Agenda Setting The Context
Panel Discussion - Customer expectations
Panel Discussion - Shareholders’ perspective
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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
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Evolution of Life Insurance Industry
50
100
150
200
250
NB
Pre
miu
m in
IN
R 1
000
Cr
Growth of Life Insurance
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• 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.
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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
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• 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
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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
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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
Source: IRDAI Handbook 2016-17
-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)
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• 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
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• 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
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150
200
250
300
350
400
2012 2013 2014 2015 2016 2017 2018
Num
ber
in 1
000
s
Number of Grievances
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• 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
Source: IRDAI Handbook 2016-17
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Panel 1 – Redefining Customer Expectation
To understand customer need
How to increase customer satisfaction level
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How to increase customer satisfaction level
How to ensure a sustainable growth for the industry
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Opportunities to Life Insurance Industry
• Increasing size of educated population
• Lower penetration in rural market
• Growing bancassurance networks and development of online channel
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• 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
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• 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
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At the same time how to ensure better customer satisfaction level
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Increasing Actuarial Resources
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200
300
400
500
600
Statistics of Fellow and Associate members of IAI
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• 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.
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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
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regulatory concerns?
What can be done for long term sustainability of the industry?
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