Development in Life Insurance
iConnect
22 August, 2015
Sunil Sharma
Agenda
India snap shot
Life insurance ; growth story
Pattern of savings in India
Insurance Penetration
Issues and Challenges in Life Insurance
Opportunities for actuaries
Environment
India’s Demographics Population 128.28 crore.
GDP is $ 2.0 trillion (approx.Rs. 125 lakh crore)
72 % of the total population resides in semi -urban and
rural areas.
Economy expected to grow at 7.5% between 2015-16.
Services industry contribute to 65% to GDP
Insurance penetration 3.3%in FY14 ( 3.9% FY13) against
world average of 6.2%.
Pattern of Savings in India
Type of Savings FY 11-12 FY 12-13
FY 13-14
Bank and other
deposits 59.1 56.6 58.8
Insurance 21.2 17.3 17.0
Provident and
Pension fund 10.3 11.7 11.6
Shares and
debentures -0.3 4.1 2.9
Currency and
others 9.7 10.3 9.7
Source: IRDA, Public disclosures, Life insurance council, Company
estimates
Snapshot of Life Insurance Industry
Source: IRDA, Life Insurance Council (FY 14-15 data is provisional)
Parameter FY 99-
00 FY 11-
12 FY 12-13
FY 13-14
FY 14-15
(provisional
)
India’s share of world
premium (Life)
0.50% 2.30 % 2.03% 2.20 % 2.1 %
New Business Policies
Indiviual (In Cr)
1.69 4.41 4.41 4.08 2.59
In force Policies (In Cr) 10.14 33.52 33.61 33.54 32.75
5
The industry services largest number of life insurance policies in the world
~ 200 countries in the world have population below nos of policies in India
Insurance Penetration Trend
1.93
2.32
2.71
3.26
2.88
3.17 3.14
4.8 4.7
4.6
5.2 5.1
4.1 3.96 3.9
3.3
0
1
2
3
4
5
6
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Penetration
Penetration of Life Insurance
0
2
4
6
8
10
USA UK Germany Japan India Russia Brazil China% o
f P
rem
ium
to G
DP
Life Insurance Penetration
Source: Life insurance council
Total premium (INR Bn)
Penetration (as a % to GDP)
New business premium1 (INR Bn)
Number of players
FY2014
24
454
3,141
FY2002
12
116
501
2.1%
28.7%
26.1%
Source: IRDA, Public disclosures, Life insurance council,
India life insurance growth story
Assets under management (INR Bn)
20,069 2,304 24.3%
1. Retail weighted premium
FY2008
18
527
2,014
8,477
-2.4%
7.7%
15.4%
4.0% 2.8%
8
Future is bright
Parameters Actual as of Projection
2015
2015-16 2020-21 2023-24 2024-
25
GDP (Trillion USD) 2.0 2.10 2.81 2.65 3.55
Premium (Billion USD) 57
( 3.27 lakh
crore)
--- --- --- ---
Gross Premium
underwritten as % of
GDP( Penetration) (Billion
USD) :-
(a) 3% --- 63 85 101 107
(b) 4% --- 84 113 134 142
(c) 5.5% --- 126 169 202 214
1USD = INR 58
Projection of Life insurance Premium considering GDP growth rate of 6 %
9 Source: Life insurance council, Company estimates
Issues and Challenges in Life Insurance
Productivity of distribution Channels
Tied Agents
Brokers
Banks
Others
Direct
Expense Management
Acquisition Expenses; expense overrun
Maintenance Expenses
Regulations
Solvency
Taxation
Issues and Challenges in Life Insurance
Misselling
Low persistency
Surrenders
Asset Liability Management
Availability of Assets
Difficulty in matching the cash flows
Guaranteed non-par Products
Comparison with UK and US Profession
Institut
e
Incorp. Nos of
Fellows
Nos of
Associa
tes
Date of
report
IAI Sept1944 278 151 31.03.14
SOA 1949 15,729 9,849 31.12.14
IFA July 1948 11,340 418 31.12.13
Where actuaries are employed in UK
Life Insurance (insurance and reinsurance cos.)
Pensions and Employee benefits ( trusts, consulting companies)
General Insurance ( insurers and reinsurers)
Investment Management ( commercial Banks)
Health and care insurance or advice ( insurer, reinsurers and consulting
Firms)
Investment Banking ( advisory and Finance)
Enterprise Risk Management ( insurers, regulators, consultants, Banks
and non-Ins companies)
Education ( Universities and colleges)
And Information technology
13th Month persistency of Industry
85%
71%
65%
72% 72%
70%
67%
60%
65%
70%
75%
80%
85%
90%
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
Series1 85% 71% 65% 72% 72% 70% 67%
13th month persistency for LI industry
Source: IRDA data on industry 13th month persistency
Expense of management
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
110.0%
Expense of Management to Gross Direct Premium Ratio
Source: IRDA data public doisclosures; IFS Seminar
Thank You
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