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The teenaged life insurance industry Lessons learnt and way ahead

This article explores the growth and transformation of the life insurance industry in India, highlighting the lessons learned and looking ahead at future trends. It discusses the evolution of product offerings, distribution channels, and customer engagement. The article also emphasizes the importance of addressing pensions and increasing trust in the industry.

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The teenaged life insurance industry Lessons learnt and way ahead

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  1. The teenaged life insurance industry Lessons learnt and way ahead November 28, 2014 Puneet Nanda

  2. How do we see ourselves

  3. Good?

  4. Not so good?

  5. A good time to look back

  6. Indialife insurance growth story FY2008 FY2002 FY2014 18 24 12 Number of players -2.4% 28.7% New business premium1 (INR Bn) 527 454 116 Total premium (INRBn) 7.7% 2,014 3,141 501 26.1% Penetration (as a % to GDP) 2.8% 2.1% 4.0% 15.4% 24.3% Assets under management (INR Bn) 2,304 8,477 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

  7. Good

  8. A transformative period Traditional products Multi product portfolio: ULIP, Traditional, Health etc. Agency channel Multi channel distribution: Bancassurance, brokers, online & proprietary sales FY 2000 FY 2014 Service delivery through Branches or Agents only Technology driven service delivery: Call centers, e-mail, SMS, website and smart phone Physical, document heavy process Smoother, digitized process with reduced paper work

  9. Leading to a more holistic appreciation of insurance

  10. Rise in all perceived benefits of insurance Source: Nielsen Life studies

  11. Not so good?

  12. Have we sold the concept of Human Life Value?

  13. Have we focused adequately on Pensions?

  14. Need for a robust pension system 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 1. Source: OECD statistics, autonomous funds as % of GDP, 2010

  16. Pension market size: Organised sector 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 • Pay only for 3 years • Withdraw your money after 3 years Transparency • X% returns*…..(*of your Sum Assured) Simple Product • Terminal Bonus, Vested Bonus, Reversionary bonus, Simple bonus, Compound bonus… Comfort of protection • 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 long-term product

  23. 13th month persistency: Lower than Asian peers 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

  27. How will these trends shape our industry?

  28. …Or can we use these trends to engender more trust amongst our customers?

  29. Looking ahead

  30. Looking ahead Products Risk assessment Distribution Processes Customer engagement

  31. Products Risk assessment Distribution • Flexible structure • Yet easy to understand Processes Customer engagement

  32. Products Risk assessment Distribution • Leverage information across ecosystem • Segmented underwriting Processes Customer engagement

  33. Products • Increasing use of Social Media platforms • Usage of analytics to anticipate customer requirements Risk assessment Distribution Processes Customer engagement

  34. Products Risk assessment • Less physical, more digital • Distributor as mobile branch Distribution Processes Customer engagement

  35. Products • Choice of channel with customer • Smart identification of prospects using Data analytics • Use of technology to sell effectively Risk assessment Distribution Processes Customer engagement

  36. Products Risk assessment Distribution Implication? Processes Customer engagement

  37. Changing consumer context Key future trends Tech capability More Innovation More Trust More consumers

  38. Looking ahead FY 2014 FY 2020E* Amounts in INR trillion 15% CAGR 113.55 262.65 Nominal GDP 15% CAGR 11.74 27.16 Gross financial savings 15% CAGR Net Insurance inflow 2.00 4.62 2.8% 4.0% Penetration (as a % to GDP) 21% CAGR 61.79 20.07 Assets under management Source: RBI, CSO *Company estimates

  39. Looking ahead FY 2014 FY 2020E* Amounts in INR trillion 15% CAGR 113.55 262.65 Nominal GDP 15% CAGR 11.74 27.16 Gross financial savings Amongst the Top 7 insurance markets globally by 2020 15% CAGR Net Insurance inflow 2.00 4.62 2.8% 4.0% Penetration (as a % to GDP) 21% CAGR 61.79 20.07 Assets under management Source: RBI, CSO *Company estimates

  40. 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…

  41. Smooth ride ahead

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