1
2
3
4
A good time to look back
5
India life insurance growth story
FY2002
FY2008
FY2014
Number of players
12
18
24
New business
premium1 (INR Bn)
116
28.7%
527
Total premium (INR Bn)
501
26.1%
2,014
Penetration (as a % to
GDP)
2.1%
Assets under
management (INR Bn)
2,304
-2.4%
7.7%
8,477
3,141
2.8%
4.0%
24.3%
454
15.4%
20,069
Sum Assured to GDP continues to be less than 50%
1. Retail weighted premium
Source: IRDA, Public disclosures, Life insurance council, Company
estimates
6
7
A transformative period
Traditional products
Multi product portfolio: ULIP,
Traditional, Health etc.
Service delivery
through Branches or
Agents only
Physical, document heavy
process
Multi channel distribution:
Bancassurance, brokers, online
& proprietary sales
FY 2014
FY 2000
Agency channel
Technology driven service
delivery: Call centers, e-mail,
SMS, website and smart phone
Smoother, digitized process
with reduced paper work
8
Leading to a more holistic appreciation of
insurance
9
Rise in all perceived benefits of insurance
Protect my family in case of my
untimely death
For my child's Future
For my old age
Regular savings
Good returns
Safety of my money
Another avenue of savings
Save tax
Source: Nielsen Life studies
10
11
Have we sold the concept of Human Life
Value?
12
Sum Assured as a %age of GDP - 2013
250%
225%
193%
200%
150%
115%
100%
46%
50%
32%
0%
Indonesia
India
Malaysia
Hong Kong
Singapore
13
Have we focused adequately on Pensions?
14
Need for a robust pension system
N SS Round
Total
% age of form al % age of inform al
em ployem ent sector w orkers
sector w orkers
55th round
(1999-00)
61st round
(2004-05)
66th round
(2009-10)
68th round
(2011-12)
396.8
13.66%
86.34%
457.5
13.66%
86.34%
459.0
26.71%
73.29%
472.9
28.86%
71.14%
Numbers in million
71% of India’s working population does not have access to
a reliable post-retirement financial support system
15
Large potential for pension market in India
Retirement assets as % of GDP
100
90.95
90
88.68
80
72.67
66.97
70
64.66
60
50
40
30
20
9.78
10
7.9
5.18
4.57
Germ any
Italy
0
Australia
UK
US
Chile
Canada
India
Spain
16
1. Source: OECD statistics, autonomous funds as % of GDP, 2010
Pension market size: Organised sector
Assets in Provident Funds 1
INR 5,000 bn
Gratuity / Superannuation Funds 2
INR 860 bn
Annuities/ pension fund with insurers
NPS – government sector 4
NPS – All citizens4
3
INR 1,900 bn
INR 210 bn
INR 7 bn
Organised sector pension assets are over INR 8,000 bn
1. including EPFO, exempt PFs and PPF; Source: EPFO Annual report 2010-11, market intelligence
2. Source: LIC data & internal estimates
3. Source: IRDA Annual report 2010-11 * Not including unit linked
pension funds
4. National Pension Scheme - Source: September 2012
17
Have we sold right?
18
What a customer seeks
Simple Product
• A product that can be understood
Transparency
• What do I pay and what do I get?
Flexibility
• Payment flexibility
• Liquidity options
Comfort of
protection
• Protection of financial risk
• Protection of mortality risk
19
How the industry sold
Flexibility
Transparency
Simple Product
Comfort of
protection
• Pay only for 3 years
• Withdraw your money after 3 years
• X% returns*…..(* of your Sum Assured)
• Terminal Bonus, Vested Bonus,
Reversionary bonus, Simple bonus,
Compound bonus…
• Minimum life cover
• Projection of past fund returns
20
The result: When the economy had a
downturn…..
21
The industry bore the brunt…..
22
And leading to insurance not being seen as a longterm product
23
13th month persistency: Lower than Asian peers
13th month persistency for LI industry
90%
85%
85%
80%
75%
72%
71%
72%
70%
70%
67%
65%
65%
60%
Series1
Mar-08
85%
Mar-09
71%
Mar-10
65%
Mar-11
72%
Mar-12
72%
Mar-13
70%
Mar-14
67%
Source: IRDA data on industry 13th month persistency
“The 13th month persistency of Indian insurers is much lower compared to their Asian
peers”
HSBC Global research report
24
Taking stock
25
A good time to look back
…in order to see ahead
26
Key trends that are shaping our future
Time
=
Money
Rising
service
expectations
Access to
information
Key future
trends
Need for
transparency
and Control
Premium on
Simplicity
29
How will these trends shape
our industry?
30
…Or can we use these trends to
engender more trust amongst our
customers?
31
Looking ahead
32
Looking ahead
Products
Risk
assessment
Customer
engagemen
t
Distribution
Processes
33
Products
Risk
assessment
• Flexible structure
Distribution
• Yet easy to
understand
Customer
engagemen
t
Processes
34
Products
Risk
assessment
• Leverage
information
across ecosystem
Distribution
• Segmented
underwriting
Customer
engagemen
t
Processes
35
Products
Risk
assessment
• Increasing use of
Social Media
platforms
Distribution
• Usage of analytics
to anticipate
customer
requirements
Customer
engagemen
t
Processes
36
Products
Risk
assessment
• Less physical,
more digital
Distribution
• Distributor as
mobile branch
Customer
engagemen
t
Processes
37
Products
Risk
assessment
• Choice of channel with
customer
• Smart identification of
prospects using Data
analytics
Distribution
• Use of technology to
sell effectively
Customer
engagemen
t
Processes
38
Products
Risk
assessment
Distribution
Implication?
Customer
engagemen
t
Processes
39
Changing
consume
r context
Key
future
trends
Tech
capability
More Innovation
More Trust
More
consumers
40
Looking ahead
Amounts in INR
trillion
Nominal GDP
Gross financial
savings
FY
2014
113.55
11.74
FY
2020E*
15%
CAGR
15%
CAGR
262.65
27.16
15%
CAGR
Net Insurance
inflow
2.00
4.62
Penetration (as a
% to GDP)
2.8%
4.0%
Assets under
management
Source: RBI, CSO
*Company estimates
21%
CAGR
20.07
61.79
41
Looking ahead
Amounts in INR
trillion
Nominal GDP
Gross financial
savings
FY
2014
113.55
11.74
FY
2020E*
15%
CAGR
15%
CAGR
262.65
27.16
15%
CAGR
Net Insurance
inflow
2.00
4.62
Penetration (as a
% to GDP)
2.8%
4.0%
Assets under
management
Source: RBI, CSO
*Company estimates
21%
CAGR
20.07
61.79
42
We are ready to switch gears
Keeping the Customer at
the core…
Along the way we
encountered a few bumps
It started with a smooth ride…
43
Smooth ride ahead
44