Media meet on ‘Customer Centricity’ 8 August 2013 New Delhi

2 Overview of Indian Life Insurance Industry 1 The largest retail financial service business with around 36 crore in-force policies [Largest in the world] 2 High capital intensive industry – ` 25,519 crore deployed 3 ` 6,046 crore FDI by international joint venture partners 5 Major contributor to every 5 Year Plan 4 AUM of Life Insurers is ` lakh crore 6 >10,000 offices across the country – 72% in semi-urban & rural areas 7 Population of 200/203 countries in the world is less than the total number of Indian life insurance customers Customer Centricity *As on 31 st March 2013

3 Indian life insurance industry has grown over the years… No. of Players Capital ( ` Cr) No. of Branches Employees (in Lakh) Individual Agents (in Lakh) Source: IRDA Annual Report &Council MIS Report ,25323,66225,519 2,04811,81511,54610, ParametersFY99-00FY08-09FY10-11 FY12-13 (Provisional) Customer Centricity

4 …by touching the lives of people across the country Customer Centricity Sr. No. State No. of Branches* 1Maharasthra1149 2Uttar Pradesh1123 3Andhra Pradesh1056 4Tamil Nadu875 5Gujarat724 6Kerala689 7West Bengal687 8Karnataka628 9Rajasthan575 10Madhya Pradesh528 11Punjab516 12Bihar398 13Haryana383 14Orissa345 15Delhi267 16Assam242 17Jharkhand238 18Chhattisgarh162 19Uttrakhand141 20Himachal Pradesh126 21Jammu & Kashmir97 22Goa50 23Chandigarh37 24Tripura30 25Meghalaya21 26Puducherry19 27Arunachal Pradesh13 28Sikkim12 29Nagaland11 30Manipur9 31Mizoram8 32Andaman & Nicobar Islands4 33Dadra & Nagra Haveli3 34Daman & Diu1 35Lakshadweep0 Total11, Top 10 states in terms of no. of branches 10,253 No. of branches as on 31 st March 2013 *As on 31 st March 2012

5  Companies are statutorily required to do rural business and cover lives from social sector - rural, un-organized and socially underprivileged from their first year of operation  Companies have to mandatorily sell –18% of new policies in rural areas (1.14 crore policies in ) –Cover 25,000 lives in social sector every year (1.84 crore policies in )  72% of the total 10,253 branches of insurance companies are in semi-urban & rural areas  No such obligations for other products under financial services The industry has expanded rural footprint for inclusive growth Source: IRDA, Life Insurance Council, Data for FY Customer Centricity

6 Life Insurance industry has witnessed a decline in total revenue but there’s been a healthy increase in renewal premium Customer Centricity Total Revenue of Life Insurers ` Crore 2,91,6392,87,071 2,87,189

7 [In –force Policies] And has witnessed a continuous growth of life insurance customer base Customer Centricity Source: IRDA Journal, Data (provisional) Crore

8 Assets Under Management (AUM) of life insurers has also witnessed steady growth Category of Investments ` Cr. (%) ` Cr. (%) ` Cr. (%) Traditional Products Central Govt. Securities47,513 (24.48%)4,68,082 (38.64%) 5,11,248 (36.55%) State Govt. Securities52,524 (27.07%)2,14,515 (17.71%) 2,66,003 (19.02%) Infrastructure Investments 24,887 (12.80%) 97,320 (8.03%) 1,16,645 (8.34%) Approved Investments50,502 (26.03%) 3,85,107 (31.79%) 4,45,611 (31.86%) Other than Approved Investments 18,584 (9.58%) 46,262 (3.82%) 59,161 (4.23%) ULIP Approved Investments - - 3,46,340 (93.61%) 3,25,281 (94.97%) Other Investments ,632 (6.39%) 17,226 (5.03%) Total 1,94,010 (100%) 15,81,259 (100%)17,41,175 (100%) Customer Centricity Source: IRDA Annual Report Investments have been targeted towards established funds that helped in infrastructure growth of the country

9 Life Insurance industry has continued to contribute significantly towards the economic growth of the country ,500 16,000 1,32,000 7,25,000 Customer Centricity to to to to to to ` Crore Life insurance sector has provided long-term funds for infrastructure development through five-year plan

10 Life Insurance - one of the most preferred financial savings instrument Customer Centricity

11 Indian Life Insurance market has huge growth potential when compared with other countries Asia: 958 World: 2,621 Asia: 4.1% World: 3.7% Asia: 230 World: 373 Size of the Market (US $ Billion) Life Insurance Penetration (Premium/GDP) – % Life Insurance Density (Premium per capita – US $) Note: * FY13 in case of India; Source: Swiss Re ‘World Insurance in 2012’ Customer Centricity

The next phase of the life insurance sector

13 Customer Centricity

14  There are 11 ombudsman Centre's in India which provides quick disposal of the grievances of the policy-holders at nominal cost.  Policy document should clearly mention inter-alia the grievance redressal mechanism, name and address of grievance officer, ombudsman to whom complaint can be registered. Ombudsman – A grievance redressal mechanism established Customer Centricity Source: IRDA Annual Report

15 Customer Grievance Redressal through Integrated Grievance Management System (IGMS) has been successful Customer Centricity Source: IRDA Annual Report

16 Existing regulations focused on customer centricity were in place Customer Centricity Protection of customer interest Prevention of mis-selling Filing of advertisement with regulator Benefit illustration for ULIP Disclosure of policy related charges Disclosure of investment risk in ULIP policy Disclosure of commission charged Disclosure & explanation of free-look period

17  Increase in frequency of risk audit from once in 3 years to once in 2 years  With profit committee for participating products  Before making any recommendation, product suitability matrix to be measured  Standard Proposal Form to be made mandatory for each individual life proposed from April 1, 2014  Min 10X Sum Assured multiple  Guaranteed Surrender Values  NRY guidelines of linked plans to apply to Variable products Regulatory changes in recent years have further enhanced focus on customer centricity Customer Centricity Need Based Investment OrientedProtection Oriented  Policyholder Protection Committee – a Board level committee  Mandatory Benefit illustration for all products Transparency

Insurers have also contributed towards the agenda of customer centricity

19 Consistent improvement in Death Claims Settled by Life Insurers – By No. of Policies Customer Centricity Claims Pending 2.1%1.9%2%2% Claims Repudiated 1.8%1.4%1%1% Claims Paid 96%97%

20 Death Claims Settled by Life Insurers – By Amount Customer Centricity Claims PaidClaims PendingClaims Repudiated 3.3%2.8%1%1% 3.8%4.1%1%1% 92.9%93.1%98%

21 Customer Centric initiatives taken by life insurers 1 Customer Education – Audio visuals, contributory articles, newsletters, consumer awareness workshops, direct service for customers 2 Need Based – Pre-Issuance verification, Post-Issuance Welcome calling, Communication calendar for ongoing communication on policy related information 3 Providing Clear Information – Policy information portal, Benefit illustration, Key feature document, Simplified Policy Kit 5 Claims Processing – Claim guarantee, 24x7 Claim Care centre, dedicated claims officer, interest payment on delay in claims payment 4 Grievance redressal – Defined service timelines, self-service modes to customers for ease and convenience, which include its website, interactive voice response system (IVRS) in multiple languages, website for mobile phones, SMS-based services Customer Centricity

22 Treating Customers Fairly – Adopt internationally accepted 6 principles  Increasing overall confidence – Embed TCF in corporate culture.  Meeting Needs – Products and services marketed and sold are designed to meet the needs customers  Clear Information – Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.  Suitable Advise – Create awareness and inculcate behaviour in distribution for promoting Need Based Selling.  Product Performance – Review of funds performance  Post Sales Barriers – Continued focus on improving complaint management process Way forward on Customer Centricity Customer Centricity

Thank You