1. Developments in Indian Life Insurance Industry
16th December 2010, Kochi

2. Agenda Snapshot of Indian Life Insurance Industry
Inclusive Growth of Life Insurance Sector
Investment by Life Insurance Companies
Expenses of Life Insurance Companies
Protection of Policyholders Interest 2

3. Snapshot of Indian Life Insurance Industry
Life Insurance Industry completes a decade of opening up.
Currently there are 23 players in the Life Insurance Industry.
20 Insurance companies have JV’s with foreign partners.
LIC, Reliance Life Insurance and Sahara Life Insurance company are the three companies who do not have JV’s.
All the major international players are present in the Indian Insurance market.
A high capital intensive industry-Rs. 30,396 Cr deployed.
(As of 30th Sept 2010)
Foreign partners have brought in capital of Rs.5053 Crs as FDI.
(As of 31st March 2010)
India has the largest in-force policies in the world. 3

4. Snapshot of Indian Life Insurance Industry……….contd
Parameters
FY 99-00
FY 07-08
FY 08-09
FY 09-10
Apr-Sep
2010
(provisional)
Number of players 1 18 22 23
Capital Deployed (Rs. Cr) 5
16,692
24,988
28,943
30,396
Branches
2,048
8,913
11,815
12,018
11,837
Employees (in Lacs)
1.23
2.54
2.85
2.70
2.62
Individual Agents (in Lacs)
7.14
25.20
29.37
29.78
27.60
More than 72 % of branches are located in Class C cities or lower
Source: IRDA, Life Insurance Council (Apr-Sep 10 data is provisional)

5. Snapshot of Indian Life Insurance Industry……....contd
Parameters
FY 99-00
FY 07-08
FY 08-09
FY 09-10
Apr-Sep
2010
(provisional)
New Business Policies (In Cr)
1.69
5.08
5.09
5.32
2.00
In force Policies (In Cr)
10.14
25.76
29.60
30.40
31.22
New Business Premium (Rs.Cr)
8,299
93,713
87,331
1,09,894
62,450
Renewal premiums
(Rs. Cr)
17,951
1,07,639
1,34,454
1,55,556
62,805
Total Premium (Rs. Cr)
26,250
2,01,351
2,21,785
2,65,450
1,25,254
As per IRDA guidelines Life Insurance Companies have to mandatorily sell 18%policies in rural areas.
Source: IRDA, Life Insurance Council (Apr-Sep 10 data is provisional)

6. Snapshot of Indian Life Insurance Industry ……..contd
Parameter
FY 99-00
FY 07-08
FY 08-09
FY 09-10
India’s share of world premium (Life)
0.50%
1.83%
1.98%
2.45%
Penetration as % of GDP
1.77%
4.0%
4.60
New Business Policies (In Cr)
1.69
5.08
5.09
5.32
In force Policies (In Cr)
10.14
25.76
29.6
31.89
The industry services largest number of life insurance policies in the world
Source: IRDA

7. Snapshot of Indian Life Insurance Industry ……..contd
Benefits Paid
Parameter
FY 06-07
FY 07-08
FY 08-09
FY 09-10
Apr-Sep
2010
(provisional)
Total Death Benefit paid(Rs.Cr)
4,794
5,288
6,125
8,385
4,937
Total Maturity claim paid(Rs. Cr)
34,356
34,543
37,806 NA
Total Benefits paid (Rs.Cr)
56,887
61,686
58,527
95,883
64,742
Source: IRDA, Life Insurance Council (Apr-Sep 10 data is provisional)

8. Inclusive Growth of Life Insurance Sector
Agenda
Inclusive Growth of Life Insurance Sector 8

9. - Inclusive growth of Life Insurance Sector
Companies are statutorily required to do rural business and cover lives from social sector -rural, un-organized and socially underprivileged from there first year of operation.
Companies have to mandatorily sell
18% of new policies in rural areas.
Cover 25,000 lives in social sector every year.
2.8 Crore rural policies were sold by companies in last two years.
(1.55 Crore policies in and 1.26 Crore policies in )
3.36 Crore life's covered in social sector in last two years.
(1.43 Crore in and 1.93 Crore in )
72% of the total 12,018 branches of insurance companies are in semi-urban or rural areas (33% in rural areas).
No such obligations for Mutual Funds which operate mostly in 16 cities.
Source: IRDA, Life Insurance Council

10. Investment by Life Insurance Companies
Agenda
Investment by Life Insurance Companies 10

11. Investment by Life Insurance Companies
Rs. Crs
Parameter
FY 00-01
FY 07-08
FY 08-09
FY 09-10
Central Government Securities
47,512
2,96,687
3,16,010
3,61,520
State Government and other approved securities
5012
85,198
1,07,190
1,36,998
Investment in Infrastructure Sector
24,887
91,283
1,15,369
1,39,710
In FY life insurers invested 7,44,505 lakh crores in Central government, state government and other approved securities.
Source: IRDA, Life Insurance Council

12. Investment by Life Insurance Companies……..contd
Pattern of investment
Rs. Crs
Instruments FY
As on 30th Sep 2010
Equity
4,46,881
5,29,444
Fixed Income (Debt)
8,10,904
8,72,577
Others
32,161
33,185
Total
12,89,946
14,35,206
Source: Life Insurance Council (data is provisional)

13. Expenses of Life Insurance Companies
Agenda
Expenses of Life Insurance Companies 13

14. Expenses of Life Insurance Companies
Insurance is a long term contract with average tenure of 15 years.
Comparatively high start-up cost to be related to a long tenure.
Under Section 40 B of Insurance Act 1938, there is a capping on expenses of management.
- Exemption is granted to companies in first 5 years of operation.
- Any non-compliance later is viewed adversely by IRDA.
Maximum Commission payable to agents under various product heads is prescribed in the Insurance Act (section 40 A).
Longer the term of the policy, lower is the premium and therefore percent commission is higher. For shorter term policies the percent commission is lower as premium is higher. This ensures that the absolute commission is reasonable.
In last four years (i.e. from FY to FY 09-10) more than Rs.1,55,600 crores of premium was collected at a commission of less than 2.0%
Source: IRDA

15. Protection of Policyholders Interest
Agenda
Protection of Policyholders Interest 15

16. Protection of Policy holders interest
All advertisements are to be filed with the regulator & must satisfy fairness criteria.
It is mandatory to explicitly give information on the definitions of all the applicable charges, method of appropriation of these charges and the quantum of all the charges during the entire term of the policy.
All ULIP sales illustration should highlight the rate of return calculated at 6% and 10% to enable comparison across various products. The illustration is to be signed by the proposer.
It is compulsory to mention on top each ULIP policy document “In this policy, the investment risk in investment portfolio is borne by policy holder.
Policy document should clearly mention inter-alia the grievance redressal mechanism, name and address of grievance officer, ombudsman to whom complaint can be registered.

17. Protection of Policy holders interest…………..…….Contd
Under regulation 6(1)Policy holders are given a 15 day free-look period from the date of receipt of policy document, where in the policy holder can review the terms and condition of the policy and opt to return the policy and claim refund.
Section 45 of the Insurance Act “Policy not to be called in question on ground of mis-statement after two years”.
U/s 17d of Insurance Act 1938, there is a capping on expenses of management.
Overall capping of expenses for ULIP is:-
More than 10 years bps
Less than 10 years bps

18. Protection of Policy holders interest…………..…….Contd
Recent Regulatory Changes
Cap on surrender charges / discontinuance.
Lock in period increased to 5 years
Even spread of charges during the lock in period
Guarantee of return at maturity for ULIP Pension / Annuity Plans (4.5%)
Minimum life insurance cover should be 110% of Single Premium for age at entry of 45 years and above and 125 % for age at entry below 45 years.
Disclosure of Commission to the prospect.

19. Protection of Policy holders interest…………….Contd
Transparency and Corporate Governance
Public Disclosures
Companies are required to disclose detailed financial & statistical information on quarterly /half yearly and yearly basis on their website.
Companies are required to publish audited half yearly and annual financial statement in newspapers.
Corporate Governance
Companies are required to follow Corporate Governance guidelines which are followed by all listed companies in India.

20. Protection of Policy holders interest…….………….Contd
Grievance Redressal Mechanism
Note:-
There are 12 ombudsman Centre's in India.
The companies cannot challenge the decision of the ombudsman
Register a Complaint with the Toll free number / helpline of the Company
Complaint to the Grievance officer of the company
Complaint to Council /IRDA / Ombudsman

21. Kerala Specific Data Individual New Business Premium (In Cr)
Parameter
FY 07-08
FY 08-09
FY 09-10
Individual New Business Premium (In Cr)
3,913
6,347
4,073
4,635
Individual New Business Policies
20,38,410
26,67,078
25,13,726
24,35,371
Branches
371
646
839
831
Number of Agents
1,10,127
1,40,099
1,59,408
1,59,884
Source: IRDA

22. Thank You

23. Life Insurance New Business Premium
Rs.Crs
Category
Premium %
Life
20,258 77
28,534 74
50,988 67
55,796 60
61,906 71
71,756 66
Annuity
1,759 7
1,668 4
1,982 3
2,577
4,357 5
5,686
Pension
4,077 15
8,575 22
22,649 30
35,245 37
20,388 23
31,676 29
Health
123
0.5 8
0.02
0.04 94
0.1
339
0.39
335
0.31
Total
26,217
38,785
75,649
93,712
86,990
1,09,453
Note: Figures may not add up to 100% due to rounding off
Source: IRDA

24. Life Insurance Business
New Business Premium collected for Pension and Annuity schemes in last 5 years
Rs.Crs
Category
Pension & Annuity
10,243
24,631
37,822
24,745
37,362
Policies
Category
Pension Policies
20,42,661
67,59,813
99,23,334
51,56,146
64,66,139
Source: IRDA