    5-10
    0-5
    Negative
    25.29 (20.44)
    18

    OPERATING EXPENSES
    (AS % of Gross Premium underwritten)

    2008-09

    2009-10

    2010-11

    2011-12

    LIC

    5.76

    6.58

    8.34

    7.35

    PVT

    25.99

    20.86

    18.11

    17.53

    INDUSTRY

    11.65

    10.85

    11.30

    10.34

    MANAGEMENT EXPENSES RATIO


    (Year ended 31.03.2012) (%age)
    (Expense of Management to Gross Direct Premium)
    LIC of India 14.27
    Aviva 28.00
    Aegon Religare
    80.00
    SBI Life 12.00
    Met Life
    25.00
    Max Life
    29.00
    ICICI Prudential 18.60
    HDFC Life
    18.11
    Reliance Life31.00
    Bajaj Allianz 22.00
    Canara HSBC
    17.30
    India First Life
    16.71
    Star Union Dai-Chi
    17.00

    Number of Offices
    %age
    Office
    Offices

    2009 2010 2011 2012


    s
    Closed
    Close
    d
    ICICI Prudential 2102 1921 1402 990 1112 52.90
    Aviva
    224 186 142 135
    89
    39.73
    TATA AIG
    454 439 363 298 156 34.36
    Max Life
    705 705 504 464 241 34.18
    HDFC Life
    609 568 498 481 128 21.02
    ING Vyasa
    265 254 247 216
    49
    18.49
    Bajaj Allianz
    1164 1151 1092 1044 120 10.31
    Kotak mahindra 198 215 203 205
    10
    4.65
    LIC
    3030 3250 3371 3455

    PROFIT/LOSSES OF LIFE COMPANIES


    For the Year (Fig in Crore)

    LIC of INDIA

    2007-08 2008-09 2009-10 2010-11 2011-12


    845

    957

    1061

    1172

    1313

    -1395

    -780

    258

    808

    1384

    MAX NEW YORK Life

    -157

    -393

    -21

    194

    460

    BIRLA Sunlife

    -445

    -702

    -435

    305

    461

    ING Vyasa

    -191

    -195

    -137

    -70

    -31

    AVIVA

    -202

    -495

    -345

    29

    74

    HDFC Life

    -244

    -503

    -275

    -99

    271

    TATA AIG

    -339

    -565

    -400

    52

    260

    RELIANCE

    -768

    -1085

    -283

    -129

    373

    KOTAK Life

    -72

    14

    69

    102

    203

    -214

    -71

    542

    1057

    1311

    ICICI Prudential

    BAJAJ Allianz

    23

    PROFIT/LOSSES OF LIFE COMPANIES


    ( Fig in Crore)
    2007-08 2008-09 2009-10 2010-11 2011-12
    MET LIFE

    21

    15

    25

    25

    33

    SBI Life

    34

    -26

    276

    366

    556

    SAHARA Life

    -18

    36

    28

    29

    SHRIRAM Life

    -18

    17

    56

    -242

    -417

    -478

    -340

    -190

    FUTURE GENERALI

    -30

    -256

    -357

    -320

    -130

    IDBI FEDERAL

    -26

    -110

    -105

    -122

    -70

    RELIGARE AEGON

    -24

    -57

    CANARA

    -202

    -246

    -191

    -89

    DLF

    -44

    -93

    -109

    -128

    SUDI

    -19

    -21

    -28

    -26

    -45

    -65

    -73

    BHARTI AXA

    INDIA FIRST

    Source: IRDA Annual Reports

    24

    CLAIMS REPUDIATION
    (IRDA ANNUAL REPORT)
    2008-09 2009-10
    2010-11
    2011-12
    Aegon Religare
    71.43
    43.69
    44.62
    32.48
    Aviva
    19.33
    14.41
    12.23
    9.55 (21.20)
    Bajaj Allianz
    8.35
    7.30
    7.08
    6.28 (9.84)
    Bharti Axa
    44.83
    31.58
    12.58
    10.80 (19.39)
    Birla Sunlife
    10.37
    20.32 4.99 (11.79) 8.78 (18.92)
    Canara HSBC
    18.75
    10.12
    16.61
    14.96
    DLF Pramerica

    1.08 19.51 (32.54)


    16.74
    Future Generali
    30.00
    34.53
    21.53
    27.15
    HDFC Std
    4.80
    7.38
    3.97
    3.63 (8.43)
    ICICI Prudential
    5.20
    4.42
    3.14
    3.16
    IDBI Federal
    5.13
    18.58 21.00 (40.30)
    27.59
    India First

    5.77
    17.99
    17.77 (25.17)
    ING Vysya
    7.81
    5.33
    3.53
    5.24 (9.96)
    25

    CLAIMS REPUDIATION
    (IRDA ANNUAL REPORT)
    Company
    2008-09 2009-10
    2010-11
    Kotak Mahindra
    9.23
    5.31
    3.89 (7.59)
    LIC
    1.33
    1.59
    1.00
    Max New York
    7.77
    14.35
    14.90
    Metlife
    22.77
    24.12
    6.06
    Reliance Life
    5.67
    15.27 8.66 (16.08)
    Sahara
    12.3
    3.49
    14.39
    SBI Life
    15.09
    5.74
    16.73
    Shriram
    24.27
    23.53
    25.87
    Star Union Dai-chi

    1.38
    Tata AIG
    27.78
    15.92 17.07 (23.66)

    2011-12
    4.17 (18.87)
    1.30
    8.58 (12.47)
    9.61 (13.53)
    11.02 (19.16)
    4.69 (9.09)
    3.19
    14.48
    2.31
    15.49 (25.75)

    26

    PERSISTENCY RATIO
    (For the 13th month) (upto 31.03.2012)

    LIC of India
    Aviva
    Aegon Religare
    HDFC Life
    India First Life
    Star Union Dai-Chi
    Canara HSBC
    Bajaj Allianz
    SBI Life
    Met Life
    Max Life
    ICICI Prudential
    Reliance Life

    Policy
    67.00
    58.00
    61.00
    75.35
    72.43
    65.00
    79.60
    54.57
    71.77
    63.56
    75.00
    77.00
    55.90

    Annualised Prem
    83.00
    68.00
    57.00
    81.57
    73.10
    68.00

    THE WORLD IS CHANGING

    DEMOGRAPHIC SHIFT AGE, GENDER


    CHANGING SOCIAL PATTERNS.
    E-COMMERCE.
    SHIFT FROM LONG TERM TO SHORT TERM
    PLANS
    CONVENTIONAL / ULIPS
    ANNUITIES
    HEALTH INSURANCE
    PENSION PLANS
    WORKING IN A REGULATORY REGIME

    AGENCY STATISTICS
    INDIVIDUAL AGENTS

    2007 2008 2009 2010 2011 2012


    Private 8.90 13.27 15.93 15.75 13.02 10.81
    LIC 11.03 11.94 13.45 14.03 13.37 12.78
    Industr
    y
    19.93 25.21 29.38 29.78 26.39 23.59
    CORPORATE AGENTS

    2007
    Private 1906
    LIC
    409
    Industr
    y
    2315

    2008 2009 2010 2011 2012


    2070 2091 2420 1870 642
    345 415 510 295 240
    2415 2506 2930 2165 882

    PRODUCTIVITY OF AGENTS
    (POLICIES SOLD)
    INDIVIDUAL AGENTS

    Private
    LIC
    Industry

    200708
    7
    32
    20

    200809
    6
    28
    16

    200910
    4
    28
    15

    201011
    4
    26
    15

    201112
    3
    27
    16

    201011
    1976
    1708
    1933

    201112
    2533
    2194
    2474

    CORPORATE AGENTS

    Private
    LIC
    Industry

    200708
    1798
    1905
    1815

    200809
    1857
    2190
    1908

    200910
    2289
    1606
    2172

    PRODUCTIVITY OF AGENTS
    (PREMIUM in lakhs)
    INDIVIDUAL AGENTS

    Private
    LIC
    Industry

    200708
    1.62
    4.22
    2.94

    200809
    1.10
    3.10
    2.02

    200910
    1.01
    3.59
    2.21

    201011
    0.99
    3.75
    2.34

    201112
    0.81
    3.14
    2.03

    CORPORATE AGENTS
    200708
    Private 453.10
    LIC
    207.81
    Industry 414.00

    2008- 2009- 2010- 201109


    10
    11
    12
    443.79 492.59 594.82 399.55
    232.84 235.62 313.42 444.90
    411.21 448.84 550.36 403.84

    LIC vis--vis Private Players


    (FPI %age share through different Channels)

    Private
    Cos

    LIC

    F.Y

    Tied
    Channel

    Banks

    Other Corp
    Agents

    Brokers

    Direct Selling
    (Referrals)

    2005-06

    59.71

    16.87

    8.92

    0.83

    7.06

    2006-07

    65.80

    16.58

    8.41

    1.05

    6.77

    2007-08

    59.81

    18.89

    11.03

    1.50

    8.78 (7.79)

    2008-09

    54.94

    20.78

    10.92

    2.00

    11.37 (9.27)

    2009-10

    50.67

    24.88

    10.28

    3.44

    10.73 (7.85)

    2010-11

    46.89

    33.21

    8.70

    4.77

    6.24 (2.34)

    2011-12

    44.05

    39.01

    7.52

    5.07

    4.35 (0.16)

    2005-06

    98.37

    1.25

    0.32

    0.06

    2006-07

    97.28

    1.24

    0.9

    0.34

    2007-08

    98.16

    1.30

    0.29

    0.05

    2008-09

    96.95

    1.98

    0.54

    0.52

    0.04

    2009-10

    97.30

    1.92

    0.41

    0.10

    0.21

    2010-11

    97.45

    2.16

    0.59

    0.04

    0.23 (0.12)

    2011-12

    96.56

    2.57

    0.22

    0.04

    0.62

    Integration of Various
    Distribution Channels (FPI in %)
    CLIA

    B&AC

    Dir Mktg

    Total

    2010

    5.97

    2.64

    0.06

    8.67

    2011

    6.33

    2.91

    0.33

    9.57

    2012

    7.57

    4.20

    0.91

    12.68

    Distribution Channels
    Business Correspondents
    Online

    M & A in Life Insurance


    Max New York Life
    Metlife
    Bharti Axa
    Reliance Insurance

    LIC Amendment Bill


    Raising of Capital
    Opening of Branches
    Sovereign Guarantee
    Agents regulations
    Distribution of Dividend

    34

    Assets under Management


    (31.03.2012)
    Life Fund

    Pension & Unit Linked


    Annuity Fund
    Fund

    Amt in
    Crores

    %age

    Amt in
    Crores

    %age

    LIC of
    India

    914614

    93.84

    212754

    Private
    Cos

    60026

    6.16

    23913

    Total

    974620

    100

    236667

    Amt in
    Crores

    %age

    89.90 141703 38.30

    1269070

    80.26

    10.10 228269 61.70

    312188

    19.74

    1581259

    100

    100

    Amt in
    %age
    Crores

    Total

    369972

    100

    35

    Wrong Doings in Life Insurance


    Industry

    Penalties imposed by IRDA recently on


    Met Life (76 Lakh)

    20 lakh ULIP
    5 Lakh Server hosted at USA
    5 Lakh Distribution issues
    30 Lakh Excess commission/charges paid
    1 Lakh Group Insurance claim not settled
    5 Lakh Erroneous payment to Axis Sales (subsidiary of Axis
    Bank)
    5 Lakh Wrong classification of Urban Business as Rural
    Business
    5 Lakh Long TAT in collection / accounting of premium from
    rural areas

    Wrong Doings in Life Insurance


    Industry
    SBI Life (6 Lakh)

    5 Lakh Group Policy (Dhanraksha) There were two


    premium paying options under this plan, single and 2
    yrs. This 2 yrs was treated as regular premium and
    commission rate of 40% on 1st Prem and 7.5% on 2nd
    yr premium was payable. In the 2 yr term there was an
    option of paying the 2nd yr premium with the 1st yr
    premium with a discount of 4%. In more than 90% of
    the cases the policy was sold in the 2 yr term (with
    advance premium) without informing the
    policyholders about the single premium option, where
    the premium was quite low.
    IRDA has not only penalized SBI Life, but also directed SBI
    Life to remitt the difference of single premium and the 2 yr
    term plan into policyholders account.
    1 Lakh Other procedural deviances

    Wrong Doings in Life Insurance


    Industry
    Kotak Mahindra Life (22 lakh)

    1 Lakh Procedural Deviances


    15 Lakh Excess commission paid
    1 Lakh Violation of guidelines for claim payments
    5 Lakh Violation of File & Use. Later changes made

    Tata AIG Life (49 Lakh)

    5 Lakh Violation of guidelines on Referral Entities, selling


    by unauthorized persons
    12 lakh Violation of guidelines on Specified persons, selling
    by unauthorized persons
    28 Lakh Excess commission/charges paid
    4 Lakh Employees selling insurance on behalf of CAs

    Wrong Doings in Life Insurance


    Industry

    Bajaj Allianz (5 lakh)

    5 Lakh Group scheme Enrolled new members later


    on also

    HDFC Life (1.47 Crore)

    1 Lakh Investment Norms not followed


    35 Lakh Excess commission/charges paid
    5 Lakh Accepted business from unlicensed entities
    1 Lakh Violation of Group Insurance norms
    1.05 Crore Refused death claims wrongly in housing
    loan group schemes

    Wrong Doings in Life Insurance


    Industry

    Shriram Life 28 lakhs


    Birla Sun Life 1 Lakh
    Max Life 5 Lakh
    Sahara Life 12 Lakh
    Future Generali 25 Lakh

    Life Insurance Right


    Business at the Right
    Time

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