Table 3.1: List of Private Life Insurance Companies in India

Transcription

1 PROFILE OF SAMPLE UNITS The Life insurance companies are the most trusted financial service providers. Insurance business is all about human beings and its aim is to protect their interests and well-being. No other business organization can get satisfaction which an insurer gets when he fulfills his promises to the insured, when he is in need or his people after his departure. Insurance business has not been on par with the banking operations which are of dire importance in each and every sphere of activity. Yet, insurance business in our country has also made rapid strides because of the opening up of the insurance sector and also effective implementation of insurance reforms. As the tasks of the insurers are taking a remarkable change in all directions, there is no doubt that the trust and confidence the customers repose on the insurers makes the accomplishment of the tasks a reality. Apart from Life Insurance Corporation, the public sector life insurer, there are 23 other private sector life insurers, most of them are joint ventures between Indian groups and global insurance giants. Table 3.1: List of Private Life Insurance Companies in India Sr. No Name of Company Registratio n No. 1 HDFC Standard Life Insurance Co. Ltd 2 Max New York Life Insurance Co. Ltd 3 ICICI Prudential Life Insurance Co. Ltd 4 Kotak Mahindra Old Mutual Life Insurance Co. Ltd 5 Birla Sun Life Insurance Co. Ltd 6 Tata AIG Life Insurance Co. Ltd Date of Registration Indian Promoter Foreign Promoter HDFC Ltd Standard Life Assurance, UK MAX India New York life, USA ICICI Bank Prudential, UK Kotak Mahindra Bank Old Mutual, South Africa Birla Group Sun Life, Canada TATA Group American International Assurance Co., USA 94

2 7 SBI Life Insurance Co. Ltd 8 ING Vysaya Life Insurance Co. Ltd 9 Bajaj Allianz Life Insurance Co. Ltd 10 Metlife Life Insurance Co. Ltd 11 Reliance Life Insurance Co. Ltd 12 Aviva Life Insurance Co. Ltd 13 Sahara India Life Insurance Co. Ltd 14 Shriram Life Insurance Co. Ltd 15 Bharti AXA Life Insurance Co. Ltd 16 Future Generalia India Life Insurance Company Ltd 17 IDBI Federal Life Insurance Co. Ltd 18 Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited State Bank of India VYSYA Bank BNP Paribas Assurance, France ING insurance International, Netherlands Bajaj Auto Allianz, Germany J & K Bank Met life International Holdings Ltd.,USA Reliance Capital Dabur Group Aviva International Sahara Group Shriram Group Sanlam Group, South Africa Bharti Group AXA Holdings, France Future Group Pantaloon Retail Ltd Sain Marketing Network Pvt. Ltd. (SMNPL), Generali, Italy IDBI Bank Fedral Bank Fortis, Netherlands Canara Bank HSBC Insurance Holdings Ltd & Oriental Bank of Commerce 95

3 19 AEGON Religare Life Insurance Company 20 DLF Pramerica Life Insurance Company Limited 21 Star Union Dai-ichi Insurance Co. Ltd 22 India First Life Insurance Company Ltd 23 Edelweiss Tokyo Life Insurance Co. Ltd Source: Religare Enterprises Limited Aegon, US DLF Group PFI, US Bank of India, Union Bank of India Bank of Baroda, Andhra Bank Edelweiss Financial Services Dai-ichi Mutual Life Insurance Co. Japan Legal General, U.K. Tokio Marine For the purpose of research, four private sector life insurance companies have been selected namely, ICICI Prudential Life Insurance, HDFC Standard Life Insurance, SBI Life Insurance and Bajaj Allianz Life Insurance. These companies have been selected on the basis of premium collection till 31 st March (See figure 1.4 of Chapter-1). 96

4 3.1 ICICI PRUDENTIAL LIFE INSURANCE ICICI Prudential Life Insurance Company Limited (ICICI Prudential Life) is a joint venture between ICICI Bank, India s second largest bank and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential Life was among the first private sector life insurance companies to enter the insurance space in December ICICI Bank and Prudential plc hold 74% and 26% stakes, respectively, in ICICI Prudential Life.. For the past decade, ICICI Prudential Life Insurance has maintained its dominant position (on new business retail weighted basis) amongst private life insurers in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life. The Company offers a range of life, pension and health products across traditional and unit linked platforms with a view to provide a range of solutions to meet specific needs of customers. During the year the company has strengthened its solution-based sales processes by enabling products to be positioned to meet the customers life stage needs. The company continues to design products that will provide a good value proposition to our customers to help them plan for their goals. The Company reaches its customers through 559 offices in 489 locations at March 31, As on March 31, 2014, the Company had over 10,700 employees and over 171,000 advisors and is thus well equipped to cater to the needs of customers. The Company distributes its products and renders services through its offices as well as individual agents, corporate agents, banks, brokers, proprietary sales force (PSF) and online channels. The digitization initiative has helped the Company expand its reach by making us agnostic to presence of physical offices. To further this initiative, the company has deployed more than 6,000 handheld devices. 97

5 Financial Performance The Company registered a decline of 1.7% in RWRP FY2014. The Company s market share based on RWRP is expected to be around 7.2% in FY2014. Total premium collected by the Company declined by 8.2% from Rs billion in FY2013 to Rs billion in FY2014 primarily on account of decline in group premium. Retail premium was flat with new business declining marginally from Rs billion in FY2013 to Rs billion in FY2014 and renewal premium were increasing marginally from ` billion in FY2013 to Rs billion in FY2014. This increase in retail renewal premium arrests the two year trend of declining renewal premiums. The Company registered 4.7% growth in profit after tax from Rs billion in FY2013 to and on-boarding continues to gain momentum. Capability to issue policies in less than three hours is first of its kind in the industry. For FY2014, 80% of new business applications were initiated using the online platform. In addition, 41% of the retail renewal premium was collected through electronic mode. The Company has been strengthening mechanisms to improve persistency including ensuring higher attachment of ECS or standing instructions at the time of sale and changes in performance management and compensation design to better align distributor and sales management to focus on persistency. These have led to increase in retail renewal premium after two years and improvement in Year 1 persistency. The Company distributes its products and renders services through its offices as well as individual agents, corporate agents, banks, brokers, the Company s proprietary sales force and online channels. The Company registered an increase in market share to 11.3% for FY2015 from 7.2% in FY2014 based on RWRP. The Company s RWRP registered a strong growth of 41.3% to Rs billion in FY2015 as compared to Rs billion in FY2014. Among the private players, the market share increased to 23.0% from 18.9% in FY2014. Total gross premium collected by the company registered a growth of 23.2% to Rs billion in FY2015 from Rs billion in FY2014. Our continued focus on customer retention has resulted in increase in retail renewal premium by 18.2% to Rs billion in FY2015 from billion in FY

6 The 13th month persistency ratios have also improved significantly to 79.3% in 11m-2015 compared to 71.5% in FY2014. Agency channel was able to arrest the year on year declining trend with a growth of 22.1% in FY2015 as against decline of 19.7% last year. The Company successfully integrated a new bancassurance relationship with Standard Chartered Bank which further strengthened the franchise. Bancassurance emerged as the predominant channel with a contribution of 59.2% and a growth of 53.0% compared to 19.5% in FY2014. Total expenses remained flat at Rs billion in FY2015 as compared to Rs billion in FY2014. This was despite a strong growth in new business premium as well as total premium. As a result Cost to RWRP ratio improved significantly to 49.1% for FY2015 as compared to 69.3% in FY2014. Profit after tax (PAT) for the Company registered a 4.3% growth and increased to Rs billion in FY2015 compared to Rs billion in FY2014. The Company was able to wipe out the accumulated losses with the balance in the P&L account of Rs.0.48 billion as at March 31, The financial position of the Company remained strong with a solvency margin of 336.9% in FY2015 compared to 372.3% for FY2014 against regulatory requirement of 150%. The Company has been able to maintain healthy return on invested capital at 33.9% for FY2015. The assets under management reached a significant milestone this year with the Company becoming the only private life insurer to have an AUM of `one trillion in March The AUM increased to Rs.1, billion as at March 31, 2015 from Rs billion as at March 31, Digitization has been a major cornerstone of our strategy to deliver superior value to our customers. The end to end use of technology from on boarding of customers to payouts has yielded significant gains. New business applications initiated using the digital platform stood at 93% for FY % of renewal premium payment was completed through standing instructions and online payment mode and 92% of our payouts were made through electronic mode. The company has a strong capital position which provides resilience to our balance sheet to comfortably manage business cycles. The total capital infused in the company at Rs billion as on March 31, 2015 is the highest in the industry and our solvency margin is quite robust at 336.9% as against the mandated 150% (as on December 31, 2014). The company has also wiped off the accumulated losses during Q3-FY2015. The company became the first 99

7 private life insurance company in India to start paying dividends in FY2012. The aggregate dividend paid during FY2015 was Rs billion. Total dividend paid so far amounts to Rs billion. The financial position of the Company remained strong with a solvency margin of 336.9% in FY2015 compared to 372.3% for FY2014 against regulatory requirement of 150%. The Company has been able to maintain healthy return on invested capital at 33.9% for FY2015. The assets under management reached a significant milestone this year with the Company becoming the only private life insurer to have an AUM of one trillion in March The AUM increased to Rs.1, billion as at March 31, 2015 from Rs billion as at March 31, Digitization has been a major cornerstone of our strategy to deliver superior value to our customers. The end to end use of technology from on boarding of customers to payouts has yielded significant gains. New business applications initiated using the digital platform stood at 93% for FY % of renewal premium payment was completed through standing instructions and online payment mode and 92% of our payouts were made through electronic mode. The Company has also seen a gradual increase in the Return on Equity (ROE) generated over the years. The ROE has increased from 31.2% in FY2013 to 32.7% in FY2014 and for FY2015, the ROE is 33.9%. There has been a considerable decrease in the cost to RWRP ratio, over the same period from 75.4% in FY2013 it went down to 69.3% in FY2014 and in FY2015 it stands at 49.1%. Products In 2014, the Company revamped its entire portfolio of products to ensure adherence to the new product regulations issued by IRDA. These regulations covered product design of all retail and group products including unit linked and traditional products. The Company currently offers a range of products across unit linked and traditional platforms to meet specific customer needs. The Company has introduced unit linked life and pension products that offer equity participation while providing a capital guarantee. In FY2014, the Company had a balanced product mix with traditional products contributing to 33.9% of the retail new business premium. The linked mix increased to 84.8% in FY2015 up from 66.5% in FY2014. The company has focused 100

8 on increasing the overall protection component of its business as a result of which the Sum assured in force increased to Rs.3, billion from Rs. 2, billion in FY2014. Table 3.2 : Product Portfolio of ICICI Prudential Life Insurance Co Ltd Product Portfolio of ICICI Prudential Life Insurance Co Wealth Creation Solutions ICICI Pru Save 'n' Protect (T) Ltd INDIVIDUAL ICICI Pru CashBak (T) ICICI Pru Life Stage Wealth II (ULIP) ICICI Pru Lifetime Premier (ULIP) ICICI Pru Pinnacle Super (ULIP) ICICI Pru Elite Life (ULIP) ICICI Pru Elite Wealth (ULIP) ICICI Pru Future Secure (T) ICICI Pru Whole Life (T) ICICI Pru Wealth Builder (ULIP) ICICI Pru Guaranteed Savings Insurance Plan (T) ICICI Pru iassure (T) Child Plans ICICI Pru SmartKid RP (T) ICICI Pru SmartKid Premier (ULIP) Term Plans ICICI Pru Life Guard ICICI Pru icare ICICI Pru Pure Protect Retirement Solutions ICICI Pru Shubh Retirement (ULIP) ICICI Pru Immediate Annuity HEALTH SOLUTIONS ICICI Pru Hospital Care II ICICI Pru Crisis Cover ICICI Pru Health Saver GROUP PLANS ICICI Pru Group Gratuity Plan ICICI Pru Group Leave encashment Plan ICICI Pru Group Superannuation Plan 101

9 ICICI Pru Group Immediate Annuity Plan ICICI Pru Group Term Insurance Plan RURAL PLAN RIDERS Accident & Disability Benefit Rider Income Benefit Waiver Waiver of Premium Rider Waiver of Premium on Critical Illness Rider ICICI Pru Sarv Jana Suraksha Critical Illness Benefit Rider Source: Claim Settlement and Net Worth The Company believes that claim settlement is the ultimate promise which needs to be delivered to policyholders/beneficiaries. Towards this objective, the company has designed and developed robust claims processes and systems which ensure settlement of genuine claims at the earliest, thereby protecting the interest of policyholders. The Company has demonstrated its commitment by settling over 15,000 individual and group mortality claims in FY2014. For non-investigated individual claims, the claim settlement was completed within an average turnaround time of six days from receipt of last requirement 30 days. part from a 24x7 claim care call centre, the digital platform provides convenience as nominees can raise a claim from the comfort of their homes. For the last three years we have consistently maintained a high claims settlement ratio. Figure 3.1 gives the claim settlement ratio since FY2013. The total quantum of claims settled in FY2015 is Rs billion. The average time taken by the Company from the date of submission of the final requirement by the claimant to dispatch of claim payment, in respect of mortality and morbidity claims, is shown in the Figure

10 Figure 3.1: Claim Settlement Ratio of ICICI Prudential from FY-2013 to FY (in%) Figure 3.2 : Average time taken for Claim Settlement by ICICI Prudential from FY-2010 to FY-2015 ( in days ) Source :-ICICI Prudential Annual Report

11 The net worth of the company has been on an increasing trend since FY2011. Figure 3.3 shows the net worth of ICICI Prudential from FY2011 TO FY2015 in lakhs. Figure 3.3 : Net Worth of ICICI Prudential from FY2011 to FY-2015 ( in lakhs ) Figure 3.4 and 3.5 depicts the new business premium (in Billion dollars) and Market share of ICICI Prudential ( in % ). 104

12 Figure 3.4: New Business Premium of ICICI Prudential from FY-2012 to FY (in Billion Dollars) Source :-ICICI Prudential Annual Report 2015 Figure 3.5 : Market Share of ICICI Prudential from FY2012 to FY2015 ( in %) Source :-ICICI Prudential Annual Report

13 Brand Performance ICICI Prudential Life has been a leading brand in the private life insurance market, with highest consumer awareness scores and high consideration scores in the syndicated Nielsen Brand Track. During FY2014, it maintained its leadership amongst private players by having a brand awareness of 79%. As per the syndicated Nielsen Brand Track, when it comes to intention to purchase, the company brand has the highest consideration amongst private players. Over the years, the brand has kept the consumers engaged through meaningful & attractive campaigns like Jeetey Raho, Chintamani, Achche Bande and Insurance is changing. During recent times, the brand has used technology and social media to maintain customer centricity. The company proactively listens and responds to customer feedback in different forms of social media. Taking the engagement with consumers to a new high, the ICICI Prudential Life YouTube channel is the most viewed in the insurance industry with more than 2.9 million views. There are close to 100 videos on the channel. These include product videos presented in a simple manner to aid consumer understanding. Continuing the efforts in this direction, the brand launched its Facebook page last year. As per data from Unmetric.com, a social media benchmarking tool, the Facebook page registers high levels of engagement. The brand icon Chintamani recently struck a partnership with Chhota Bheem, the much revered animated child hero. This unique tie-up created brand affinity and engagement with both parents & children. The brand continues to help customers in the right purchase and right usage of insurance products and undertakes many initiatives in this direction. During the last year, key information help in the form of calculators, videos, leaflets and presentations were integrated with the pre purchase process so as to help the customer make a more informed decision. Customer Service Superior customer service is an integral element of company s value proposition to the customer. The company is responsive to various servicing requirements of the customer throughout the lifecycle of the policy. Easy and simple buying process, service delivery, claims management and grievance redressal are the building blocks 106

14 of its service value proposition. All these blocks are interwoven with superior technology solutions to provide the customer a seamless experience throughout the tenure of his policy. The company is proactive, easily accessible, provide anytime anywhere service and aim to provide first time right service. Apart from the traditional servicing channels such as branch, call center, , customers have the option to avail information/transact with company through the website, SMS or IVRS (Interactive Voice Response System). Steps taken by the company in using technology for improved accessibility, speed and efficiency has truly been a differentiator this year. Efforts taken in this direction were also recognized when the company was awarded the Global model Insurer award in the category Digital and Omni-channel technologies for innovation in digitization. The key customer service parameters are given below:- 94.1% claims settlement ratio for FY Best amongst the private players 93% of the new business applications initiated using the digital platform 50% of renewal premium payment through website and electronic modes 69% of the service transactions processed through website, SMS and IVRS 92% of payouts through electronic mode Grievance ratio for FY2015 stood at 185 compared to 253 for FY

15 3.2 HDFC STANDARD LIFE INSURANCE It is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. HDFC Standard Life Insurance Co. Ltd. is a joint venture between HDFC Ltd., India's largest housing finance institution and Standard Life Assurance Company, Europe's largest mutual life company. It was the first life insurance company to be granted a certificate of registration by the IRDA on the 23rd of October, HDFC holds about 72.43% of the equity, Standard Life holds 26% while the rest is held by others. Standard Life, UK was founded in 1825 and has an experience of over 185 years. The company is rated as "very strong" by Standard & Poor's (AA) and "excellent" by Moody's (Aa2). Headquartered in Edinburgh, Standard Life has around 9,000 employees across the UK, Canada, Ireland, Germany, Austria, India, USA, Hong Kong and mainland China. The Standard Life group includes savings and investments businesses, which operate across its UK, Canadian and European markets; corporate pensions and benefits businesses in the UK and Canada; Standard Life Investments is a global investment manager. HDFC Limited, India's premier housing finance institution has assisted more than 3.8 million families to own a home, since its inception in 1977 across 2400 cities and towns through its network of over 289 offices. It has international offices in Dubai, London and Singapore with service associates in Saudi Arabia, Qatar, Kuwait and Oman. HDFC has set benchmarks for the Indian housing finance industry. Recognition for the service to the sector has come from several national and international entities including the World Bank that has lauded HDFC as a model housing finance company for the developing countries. HDFC has 108

16 undertaken a lot of consultancies abroad assisting different countries including Egypt, Maldives, Mauritius, Bangladesh in the setting up of housing finance companies. The company retained its focus on the five principles outlined four years ago: 1. Emerge as a leader in providing long term insurance solutions 2. Fortify and diversify distribution channel mix 3. Own select customer segments and product categories 4. Deliver unique customer experience 5. Attain cost leadership across the delivery chain Some of the key highlights of the Company s distribution network during FY 2014 are: 429 own branches covering 985 cities Over 75,000+ financial consultants Key Bancassurance partners with presence in more than 5,000 branches 7 key pan-india brokers and corporate agency tie-ups An employee force of more than 13,900 as on March 31, 2014 Financial Performance Figure 3.5 summarizes the performance of the Company over the year. The reported Total Premium increased by 23%. Robust growth has been witnessed across First year, Renewal, Single as well as Group premium. The increase in Income from Investments is primarily due to better equity market performance with a consequent increase in Assets under Management. 109

17 Figure 3.6 : Financial Performance of HDFC Standard Life Insurance from FY2013 to FY2015 Source : HDFC Standard Life Insurance Annual Report Over the years, the Company has made its journey from being a nascent player to becoming a credible and customer-centric company and brand. It achieved this by staying relevant to customers and providing them best in-class product solutions to meet their financial goals. The Company has been strengthening its market leadership with strong growth across years. The Company s market share in individual business among private players stood at 14.8% in FY 2015 versus 13.8% in FY 2014 and was ranked 3rd in private sector. In Group business, the Company ranked 1st, with a market share of 17.8% in FY 2015 vs 14.4% in FY In overall new business received premium terms, the Company ranked 2nd, with market share of 15.8% within the private sector an improvement of 2.1% over FY The Company delivered a conservation ratio of 90% versus 79% in FY 2014, clearly reflecting the impact of multiple customer centric initiatives undertaken by the Company. These were also reflected in better 13th month persistency at 73% versus 69% and 61st month persistency at 68% versus 64%. Continuing its efficiency focus, the Company managed to keep its operating expense ratio at 10.2% versus 10.7% in FY For the year ended March 31, 2015, the Company earned 110

18 IGAAP profits of Rs. 786 crores versus Rs.725 crores in FY 2014, i.e. an increase of 8%. The Company wiped off all the carried forward losses by the start of the financial year itself, and the Board declared an interim Rs per equity share (face value of Rs. 10 each). Another key milestone achieved by the Company was its AUM crossing Rs. 60,000 crores during the financial year. As at the end of the year, the Company had an AUM of Rs. 67,047 crores versus Rs. 50,552 crores, as on March 31, 2014 a growth of 33%. Figure 3.7 : Market Share of HDFC Standard Life from FY2013 TO FY2015 ( in %) Source : HDFC Standard Life Insurance Annual Report Products Protection Plans These schemes are aimed at providing for a death or illness in the family. Financial security is one of the most important goals in life and HDFC's protection plans give that independence in case of emergencies. No matter how much you have planned, sudden eventualities like loss of income or home loan repayments can occur anytime. Children s Plans 111

19 Children have several dreams and inspirations and parents seek to fulfill all of them. Securing your child's future in terms of finances can be achieved by HDFC Life Insurance Children's Plans. There are traditional plans that offer return on policy in the form of bonus, payable on maturity or others where return is in the form of growth. Retirement Plans When incomes start to reduce, retirements plans put them in place! Accumulating and investing in savings where a lump sum is provided on retirement is the best idea. Regular income flowing through annuity plans is another one. There are several ways to go about this; either, a United Linked Plan where you can get vesting benefit or a traditional one where HDFC takes all the decisions on your behalf over the entire policy term. Savings & Investment Plans If you are the earning member of the family, then their future is dependent on you. The Savings & Investment Plan assures you lump sum funds for the monthly/annual expenses. It is also a means of achieving your short-term and long-term financial goals. An adequate insurance cover is automatically provided in the event of a family member's demise. Health Plans Neglecting health due to changes in our lifestyle is common. HDFC Life Insurance covers a person during times of critical illness and even major surgical procedures. A small premium of about Rs.3500 annually can provide health insurance of more than 5 lakhs for a period of 20 years. This way, you can have a safe and secure future. The below mentioned plans give you a fair idea about what you can expect. 112

20 Table 3.3 :- Product Portfolio of HDFC Standard Life Insurance Company Limited Retirement/Pension Plan Retirement/Pension Plan Retirement/Pension Plan Child Plan Child Plan Child Plan Term Plan Term Plan Term Plan Term Plan Savings and Investment Plan Savings and Investment Plan Savings and Investment Plan Savings and Investment Plan Savings and Investment Plan Savings and Investment Plan Savings and Investment Plan Savings and Investment Plan Health Plan Health Plan HDFC Personal Pension Plan HDFC Immediate Annuity HDFC SL Pension Maximus HDFC Children s Plan HDFC SL Youngstar Super II HDFC SL Youngstar Super Premium HDFC Term Assurance Plan HDFC Premium Guarantee Plan HDFC Loan Cover Term Assurance Plan HDFC Home Loan Protection Plan HDFC SL Crest HDFC Endowment Assurance Plan HDFC SL ProGrowth Super II HDFC SL ProGrowth Maximiser HDFC SL New Money Back Plan HDFC Single Premium Whole of Life Insurance Plan HDFC Assurance Plan HDFC Savings Assurance Plan HDFC Critical Care Plan HDFC SurgiCare Plan Source : 113

21 Claim Settlement and Net Worth The company has an enhanced claim settlement ratio that is among the best in the industry. The trend of average claims settlement time for the current year and last 5 preceding years has been 10 days consecutively. Figure 3.8: Average time taken for Claim Settlement by HDFC Standard Life from FY-2010 to FY-2015 ( in days) Source: HDFC Standard Life Insurance Annual Report The net worth of the company has been on an increasing trend from FY-2011 to FY Figure 3.9 shows the net worth of the company from FY-2011 to FY

22 Figure 3.9: Net Worth of HDFC Standard Life from FY-2011 to FY-2015 ( in crores) Source: HDFC Standard Life Insurance Annual Report Brand Performance Over the years, the Company has made its journey from a new brand on the block to a credible and customer-centric brand by being relevant to customers and providing them the best solutions for their financial needs. An important part of this journey has been engaging the customer, both through traditional and digital media. This year, through various initiatives, the Company maintained a strong media presence and visibility ensuring the customers continued their journey of self-respect with the Company. The Company has consistently communicated and built a very strong emotional connect with its brand positioning of Sar Utha Ke Jiyo. But while this thought had strong recall and consumer connect, research showed that with the passage of time, the consumer had evolved and the Company s communication needed to truly reflect what Sar Utha Ke Jiyo means to them. The Company decided to appeal to the men of today by reminding them that their role in their family s life was one of being more than a mere provider, but that of the one who teaches his family to live with dignity and self respect through his acts, both big and small. It is 115

23 through these acts that he lives Sar Utha Ke, and becomes hard to replace in the life of his family. This came to life in the new brand campaign Apno ko Apne Dum Pe Jeena Sikhao which showcased the relationship between a father and daughter and his journey to show her the path to self reliance. The film was received well by consumers gaining over 5 million views in 2 months on YouTube. It also reflected in the Company s brand consideration scores which went up by 4 points to an all time high, since Customer Service In FY 2015, the Company strengthened its service recovery cell for better customer retention. It adopted a new approach, the emphasis of which was on service experience, quality resolution, process improvement by eliminating non-value add processes and process recovery to prevent recurrence of failures. The new framework has resulted in a 57% reduction in complaints month-on-month since September Majority of our complaints are now resolved in 24 hours. Through use of customer verification calling process and Early Warning Indicators of potential mis-sell, the Company is focused on Business Quality and ensuring right on-boarding of the new policyholders. The initiative has led to 50% reduction in post policy issuance leakages. The Company s efforts to improve efficiency and investments made in multimode channel of payment resulted in improvement of online collections from 13% to 17% of the overall renewal premiums received this year. FY 2015 has seen an increase in portal users. Other service initiatives such as Missed Call, SMS fund alerts were initiated to better the overall customer experience. Missed call and SMS has been a huge success with a large number of customers using this facility. The Company set out on a journey of increasing operational rigor during the year. The multiple initiatives focused on First Time Right at customer interaction touch points. Proactive quality checks of web-portal, call listening, mystery checks of services provided to be ahead of the curve to know the fallouts and raise red flags were introduced. This coupled with Service Delivery Assurance and concurrent audit frameworks across service points and back-end processes resulted in predictive and improved service delivery. 116

24 3.3 SBI LIFE INSURANCE It is a joint venture between the State Bank of India and Cardif of France. State Bank of India (SBI) is a multinational banking and financial services company based in India. The Bank is India s largest commercial Bank in terms of assets, deposits, profits, branches, number of customers and employees, enjoying the continuing faith of millions of customers across the social spectrum. It is the oldest commercial Bank in the Indian subcontinent, strengthening the nation s trillion-dollar economy and serving the aspirations of its vast population. SBI serving the country with over 15,000 branches in India and 190 foreign offices, 5 banking subsidiaries, other nonbanking Indian and foreign subsidiaries and also having over 2 lacs employees. SBI has surpassed H 26 trillion in business size. SBI has over 100,000 touch points (branches, ATMs, CSPs) that directly serve customers everywhere. But this is not just the story of a commercial Bank, it is the story of how an aspiring India has embraced growth over the years, and how it continues to look ahead with confidence. SBI makes a profound contribution in driving all sectors of the Indian economy primary, secondary and tertiary, in equal measure. It is one of India s most familiar institutions of trust stretching from the remotest villages to the global financial hubs. BNP Paribas Cardif is the life, property and casualty insurance arm of BNP Paribas, one of the strongest banks in the world. BNP Paribas Group, having presence in more than 80 countries ranks highly in Retail Banking, Investment Solutions and Corporate & Investment Banking. BNP Paribas Cardif is one of the world leaders in creditor insurance. BNP Paribas Cardif s success is anchored in an innovative business model. The company develops savings and insurance products 117

25 and services, and distributes them through a network of partners including banks, credit companies, the insurance units of automobile manufacturers, telecom operators, insurance brokers, retail chains etc. With a presence in 37 countries, BNP Paribas Cardif adapts its solutions to the needs of local customers, with its partners, skillfully integrating the distinctive economic and cultural factors that characterize each market. SBI Life s mission is to emerge as the leading company offering a comprehensive range of Life Insurance and pension products at competitive prices, ensuring high standards of customer service and world class operating efficiency. SBI Life has a unique multi-distribution model Cardif has also been a pioneer in the art of selling insurance products through commercial banks in France and in 35 more countries. SBI Life has a unique multi-distribution model encompassing Bancassurance, Agency and Group Corporates.SBI Life extensively leverages the SBI Group as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBI s access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country ensuring true financial inclusion. The Company, SBI Life, has delivered another successful year of operational excellence, financial performance, growth & recognitions. Financial Performance Continuing its track record of sustainable growth, the Company has posted a record profit of Rs. 820 crores ( 121 million), for the financial year ending March 31, an increase of 11% over the last financial year. Operational efficiency has been the key driver of Company s profitability. The Company has maintained its No. 1 position amongst private life insurers on total New Business Premium (NBP) basis, achieving highest NBP of Rs. 5,529 crores ( 819 million) with a market share of 15.9% amongst private players. The individual new business premium has increased from Rs. 3,217 crores ( 427 million) in FY to Rs.3,757 crores ( 557 million) this year, recording a growth of 17%. The Company has built its business upon the trust of millions of customers who avail of its products and 118

26 services through a distribution network of 750 branches, 9,657 employees and 1,10,392 Insurance Advisors & CIFs. The Company has garnered a total Gross Written Premium (GWP) of Rs.12,867 crores ( 1,906 million) a growth of 20% during the Financial Year and have added nearly lacs new policies to its portfolio. The Company witnessed a sound growth of 29% in its regular business NBP and a growth of 11% in its individual new business measured on Annualised Premium Equivalent basis. The Assets Under Management of the Company grew by 22% to Rs. 71,339 crores ( 10,567 million) as against Rs. 58,480 crores ( 7,082 million) at the end of the previous financial year. In view of the Company s performance in profitability, cash flows and considering its financial position, an interim dividend was declared during the FY at 12% of equity share capital amounting to Rs. 144 crores ( 21 million) (including dividend distribution tax). The strength of the Company s brand, multi-distribution model, higher agency productivity, excellence in operational efficiency, low cost structure, optimum resource utilisation, etc. are amongst the few key drivers of SBI Life s consistent profitable growth. SBI Life has posted a record profit of 622 crores reflecting a growth of 11.94% as compared with previous year (2012). The Company collected a total Gross Written Premium (GWP) of Rs. 10,450 crores, comprised of Rs.5,183 crores New Business Premium and Rs.5,267 crores Renewal Premium. The Company has registered a strong growth of 19.40% in its First Year Premium and a growth of 13.30% in its Individual new business measured on Annualized Premium Equivalent (APE) basis. The performance in Renewal Premium collection led to improvement in the Company s 25th month persistency by 319 basis points and 37 th month persistency by 1144 basis points. The company retained a private market share of 16.85% and a total market share of 4.84% for the financial year Reflecting excellence in its operational efficiency, SBI Life continued to maintain one of the lowest Operating Expense (excl. service tax on ULIP charges) to GWP Ratio at 9.73%, amongst private sector life insurance companies. The Asset under Management (AUM) of the Company rose by 11.46% to 51,912 crores as on March 31, 2013 as against Rs. 46,576 crores as on March 31, The Company is committed to 119

27 maintain a stricter solvency margin level than the regulatory requirement. The Solvency ratio of the Company stands at 2.15 as on March 31, 2013 as against the regulatory requirement of 1.50, indicating the strong & stable financial health of the Company. All key distribution channels namely, Bancassurance, Agency and Corporate Solutions demonstrated profitable business growth during the year. The Agency Channel provided a significant thrust to the overall business, contributing 41.57% of total premium as a result of superior productivity levels of Insurance Advisors. Bancassurance contributed 34.19% of the total premium and Corporate Solutions contributed 21.09% of total premium. The brand, SBI, is a very strong, trusted, reliable and most preferred brand in India in financial & banking services. SBI Life is blessed with strong parentage of State Bank of India (SBI) & BNP Paribas Cardif. SBI Life extensively leverages the State Bank Group relationship as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBI s access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country, thus ensuring true financial inclusion. The Company not only taps the potential better but also provides a safe and transparent insurance alternative to the public at large. The brand SBI Life has become one of the most recognized, trusted and preferred brand in India, among private sector life insurance companies, which provides its stakeholders a wide range of products & services with significant competitive advantage. The testimony of the same is Company s No. 1 position amongst private life insurance players (NBP base) on a year on year basis. Further, the Company s performance has been acclaimed & awarded by various esteemed organizations over the years. The Company continued its efforts towards maintaining its brand image in FY The Company has been ranked as the Most Trusted Private Life Insurance Brand, 2013, for the third consecutive year, by The Economic Times, Brand Equity & Nielsen Survey. The Most Trusted Brands identifies Brands that possess that special ingredient - the Consumer s Trust. Conducted by Nielsen, it is among the largest research project of its kind in India. This year, the research covered a sample of 7,200 people cutting across socio economic classifications, age, income and geography. During the financial year , the company grew at a steady pace 120

28 and strengthened its base by adding 44 new branches, 385 employees and 7,527 Insurance Advisors & CIFs. Testifying Company s approach towards life insurance inclusion, 23% of total lives covered by the Company are from the rural segment and 68,714 lives covered are from the underprivileged social sector, leading to the Company exceeding the minimum Rural & Social regulatory requirements. Figure 3.10 shows the market share of the company (in % ) from FY2011 to FY2015. Figure 3.10 : Market Share of SBI Life Insurance from FY2011 to FY2015 ( in % ) Products SBI Life has a wide range of products catering to various customer needs in the life, health, pension, on-line & micro-insurance segment. The products are customer centric, simple to understand and have competitive features. To maintain its competitive edge in the market, the Company had launched six new individual products and one new group product in the financial year Details of the products launched are as follows:- 121

29 Table 3.4: Product Portfolio of SBI Life Insurance Company Limited Product Portfolio of SBI Life Insurance Company Limited INDIVIDUAL SBI Life Unit Plus Super SBI Life Saral Maha Anand SBI Life Smart Elite SBI Life Smart Scholar SBI Life Smart Horizon SBI Life Smart Wealth Assure UNIT LINKED PLANS SBI Life Smart Performer CHILD PLANS SBI Life Scholar II SBI Life Smart Scholar PENSION PLANS SBI Life Saral Pension SBI Life Annuity Plus PROTECTION PLANS SBI Life Shield SBI Life Smart Income Shield Insurance SBI Life Smart Shield SBI Life Saral Shield SBI Life Swadhan SBI Life Grameen Bima SAVINGS PLANS SBI Life Smart Income Protect SBI Life Smart Money Back Insurance SBI Life Flexi Smart Insurance SBI Life Sanjeevan Supreme SBI Life Shubh Nivesh SBI Life Saral Life 122

30 GROUP PLANS CORPORATE SOLUTIONS- Retirement Solutions SBI Life - CapAssure Gratuity Scheme SBI Life - Kalyan ULIP Plus SBI Life - CapAssure Leave Ench Scheme SBI Life Dhanrashi SBI life - Swarna Jeevan SBI Life - Gaurav Jeevan SBI Life - Swarna Ganga SBI Life - CapAssure CORPORATE SOLUTIONS-Protection Plans SBI Life - Sampoorn Suraksha SBI Life - Credit Guard SBI Life - Suraksha Plus GROUP TERM WITH ROP GROUP LOAN PROTECTION PRODUCTS GROUP MICRO INSURANCE PLANS SBI Life Swadhan (Group) SBI Life Nidhi Raksha RP SBI Life Grameen Shakti SBI Life Grameen Super Suraksha HEALTH PLANS SBI Life Smart Health Insurance SBI Life Group Criti9 SBI Life Hospital Cash Source: Claim Settlement and Net Worth Speedy settlement of claims is a very vital aspect of service to the policyholders. Hence, the company has laid great emphasis on expeditious settlement of maturity as well as death claims. The prominent achievements in the claims area during FY are as follows: Improvement in Non Early Death claim processing to average 5.19 Days in FY from 5.86 days in FY

31 Settlement of Living Benefit claims - increased to 98.36% in FY from 96.16% in FY % of the living benefit claims were settled on or before due date in FY as against 65.95% cases in FY Number of Claims Settled (in %) of SBI Life insurance has been shown in the figure 3.11 Figure 3.11: Claim Settlement of SBI Life Insurance from FY-2011 to FY-2015 ( in % ) Source : SBI Life Insurance Annual Report Net worth of the company has shown an increasing trend. For the financial year 2015, the net worth of the company was around Rs crores as compared to Rs crores in financial year

32 Figure 3.12 shows the Net Worth of the company from FY 2011 to FY 2015 Figure 3.12: Net Worth of SBI Life Insurance ( In Crores ) from FY-2011 to FY2015 Source : SBI Life Insurance Annual Report Brand Performance The brand, SBI, is a very strong, trusted, reliable and most preferred brand in India in financial & banking services. SBI Life is blessed with strong parentage of State Bank of India (SBI) & BNP Paribas Cardif. SBI Life extensively leverages the State Bank Group relationship as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBI s access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country, thus ensuring true financial inclusion. The Company not only taps the potential better but also provides a safe and transparent insurance alternative to the public at large. The brand SBI Life has become one of the most recognized, trusted 125

33 and preferred brand in India, among private sector life insurance companies, which provides its stakeholders a wide range of products & services with significant competitive advantage. The testimony of the same is Company s No. 1 position amongst private life insurance players (NBP base) on a year on year basis. Further, the Company s performance has been acclaimed & awarded by various esteemed organizations over the years. The Company continued its efforts towards maintaining its brand image in FY The Company has been ranked as the Most Trusted Private Life Insurance Brand, 2014, for the fourth consecutive year, by The Economic Times, Brand Equity & Nielsen Survey. The Most Trusted Brands identifies Brands that possess that special ingredient - the Consumer s Trust. Conducted by Nielsen, it is among the largest research project of its kind in India. This year, the research covered a sample of 7,200 people from 12 cities cutting across socio economic classifications, age, income and geography. Profile of people interviewed were chief wage earners, housewives, adult males and adult females. The study looks at the Trust Score of each Brand which is determined by the four attributes viz. Quality, value for money, recommendation to family and friends and understanding consumer needs. Customer Service Financial Year was a year of renewed focus on customer service delivery, process automation & enhancements in business process and quality. We improved our performance in terms of customer service quality and delivery consistently and holistically. The dedicated efforts shall strengthen customer loyalty and help us in sustainable development of the organisation. Some of the unique and crucial initiatives taken by SBI Life during the FY were: Customer Service Enhancement Go Green: We have actively promoted registration of ids for customer communications through Go Green campaign. This campaign not only helped reduce our carbon footprints but will also ensure that customers get timely communications regarding various policy events. Dematerialisation of Insurance Policies: SBI Life proactively participated in the pilot phase of the electronic policy issuance i.e. Dematerialised policies rolled out by 126

34 IRDAI. This facility will help policy holders to have a common KYC across insurance companies. Data Migration from SBI Core Banking: To improve the operational efficiency and reduce the process turnaround time for Credit Life proposals, data migration from SBI Core Banking to SBI Life s systems was successfully implemented. Group Customer Self Service Portal: Customer Self Service portal was launched to enable customers of Group Insurance policies to view their cover details, generation of premium paid certificate, update mobile number and id and generate fund statement for Swarna Ganga policy. Policy Servicing forms in Regional Language: In order to assist policyholders in submitting the policy servicing requests in the preferred language of communication, all policy servicing forms are now available in all the major regional languages. Premium Payment facilities: During FY , Electronic Fund Transfer (EFT) facility for new business and renewal premium payment was extended to the 13 Regional Rural Banks of State Bank Group. Till now, this facility was available only with State Bank of India and its Associate Banks. SBI Life became a member of the National Automated Clearing House (NACH) to facilitate collection of renewal premium from customers of different banks. The coverage and efficiency of this new alternate mode is far greater than the existing ECS and Direct Debit modes with more than 293 participating banks. During FY , we have enabled 81 branches to collect renewal premium payment through debit/ credit cards. We have processed 16,436 transactions amounting to collection of Rs crores towards renewal premium. 127

35 Easy Collect : The facility to pay renewal premium in cash at any State Bank of India branch was rolled out. Customers can now pay renewal premium in cash up to Rs. 49,999. Surrender Prevention: Insurance contracts are long term in nature and the customer reaps the maximum benefit by keeping his policy in force for the entire duration of the contract. Keeping this in mind, SBI Life had launched the Surrender Prevention initiative during FY to educate the customer about the benefits of staying invested for the policy term and convincing them against terminating the contract. During FY , we have successfully convinced 42,418 policyholders to continue the insurance protection which amounts to 13% of the customers who had visited our branch to surrender the policy. 128

36 3.4 BAJAJ ALLIANZ LIFE INSURANCE CO. LTD. Bajaj Allianz is a joint venture between Allianz AG one of the world's largest insurance companies, and Bajaj Auto, one of the biggest two and three wheeler manufacturer in the world. Bajaj Allianz is into both life insurance and general insurance. Allianz Group is one of the world's leading insurers and financial services providers. Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost 174,000 employees. Allianz is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion Euros (Over Rs. 55,00,000 crores). Allianz SE has over 115 years of financial experience in over 70 countries. Today, Bajaj Allianz is one of India's leading and fastest growing insurance companies. Currently, it has presence in more than 550 locations with over 60,000 Insurance Consultants. An overview of their life insurance products is as follows: Term plans a basic term life insurance plans through which customers can insure their lives for a high sum assured. ULIPs Unit Linked Insurance Plans which combine insurance and investment. The plans come with the aim of helping the customer plan for retirement, children s education, marriage, pension etc. 129