life insurance scenario in india

7/26/2019 Life Insurance Scenario in India

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Life Insurance Scenario

inIndia

Amit Gosain- Research Associate


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Agenda

Evolution of Life Insurance Sector

Entry of Competition and Evolution thereafter

Claims Ratio, Profitability, Assets under

Management of Various CompaniesDistribution Channels

M&A in Life Insurance Sector

Wrong Doings

LIC Amendment BillLife Insurance Right business at the Right time

2


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Basic Strategy of Competitors

Differentiate

To compete with a strong Brand Like LIC,competitors need to show a difference

Without differentiating from us, theycannot survive


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Evolution

Year SA (Cr) CAGR

1956 200

1969-70 1000 12%1979-80 2000 7%

1985-86 7000 23%

2004-05 180000 18%


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Evolution

Post 1997, the interest rates started declining13% in 1996to6% in 2003making conventionalplans unattractive

Some companies started focusing on Term

Insurance plansGuaranteed return plans withdrawn

During this time the Sensex started its climb.

Apr 2003 3000

Dec 2003 6000

Jan 2008 21000

Jan 2013 20000


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Private Players started aggressive marketingshowing the growth in NAV of their ULIPs incomparison of the kind of products soldtraditionally by LIC

The general atmosphere in Economy was verybullish and sensex continued to climb.

Many insurers did aggressive selling on ULIP frontpromising astronomical returns based on theperformance since year 2003

Post 2009, the share of ULIP policies started todecline


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Evolution

Media also made lot of noise about the on goingmis-selling

2010 saw the SEBI-IRDA spat related to regulationof ULIPs

IRDA came up with revised ULIP guidelineseffective Sept11

IRDA also came up with revised guidelines onVariable Insurance Plans and draft guidelines on

many other issues.


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Current ScenarioThe life insurance sector has itself undergone amakeover, offeringmore choices

more products

tighter regulation and

greater awarenessEach player is trying to offer a variety ofproducts, better services and quicker claimsettlements; thus, making the environment

extremely competitive. Further, service standardsand products being more or less alike, creating adifferentiation is becoming extremely tough.


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Current Strategy of Pvt Players

Differentiate from LIC

Experience

Selling (countering Mis-selling)

Servicing

LICI Zindagi ke saath bhi, Zindagi keBaad Bhi,

Na Chinta Na FikarBajaj Allianz Jiyo Befikar

Max Aapke Sache Advisor


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FIRST YEAR (INCLUDING SINGLE PREMIUM)LIFE INSURANCE PREMIUM (Rs. Crores)


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MARKET SHARE - FIRST YEAR (INCLUDINGSINGLE PREMIUM) LIFE INSURANCE PREMIUM


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Life Insran!e Pene"ra"ion in In#ia(Ra"io of Pre$i$ "o GDP)

Year Pene"ra"ion%&&' %.'

%&&% %.

%&&* %.%+%&&, %.*

%&& %.*

%&&+ ,.'&

%&& ,.&&%&& ,.&&

%&& ,.+&

%&'& ,.,&

%&'' *.,&


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Insran!e Pene"ra"ion in Se/e!" Con"ries

C0UNTRY INSURANCE PENETRATI0N (1)2010 2011

SouthAfrica 12.0 10.2

UnitedKingdom 9.5 8.7France 7.4 6.2

Switer!and 5.5 5.5

United

State" #.5 #.6$ndia 4.4 #.4

%erman& #.5 #.2

Au"tra!ia #.1 #.0

'rai! 1.6 1.7(or!d 4.0 #.8


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Insran!e Pene"ra"ion in Asian Con"ries

C0UNTRY INSURANCE PENETRATI0N (1)

2010 2011

)aiwan 15.4 1#.9*ong Kong 10.1 10.1

+a,an 8.0 8.8

South

Korea 7.0 7.0Singa,ore 4.6 4.#

(or!d 4.0 #.8

$ndia 4.4 #.4

-a!a&"ia #.2 #.#)hai!and 2.6 2.7

hina 2.5 1.8

'ang!ade"h 0.7 0.7

Sri /ana 0.6 0.6

ai"tan 0.# 0.4


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Life Insran!e Densi"2 in In#ia(Per Ca3i"a Pre$i$)

Year Insran!e Densi"2 (4)%&&' .'

%&&% ''.

%&&* '%.

%&&, '.

%&& '.*

%&&+ **.%

%&& ,&.,

%&& ,'.%

%&& ,.

%&'& .

%&'' ,.&


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Insran!e Densi"2 in Se/e!" Con"ries

C0UNTRY INSURANCE DENSITY (4)

2010 2011

Switer!and #666.8 4421.0

UnitedKingdom #4#6.# ##47.0

France 29#7.6 26#8.0Au"tra!ia 1766.# 2077.0

UnitedState" 16#1.8 1716.0

%erman& 1402.2 1#89.0SouthAfrica 854.6 82#.0

'rai! 169.9 208.0

$ndia 55.7 49.0(or!d #64.# #78.0


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Insran!e Densi"2 in Asian Con"ries

C0UNTRY INSURANCE DENSITY (4)

2010 2011+a,an #472.8 41#8.0

*ong Kong #197.# #442.0

)aiwan 2756.8 2757.0

Singa,ore 2101.4 2296.0SouthKorea 1454.# 1615.0

-a!a&"ia 282.8 #28.0

)hai!and 121.9 1#4.0

hina 105.5 99.0$ndia 55.7 49.0

Sri /ana 1#.7 15.0

'ang!ade"h 4.4 5.0

ai"tan #.2 4.0


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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 States5-10

Iceland, Switzerland, Netherlands, Sweden 0-5

France Negative

India (LIC) 25.29 (20.44)18


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OPERATING EXPENSES(AS % of Gross Premium underwritten)

%&&-& %&&-'& %&'&-'' %&''-'%

LIC .+ +. .*, .*

P5T %. %&.+ '.'' '.*

INDUSTRY ''.+ '&. ''.*& '&.*,


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MANAGEMENT EXPENSES RATIO(Year ended 31.03.2012) (%age)

LIC of India14.27Aviva 28.00

Aegon Religare 80.00

SBI Life12.00

Met Life 25.00

Max Life 29.00

ICICI Prudential18.60

HDFC Life 18.11

Reliance Life31.00

Bajaj Allianz22.00Canara HSBC 17.30India First Life 16.71

Star Union Dai-Chi 17.00

(Expense of Management to Gross Diret !remi"m#


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Number of Offices

20092010201120123ce"!o"ed

age

3ce"!o"e

d

$$$ rudentia! 210219211402 990 1112 52.90

Aia 224 186 142 1#5 89 #9.7#

)A)A A$% 454 4#9 #6# 298 156 #4.#6

-a /ife 705 705 504 464 241 #4.18

*F /ife 609 568 498 481 128 21.02

$% :&a"a 265 254 247 216 49 18.49

'a;a; A!!ian 1164115110921044 120 10.#1

Kota mahindra 198 215 20# 205 10 4.65

/$ #0#0#250##71#455


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For the Year (Fig in Crore)

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

LIC of INDIA 845 957 1061 1172 1313

ICICI Prudential -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

BAJAJ Allianz -214 -71 542 1057 1311

PROFIT/LOSSES OF LIFE COMPANIES

23


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( 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 3 -18 36 28 29

SHRIRAM Life 6 8 -18 17 56

BHARTI AXA -242 -417 -478 -340 -190

FUTURE GENERALI -30 -256 -357 -320 -130

IDBI FEDERAL -26 -110 -105 -122 -70

RELIGARE AEGON 0 4 4 -24 -57

CANARA 0 -202 -246 -191 -89DLF 0 -44 -93 -109 -128

SUDI 0 -19 -21 -28 -26

INDIA FIRST -45 -65 -73

PROFIT/LOSSES OF LIFE COMPANIES

$o"re &'D nn"a) 'eports24


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2008-092009-10 2010-11 2011-12

Aegon Religare 71.43 43.69 44.62 32.48Aviva 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)

CLAIMS REPUDIATION

(IRDA ANNUAL REPORT)

25


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Company 2008-092009-10 2010-11 2011-12

Kotak Mahindra 9.23 5.31 3.89(7.59) 4.17(18.87)

LIC 1.33 1.59 1.00 1.30

Max New York 7.77 14.35 14.90 8.58(12.47)

Metlife 22.77 24.12 6.06 9.61(13.53)

Reliance Life 5.67 15.27 8.66(16.08)11.02(19.16)Sahara 12.3 3.49 14.39 4.69(9.09)

SBI Life 15.09 5.74 16.73 3.19

Shriram 24.27 23.53 25.87 14.48

Star Union Dai-chi 1.38 2.31

Tata AIG 27.78 15.92 17.07(23.66)15.49(25.75)

CLAIMS REPUDIATION

(IRDA ANNUAL REPORT)

26


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PERSISTENCY RATIO(For the 13thmonth) (upto 31.03.2012)

Policy Annualised PremLIC of India 67.00 83.00

Aviva 58.00 68.00

Aegon Religare 61.00 57.00

HDFC Life 75.35 81.57

India First Life 72.43 73.10

Star Union Dai-Chi 65.00 68.00

Canara HSBC 79.60

Bajaj Allianz 54.57

SBI Life 71.77Met Life 63.56

Max Life 75.00

ICICI Prudential 77.00

Reliance Life 55.90


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THE WORLD IS CHANGING

DEMOGRAPHIC SHIFT AGE, GENDER

CHANGING SOCIAL PATTERNS.

E-COMMERCE.

SHIFT FROM LONG TERM TO SHORT TERMPLANS

CONVENTIONAL / ULIPS

ANNUITIES

HEALTH INSURANCEPENSION PLANS

WORKING IN A REGULATORY REGIME


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AGENCY STATISTICS

2007 2008 2009 2010 2011 2012

riate 8.90 1#.27 15.9#15.75 1#.02 10.81/$ 11.0# 11.94 1#.45 14.0# 1#.#7 12.78

$ndu"tr& 19.9# 25.21 29.#8 29.78 26.#9 2#.59

2007 2008 2009 2010 2011 2012riate 1906 2070 2091 2420 1870 642/$ 409 #45 415 510 295 240

$ndu"tr

& 2#15 2415 2506 29#0 2165 882

INDI5IDUAL AGENTS

C0RP0RATE AGENTS


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PR0DUCTI5ITY 0F AGENTS(P0LICIES S0LD)

2007

life insurance scenario in india

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