1. Presentation On Life Insurance in India
09th March 2010 , Ahmedabad

2. Life Insurance Industry
Life Insurance Industry was liberalized in the year
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.27,620 Cr deployed
Foreign partners have brought in capital of around Rs.4,355 Cr as FDI.
India has the largest in-force policies in the world. 2

3. Growth Indicators…………….Contd
Parameter
FY 99-00
FY 06-07
FY 07-08
FY 08-09
(Apr-Dec09) Q3
Number of players 1 16 18 22 23
Capital Deployed (Rs. Cr) 5
9,485
16,692
24,988
27,620
Branches
2,048
5,373
8,913
11,815
11,931
Employees (in Lacs)
1.23
1.87
2.54
2.85
2.70
Individual Agents (in Lacs)
7.14
19.93
25.20
29.37
29.84
Source: IRDA, Life Insurance Council (Apr-Dec 09 data is provisional)

4. Growth Indicators…………….Contd
Parameters
FY 99-00
FY 06-07
FY 07-08
FY 08-09
(Apr-Dec 09) Q3
Increase from FY 00 to
FY 09
New Business Premium (Rs.Cr)
8,299
75,649
93,713
87,006
67,438
+10 times
Renewal premiums
(Rs. Cr)
17,951
80,427
1,07,639
1,34,785
96,917
+7 times
Total Premium (Rs. Cr)
26,250
1,56,076
2,01,351
2,21,791
1,64,355
+8 times
Expenses of management – Commission (Rs.Cr)
3,171
12,259
14,704
15,533
10,552
+5 times
Expenses of Management-operating expenses (Rs.Cr)
3,756
13,585
20,299
25,724
16,671
+6 times
Source: IRDA, Life Insurance Council (Apr-Dec 09 data is provisional)

5. Growth Indicators Parameter FY 99-00 FY 06-07 FY 07-08 FY 08-09
New Business Policies (In Cr)
1.69
4.61
5.08
5.09
In force Policies (In Cr)
10.14
22.70
25.76
29.6
Source: IRDA, Life Insurance Council (FY data is provisional)

6. Global Parameters Parameter FY 99-00 FY 06-07 FY 07-08 FY 08-09
India’s share of world premium (Life)
0.50%
1.53%
1.83%
1.93
Penetration as % of GDP
1.39%
4.1%
4.0%
Source: IRDA, Swiss Re (Inflation adjusted)

7. Global Parameters
India has largest number of in-force policies in the world (IRDA Annual report).
Source: IRDA report

8. - 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 which are in operation for 6 years or more have to mandatorily sell
18% of new policies in rural areas.
Cover 25,000 lives in social sector every year.
2.6 Crore rural policies were sold by companies in last two years.
(1.05 Crore policies in and 1.55 Crore policies in )
2.09 Crore life's covered in social sector in last two years.
(0.69 Crore in and 1.40 Crore in )
71% of the total 11,815 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

9. Benefits Paid
Parameter
FY 06-07
FY 07-08
FY 08-09
Total Death Benefit paid(Rs.Cr)
4,794
5,288
6,125
Total Maturity claim paid(Rs. Cr)
34,356
34,543
37,806
Total Benefits paid (Rs.Cr)
56,887
61,686
58,343
Surrenders paid have come down from Rs.21,677 Crs in FY to Rs.13,869 Crs in FY indicating better persistency and improved quality of sales.
Source: IRDA, Life Insurance Council

10. Industry Contribution to Provide Support to the Economic Stability in FY 2008-09…………….Contd
New Offices
Insurance Industry opened 2,902 new offices in FY
B. Employment Generation
Have provided direct employment to 30,912 people.
Part time employment to more than 4.17 lacs individual agents during the year.
C. Higher revenue generation and Capital formation
Increase in renewal premium collection by 25 % (Rs.1,07,639 Crs to Rs.1,34,786 Crs)
Increase in unit linked renewal premium collection by 107 % (Rs.22,380 Crs to Rs 46,394 Crs)
Increase in Total Premium collection by 10% (Rs.2,01,351 Crs to Rs.2,21,791 Crs)
Source: IRDA, Life Insurance Council

11. Industry Contribution to Provide Support to the Economic Stability in FY 2008-09…………….Contd
Investment by Indian Insurance Companies
Insurance companies have invested approximately Rs.51,562 Cr in the Equity market.
FII pulled out approximately Rs.47,345 Cr from the domestic stock market.
Mutual funds invested approximately Rs.7,000Cr in the domestic stock market.
Increase in Infrastructure Investment by 25%(Rs.91,283 Cr to Rs.1,13,717 Cr)
“Insurance industry was the saving grace for the domestic equity market”- Hindu Business Line.
Source: IRDA, Life Insurance Council

12. Industry Contribution to Provide Support to the Economic Stability in FY 2008-09…………….Contd
Investments as on March 31,2009
Instruments
Rupees in Crores
Equity
1,99,666
Fixed Income (Debt)
7,08,622
Others
25,742
Total
9,34,030
Prudent asset management strategies aligned to regulations adopted by the industry have provided consumers healthy returns over long-term
Source: Life Insurance Council

13. Expenses of Life Insurance Companies…………Contd
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.
Source: IRDA

14. Expenses of Life Insurance Companies…………Contd
In last 2 years 42% of new premium is collected at a commission rate of % (with no trail commission)
In last four years more than Rs.1,25,000 crores of premium was collected at a commission of % (Lower than the prevailing entry load for mutual funds)
Commission as percent of premium has been declining.
Parameter
FY 99-00
FY 06-07
FY 07-08
FY 08-09
(Apr-Dec 09) Q3
Commission as % of total premium
12.08
7.85
7.30
7.00
6.42
Competition will continue to drive down commission expenses in future.
Source: IRDA, Life Insurance Council (Apr-Dec 09 data is provisional

15. Expenses of Life Insurance Companies
Commission will further come down due to following factors:-
As new generation companies will complete 10 years of operation ,maximum first year commission payable on long term policy will come down to 35%.
Introduction of capping of expenses under ULIPS which is effective from 01st October 2009.
Increasing shift towards alternate cheaper distribution channels like Corporate agents , bancassurance, institutional agencies, direct marketing.
Source: IRDA

16. Protection of Policy holders interest…………….Contd
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
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”.
Note- Detailed guidance is available for new and existing customers on the Life Insurance Council website

18. 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

19. Thank You