1. Media meet on Looking ahead in Life Insurance
19 SEPTEMBER 2013
MUMBAI

2. Overview of Indian Life Insurance Industry1
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 4
AUM of Life Insurers is `17.41 lakh crore 5
Major contributor to every 5 Year Plan 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
*As on 31st March 2013
Looking ahead in Life insurance

3. Indian life insurance industry has grown over the years…
FY12-13 (Provisional)
June 2013
(Provisional)
Parameters
FY99-00
FY08-09
FY10-11
No. of Players 1 22 23 24 24
Capital (`Cr) 5
18,253
23,662
25,519
34,074
No. of Branches
2,048
11,815
11,546
10,253
10,587
Employees (in Lakh)
1.23
2.85
2.42
2.45
2.41
Individual Agents (in Lakh)
7.14
29.38
26.39
21.25
21.31
Source: IRDA Annual Report &Council MIS Report
Looking ahead in Life insurance

4. …by touching the lives of people across the country
Sr. No.
State
No. of Branches* 1
Maharasthra
1149 2
Uttar Pradesh
1123 3
Andhra Pradesh
1056 4
Tamil Nadu
875 5
Gujarat
724 6
Kerala
689 7
West Bengal
687 8
Karnataka
628 9
Rajasthan
575 10
Madhya Pradesh
528 11
Punjab
516 12
Bihar
398 13
Haryana
383 14
Orissa
345 15
Delhi
267 16
Assam
242 17
Jharkhand
238 18
Chhattisgarh
162 19
Uttrakhand
141 20
Himachal Pradesh
126 21
Jammu & Kashmir 97 22
Goa 50 23
Chandigarh 37 24
Tripura 30 25
Meghalaya 26
Puducherry 27
Arunachal Pradesh 28
Sikkim 29
Nagaland
Manipur 31
Mizoram 32
Andaman & Nicobar Islands 33
Dadra & Nagra Haveli 34
Daman & Diu 35
Lakshadweep
Total
11,167
10,587
No. of branches as on
30th June 2013 1 2 3 4 5 6 7 8 9 10
Top 10 states in terms of no. of branches
*As on 31st March 2012
Looking ahead in Life insurance

5. The industry has expanded rural footprint for inclusive growth
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
Source: IRDA, Life Insurance Council, Data for FY
Looking ahead in Life insurance

6. Total Revenue of Life Insurers
Life Insurance industry has witnessed a decline in total revenue but there’s been a healthy increase in renewal premium
` Crore
Total Revenue of Life Insurers
2,91,639
2,87,071
2,87,189
Looking ahead in Life insurance

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

8. Assets Under Management (AUM) of life insurers has also witnessed steady growth
Category of Investments
` Cr (%)
` Cr (%)
` Cr (%)
Traditional Products
Central Govt. Securities
47, (24.48%)
4,68, (38.64%)
5,11, (36.55%)
State Govt. Securities
52, (27.07%)
2,14, (17.71%)
2,66, (19.02%)
Infrastructure Investments
24, (12.80%)
97, (8.03%)
1,16, (8.34%)
Approved Investments
50, (26.03%)
3,85, (31.79%)
4,45, (31.86%)
Other than Approved Investments
18, (9.58%)
46, (3.82%)
59, (4.23%)
ULIP
- -
3,46, (93.61%)
3,25, (94.97%)
Other Investments
23, (6.39%)
17, (5.03%)
Total
1,94, (100%)
15,81, (100%)
17,41, (100%)
Investments have been targeted towards established funds that helped in infrastructure growth of the country
Source: IRDA Annual Report
Looking ahead in Life Insurance

9. Life Insurance industry has continued to contribute significantly towards the economic growth of the country
` Crore
180
750
3,500
16,000
1,32,000
7,25,000 to to to to to to
Life insurance sector has provided long-term funds for infrastructure development through five-year plan
Looking ahead in Life insurance

10. % share of Life Insurance within net household
Life Insurance - one of the most preferred financial savings instrument
Details
FY09-10
FY10-11
FY11-12
Total Savings as a % of GDP
33.7
34.0
30.8
Of which, Net Household Financial Savings as % of Total Savings
35.6
30.6
26.0
Out of Net Household Financial Savings
Fixed Deposits
51.7
59.4
64.1
Life Insurance
26.2
22.3
23.1
Provident & Pension Funds
13.1
14.0
15.6
Shares & Mutual Funds
4.5
0.2
-0.7
Others
4.1
-2.1
Total
100
% share of Life Insurance within net household
* Life Insurance Council projections
Looking ahead in Life Insurance

11. Indian Life Insurance market has huge growth potential when compared with other countries
Size of the Market (US $ Billion)
Life Insurance Penetration (Premium/GDP) – %
Life Insurance Density (Premium per capita – US $)
Asia: 958
World: 2,621
Asia: 4.1%
World: 3.7%
Asia: 230
World: 373
Note: * FY13 in case of India; Source: Swiss Re ‘World Insurance in 2012’
By FY 2020 life insurance penetration expected to grow to 5% of GDP; industry size expected to touch 700 billion US $. Council is of the view that the industry size has the potential to touch 1 Trillion US $ by 2020.
Looking ahead in Life Insurance

12. Indian demography is favourable to the growth of Life Insurance
Life Expectancy
Insurable Population
Insurable population is expected to grow to 75cr. by FY 2020
Looking ahead in Life Insurance

13. The next phase of the life insurance sector

14. Customer Centricity Insurance Awareness Policy Issuance
Service to Customers
Claim Settlement
Looking ahead in Life Insurance

15. Ombudsman – A grievance redressal mechanism established
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.
Year
Total No. of Complaints
Complaints disposed
% of disposal
Complaints pending
% of pending
28,361
21,185
75%
7176
25%
18,557
14,673
79%
3884
21%
Number of complaints are high and they have gone up. The Grievance Redressal efforts have brought the pending complaints down marginally.
Source: IRDA Annual Report
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16. Customer Grievance Redressal through Integrated Grievance Management System (IGMS) has been successful
Year
No. of In-force policies
No. of Grievances reported
No. of Grievances attended
No. of Grievances pending
33.52 Cr.
3,09,613
3,08,331
(99.59%)
1282
(0.41%)
35.87 Cr.
3,42,294
3,41,070
(99.64%)
1224
(0.36%)
Source: IRDA Annual Report
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17. Insurers have also contributed towards the agenda of customer centricity

18. Total benefits* paid to customers by life insurers
` Crore
Total Benefits Paid (` Cr.)
* Total Benefits paid include Death claim, Maturity claim & Surrender payouts.
Source: IRDA Annual Report
Looking ahead in Life Insurance

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

20. Death Claims Settled by Life Insurers – By Amount
Claims Paid
Claims Pending
92.9%
93.1%
98%
3.3%
2.8% 1%
Claims Repudiated
3.8%
4.1% 1%
Looking ahead in Life Insurance

21. Customer Centric initiatives taken by life insurers1
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 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 5
Claims Processing – Claim guarantee, 24x7 Claim Care centre, dedicated claims officer, interest payment on delay in claims payment
Looking ahead in Life Insurance

22. Steps taken to tackle mis-selling
Regulatory Initiatives
Standard Proposal Form has been made mandatory for each individual life proposed w.e.f. 1st April 2014
Before making any recommendation, product suitability matrix to be measured
Benefit illustration compulsory for all products
Life Insurers’ Initiatives
The regulator has already done some work to reduce the incidence of mis-selling. Setting up of a Policyholder Protection Committee as a mandatory Board subcommittee was the first step in this direction. The Standard Proposal Form, aimed at institutionalising the need based sales process is another step in this direction.
1. Brings in uniformity in the industry and will ensure transparency for policyholders
2. Enables policyholder better information on their policy accounts and funds chosen
3. Besides, supporting insurance sector’s contribution to infrastructure it also helps insurers get longer term investment avenues for the long term liabilities assumed by them
4. Ensuring stronger controls on risk management systems and processes of the insurers
Welcome calling before issuing the policy
Mystery shopping to check selling practices
Regular customer satisfaction survey on various aspects of pre and post sales processes
Looking ahead in Life Insurance

23. Key measures that will drive growth in the Life Insurance industry

24. Multiple actions will bring back growth in the life insurance industry
Pioneers in the globe to grant license to e-repositories
5 Repositories authorized to open e-Insurance Accounts.
Increase in FDI in Insurance sector to 49%
Enhancement of dollar inflows in the country immediately and in future on a recurring basis
Arrival of domain capital in the area of products, technology and risk management techniques to ensure steady growth of the industry
Flowing of up to 10 billion US $ in the country
Distribution related initiatives
Expand distribution reach – Insurers are poised to increase number of agents to more than 3 million in the next 5 years
Utilize CSCs to expand reach - One lakh CSCs each serving a cluster of 6-7 villages, covering ~6.5 lakh villages across India
Improve market conduct and raise trust levels with customer
Awareness building initiatives
Increase grievance cells and customer contact centres
E-insurance accounts - This account will help safeguard policyholders to hold insurance policy documents in electronic format and also provide access to the insurance portfolio online. This will help Insurance Companies to open more outlets/offices in rural areas.
Looking ahead in Life Insurance

25. Life Insurance industry expected to record a CAGR of 12-15% over the next 5 years

26. Projections:
The net Household Financial savings could reach around 30% in the next 3 years from the present level of 23.1% (FY 11-12); Life Insurance being the second most preferred financial instrument will benefit from this 1 2
The Penetration level of Life insurance industry is expected to grow from 3.2% to 5% by year 2020 3
Expected CAGR of Life Insurance industry will be 12-15% in the next 3-5 years
Looking ahead in Life Insurance

27. Life Insurance sector will continue to contribute to nation building
Life Insurance employment potential till FY 2020 – Lakh employees 1 2
Life insurance industry contribution to Infrastructure projects – Rs. 3.5 Lakh cr. by FY 2020 3
Increase in FDI up to 10 billion US $ will increase customer coverage in rural and semi urban areas from 72% to 80% and fuel employment growth in the country and contribute to increase in GDP of the country.
Looking ahead in Life Insurance

28. Thank You