Panel Discussion – Setting the Context - the Institute of ...

Panel Discussion – Setting the Context

By Ranabir Ghosh

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Agenda Setting The Context

Panel Discussion - Customer expectations

Panel Discussion - Shareholders’ perspective

www.actuariesindia.org

Panel Discussion - Shareholders’ perspective

Panel Discussion - Perspective of Actuaries

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Panel Discussion Customer expectations and the Customer expectations and the

major gaps

www.actuariesindia.org3

Evolution of Life Insurance Industry

50

100

150

200

250

NB

Pre

miu

m in

IN

R 1

000

Cr

Growth of Life Insurance


• Life Insurance industry grown with a CAGR of 19 % between 2001-2018

-

2002 2006 2010 2014 2018

NB

Pre

miu

m in

IN

R 1

000

Cr

Year

NB Premium Nifty Rebased

Prod, RI Reg 2013

Source for premium and Grievances: IRDAI Annual Report 2017-18 and prev.

4

UL Cir, Reg2010UL Cir 2005

Regulations to protect policyholders

• IRDA (Protection of policyholder’s Interests) Regulations 2002

• IRDAI Circular 032/IRDA/Actl/Dec-2005

• IRDAI Circular (049/IRDA/ACTL/ULIP/JANUARY-08) - ULIP Benefit Illustration

• IRDAI Circulars (055/IRDA/Actl/ULIP/2009-10; IRDA/ACT/CIR/ULIP/102/06/ 2010) – Cap on charges


• IRDA (Treatment of Discontinued Linked Policies) Regulation, 2010

• IRDA (Non Linked Insurance Products) Regulation, 2013

• IRDA (Linked Insurance Products) Regulation, 2013

• IRDA (Life Insurance-Reinsurance) Regulation, 2013

• IRDAI (Payment of commission or remuneration or reward to Insurance Agents) Regulation, 2016

• IRDAI (Protection of Policyholders’ Interests) Regulations, 2017

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Customers’ Response - Persistency

50

55

60

65

70

2013-14 2014-15 2015-16 2016-17

pers

iste

ncy

(%)

Year

13th month persistency (by number of policies)

LIC

Private Avg

• Persistency (by number of policy) was very poor initially and improved over the years.

• BUT still persistency by number of policies is poor


01020304050

2013-14 2014-15 2015-16 2016-17pers

iste

ncy

(%)

Year

61st month persistency (by number of policies)

LIC

Private Avg

Source: IRDAI Handbook 2016-17

number of policies is poor

• In FY 2017-18 some insurers have shown significant improved persistency by premium amount whereas policy wise persistency increased by 1-2% points.

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New Business Pattern – Number of Policies


-40%

-30%

-20%

-10%

0%

10%

20%

050

100150200250300350400450

2013-14 2014-15 2015-16 2016-17

No.

Pol

s in

Lak

hs

Year

New business policy growth

No. of new pols % growth of pols (Sec Axis)


• Total NB premium grew (from 120K Cr to 175K Cr between 2014 to 2017) but not the number of policies (from 409 L to 265 L)

• From 03/2014 to 03/2017 number of individual agent dropped from 21.9 L to 20.89 L, average no. policies sold reduced (17 to 10), but average NB premium increased (2.22 L to 2.6 L) (source IRDAI Handbook 2016-17)

• Similarly number of corporate agent dropped from 689 to 533 but both average no. policies sold (4242 to 6721) and average NB premium increased (1447 L to 4068 L) (source IRDAI Handbook 2016-17)

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Customers’ Perspective – Claim payment

0%10%20%

30%40%

50%60%70%

< 3 months 3-6 months 6-12 months More than 1 year

Duration -wise breakup of Claims Pending (Indiv. policies)

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%

6.00%

2013-14 2014-15 2015-16 2016-17 2017-18

% Repudiation of Claim (By Amount) for indiv policies


• Repudiation of claim is showing decreasing trend

• But still around10% of the claims are paid six months after the date of claim.

Source: IRDAI Annual Report 2017-18Source: IRDAI Annual Report 2017-18, Statement 6

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Customers’ Response - Grievances

0%

10%

20%

30%

40%

50%

60%

Unfair business

Pol Servicing

UL Related

Proposal process

Claim Others

Distribution of Grievances

-

50

100

150

200

250

300

350

400

2012 2013 2014 2015 2016 2017 2018

Num

ber

in 1

000

s

Number of Grievances


• Between 2014 and 2017 the number of grievances shows a falling trend, it moved up again in 2018

• For FY 2017-18 the number was more than 1.5 Lakh

• A significant part of grievances are due to unfair business practice.

2016-2017 2017-2018Year


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Panel 1 – Redefining Customer Expectation

To understand customer need

How to increase customer satisfaction level


How to increase customer satisfaction level

How to ensure a sustainable growth for the industry

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Panel Discussion Shareholders’ perspective Shareholders’ perspective


Opportunities to Life Insurance Industry

• Increasing size of educated population

• Lower penetration in rural market

• Growing bancassurance networks and development of online channel


• Growing bancassurance networks and development of online channel

• Rising need for retirement solutions

• Spread of social Media and digitization

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Challenges to Industry

• Growth of new lives is low

• Many insurers are suffering from high acquisition cost

• Low Persistency for low ticket size policies


• Low Persistency for low ticket size policies

• Customer satisfaction and confidence need to be improved

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Panel 2 – Shareholders’ perspective

To understand insurance business from shareholders’ perspective


At the same time how to ensure better customer satisfaction level

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Panel Discussion Perspective of ActuariesPerspective of Actuaries


Increasing Actuarial Resources

100

200

300

400

500

600

Statistics of Fellow and Associate members of IAI


• Institute of Actuaries of India (IAI) now have more than 550 Associate and Fellow members (85% are below age of 60 years and 72% are below age of 50 years)

• IAI can work on relevant standards and guidelines to bring best industry practices, if required.

0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

No. of Fellows No. of Affiliates No. of Associates

Source: IAI Annual Report 2017-18

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Practice Standard and GN’s issued by IAI

APS/GN Brief Description

APS 1 For the AA’s and other related actuaries of life insurance company; adhere to the professional standard while discharging the duties of the AA

APS 2 For the AA’s and other related actuaries of life insurance company; in addition to APS1 - this specifically addressed to the professional responsibility in the area of valuation, solvency etc.


responsibility in the area of valuation, solvency etc.

APS 4 For AA’s of life insurance; requirement of Peer review

APS 5 For AA’s of life insurance; preparation of BI for NB

APS 7 For the AA’s, Peer reviewers and actuaries of life insurance company; provide guidance on determination of MAD

GN 6 For AA’s of life insurance; declaration of bonus under Par.

Panel 3 – Perspective of Actuaries

How Actuaries can balance the need of customer and shareholders?

Can Actuaries take a bigger role to address the


regulatory concerns?

What can be done for long term sustainability of the industry?

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Institute of Actuaries of India

THANK YOUTHANK YOU


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