Vol :3 Issue 3 We are pleased to release our quarterly newsletter on the developments of life insurance industry in India. Life insurance in India has major growth potential. The Indian insurance industry has undergone transformational changes since 2000 when the industry was liberalized. With a one-player market to 24 in 14 years, the industry has witnessed phases of rapid growth along with extent of growth moderation and intensifying competition. There have also been a number of product and operational innovations necessitated by consumer need and increased competition among the players. Changes in the regulatory environment also had a pathbreaking impact on the development of the industry. While the insurance industry still struggles to move out of the shadows cast by the challenges posed by economic uncertainties of the last few years, the strong fundamentals of the industry augur well for a roadmap to be drawn for sustainable long-term growth. India continues to be a country of savers, though we have witnessed a decline in the household savings rate in the past couple of years. In India, the problem lies in household savings lying idle or getting invested in saving instruments that do not help them achieve their life stage goals. There is a worrying trend of larger portion of household savings getting into non-productive physical assets such as real estate and gold. But even then, the future looks interesting for the life insurance industry with several changes in regulatory framework which will lead to further change in the way the industry conducts its business and engages with its customers. World over it has been observed that the life insurance industry does behave in a counter cyclical manner in many cases, e.g., in a situation where the economic growth is slowing down, due to other factors such as high current account and fiscal deficits, currency depreciation, high interest rates, savings rate will continue to be high, leading to higher demand for life insurance. Life insurance is a big savings vehicle along with banking in such uncertain economic environment and so we expect the industry to fare reasonably well. Demographic factors such as growing middle class, young insurable population and growing awareness of the need for protection and retirement planning will also support the growth of Indian life insurance. For life insurance, it is time to re-commit itself to customer-centric behavior, product solutions based on consumer needs, ethical market conduct, transparency and governance. The growth will be the natural outcome for now and years to come. We provide an overview of these and other market developments in this edition of the newsletter. We hope you find the newsletter interesting and informative and look forward to receive your feedback. Regards S.ANAND Zonal Secretary 1
MARKET UPDATE LIC reports surplus of Rs. 1,803 Crore in FY15 Life Insurance Corporation of India (LIC) recorded a surplus of Rs. 1,803.05 crore in FY15, up 10.33 per cent over the previous year, according to a media report. The insurer generated the surplus amount after paying an interim bonus of Rs. 1,899.75 crore to its policyholders, the report added. The LIC board approved the audited financial results in its meeting on June 9. The insurer has made higher provision for taxation at Rs. 3,698 crore, up 46 per cent from the previous year LIC's first-year premium income falls to 69% in FY15 LIC's market share in the first-year premium income declined to 69.21% in FY15 from 75% a year ago, according to a media report. The decline in new premium income of LIC was due to discontinuation in selling of ULIPs and a number of other products in the new regulatory regime, the report added. LIC's market share in terms of number of policies increased to 77.85% in FY15. LIC buys NMDC shares worth over Rs 1,116 Crore NMDC said Life Insurance Corporation of India (LIC) has acquired almost 8 crore of its shares shares worth over Rs 1,116 crore in a market purchase. In a BSE filing, NMDC said the country's largest insurer has acquired 7,98,39,172 shares or 2.013 per cent stake in the firm in a market purchase through various brokers worth over Rs 1,116.17 crore. Canara Bank allots 4 Crore shares to LIC on preferential basis Canara Bank has allotted 4 crore fully paid-up equity shares to Life Insurance Corporation of India on Preferential Basis on May 12, 2015. Consequent to passing of the Special Resolution by the shareholders at the EGM of the Bank held on April 30, 2015 for issue and allotment of 4 crore equity shares to LIC on preferential basis, the Managing Director & Chief Executive Office has allotted 4 crore Fully Paid-up Equity Shares to LIC on Preferential Basis. HDFC Life wins the Golden Peacock Innovative Product award HDFC Life, India's leading long-term private life insurance solutions provider has been awarded the prestigious Golden Peacock Award for the most Innovative Product for Click2Invest, a second generation online Unit Linked Insurance Plan, at a global conference held recently. Exide Life Insurance posts Rs. 65.3 Crore profit in 2014-15 Exide Life Insurance announced a net profit of Rs. 65.3 crore for the financial year 2014-15. The company recorded an 11% growth in total premium, 9% growth in renewal premiums and a 14% growth in new business premium. Exide Life Insurance serves over 10 lakh customers in over 200 cities in India. Star Union Dai-ichi Life profit at Rs. 12.87 Crore in FY15 Star Union Dai-ichi Life Insurance Company Limited reported its maiden profit of Rs.12.87 Crs, in FY 2014-15, its 6th full year of operations by pursuing a profitable growth strategy.. 2
Max Life Insurance paid 97.23% death claims in FY2014-15 Max Life Insurance, one of the leading life insurers in India, announced a milestone achievement of Claims Settlement Ratio of 97.23% in the FY 2014-15 as compared to 93.86% in FY13-14. The Outstanding Claims Ratio stood at 0.07% as on 31st March 2015, which means that only 6 claims were pending of the total 9,108claims received during the year. This is amongst the best performance in claims management in the Indian Life Insurance sector. Shriram Life Insurance bags award for 'Best Insurance Company for Non-Urban Coverage' Shriram Life Insurance bagged the award for the 'Best Insurance Company for Non-Urban Coverage Life Insurance' at the Indian Insurance Awards organized by Fintelekt. These awards recognized and honoured the achievements of insurance companies in India that have met measurable and tangible business objectives. New Appointments Swiss Re appoints Kalpana Sampat as Managing Director for Mumbai operations Swiss Re announced the appointment of Kalpana Sampat as Principal Officer and Managing Director of Swiss Re Services India Private Ltd. Kalpana will join Swiss Re on 22 June 2015 and be based in Mumbai. As Head of India, Kalpana will strengthen and broaden Swiss Re's relations with clients and partners in the country. She will be responsible for Swiss Re's life and health reinsurance business in the market and will report to Robert Burr, Head of Life & Health, Asia, in Swiss Re. Kalpana brings with her 30 years of experience in the life insurance industry with expertise in insurance, finance and law. Prior to Swiss Re, she held the position of Chief - Customer Service and Operations at ICICI Prudential Life Insurance Co. Ltd., a company she served for 15 years with different functions including Underwriting, Grievance Management, Central Operations, Branch Operations, Claims and Group Business Operations. She had also led Internal Audit, Legal and Risk Control functions. Bharti AXA General appoints Deepak Iyer as CEO & MD Bharti AXA General Insurance (GI) Company Ltd announced the appointment of Deepak Iyer (currently the Managing Director Indian subcontinent at Wrigley India Pvt. Ltd subsidiary of Mars Inc.) as its new Chief Executive Officer and Managing Director. Deepak is expected to come on board by end June, 2015 and will take charge from Milind Chalisgaonkar, Interim CEO and MD after receipt of regulatory approvals by the company. Canara HSBC Oriental Bank of Commerce Life Insurance appoints Anuj Mathur as CEO Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited a joint venture between two of India's largest public sector banks, Canara Bank and Oriental Bank of Commerce, and HSBC Insurance (Asia Pacific) Holdings Limited announced the appointment of Anuj Mathur as the new Chief Executive Officer of the company. Mathur will take charge as the CEO on 1 July 2015, succeeding the current CEO, John Holden. 3
DISTRIBUTION UPDATE Dena Bank, LIC sign MoU to extend PMJBY scheme Dena Bank is associated with LIC as a corporate agent since 2005 and now LIC has offered this new product as announced in the budget. Dena Bank is entering into a Memorandum of Understanding (MoU) with state-owned Life Insurance Corporation (LIC) of India under the Prime Minister's Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJBY) scheme to provide insurance cover to all Adhar-linked Saving account holders of the bank in the age group of 18 to 50 years. People who join the scheme before completing 50 years can continue to have the risk of life cover up to the age of 55 years subject to payment of premium. IDBI Bank, LIC ink pact to offer PM Jeevan Jyoti Bima Yojana IDBI Bank and Life Insurance Corporation (LIC) of India have signed a memorandum of understanding (MoU) for implementing 'Pradhan Mantri Jeevan Jyoti Bima Yojana' (PMJJBY), according to a media report. PMJJBY is the central government's scheme to bring the entire nation under the ambit of insurance coverage. Recently, LIC signed an MoU with Corporation Bank in Mangaluru for implementing PMJJBY. Under PMJJBY, Corporation Bank's Aadhar-linked savings account holders will be eligible for life insurance up to Rs. 2 lakh for a premium of Rs. 330 (plus service tax) per annum. Bank of Maharashtra, LIC team up for PMJJBY Public sector lender Bank of Maharashtra (BoM) has partnered with Life Insurance Corporation (LIC) of India to provide life insurance cover to all its Savings account holders under Prime Minister Jeevan Jyoti Bima Yojana PRODUCT UPDATE PNB MetLife introduces health insurance product PNB MetLife India Insurance launched MetLife Major Illness Premium Back Cover. The plan returns all the premiums paid in case there is no claim from the policy holder during the policy term and upon survival, PNB MetLife said in a statement. The plan also provides the policy holder with a lump sum amount on diagnoses of any critical illness covered by the policy, so that the family has adequate funds to meet the unplanned medical expenses, it added. Future Generali India Life launches Assured Money Back Plan Future Generali India Life Insurance (FGILI), launched of the Assured Money Back Plan which is a nonlinked and non-participating, money back plan. This is a simple insurance plan which combines certainty along with returns at regular intervals. This plan caters to the needs of customers who are unsure about their ability to pay premiums for the entire policy term. For eg: business owners, sportspersons, artists etc who tend to have an irregular income. This plan also offers flexibility to choose from 4 limited premium payment terms, which starts from 5 years and the customer enjoys a longer duration of life cover along with 200% of the sum assured as guaranteed money backs during the policy term. Future Generali India Life Insurance launches Assured Education Plan Future Generali India Life Insurance Company Limited announced the launch of the Assured Education 4
Plan which is a non-linked and non-participating, guaranteed plan. This is a simple insurance plan designed to financially secure the child's education milestones by providing a savings platform along with a premium waiver option in case of an unforeseen event Reliance Life Insurance launches Health Total Reliance Life Insurance Company (RLIC), part of Reliance Capital Ltd, launched 'Reliance Health Total' a comprehensive health insurance plan with unique advantages. Reliance Health Total is a non-linked, non-participating and non-variable health insurance plan that provides a complete health cover including a fixed benefit cover for hospitalization, critical illnesses and surgeries, along with reimbursement for other health related expenses. Reliance Health Total provides customers with fixed benefit hospitalization and critical illness covers. The uniqueness of the plan lies in the medical reimbursement feature that allows customer to claim for OTC health-related expenses or medical bills. This plan also acts as an additional cover for hospitalization claims, over and above your existing medical plan, said Mr. Manoranjan Sahoo, Chief Agency Officer, Reliance Life Insurance.. Tata AIA Life Insurance Money Back Plus Tata AIA Life Insurance (Tata AIA Life) announced the launch of the unique Tata AIA Life Money Back Plus (Money Back Plus), a savings solution that offers customers money back in both short and longer term intervals along with bonuses. The premium paying term is only half of the policy term, and the plan offers protection solution including built-in double coverage for accidental death. Money Back Plus is structured into three equal tranches totaling 20% each of sum assured to take care of short term goals. In addition, a lump sum payment at maturity, which can be as high as an additional 70% sum assured, plus compounded bonus and terminal bonus takes care of medium to longer term goals. Star Union Dai-ichi Life Insurance launches assured income plan Star Union Dai ichi Life Insurance Company Limited (SUD Life) announced the launch of SUD Life Assured Income Plan, non-linked non-participating Guaranteed Return Endowment Assurance Plan which brings to you the best of both the worlds. It is designed for the customers who primarily seek tax free supplementary income while ensuring a strong financial protection for the family in case of an unforeseen event. It especially caters to the diverse financial goals of customers belonging to different age groups through a guaranteed supplementary annual income towards meeting the lifestyle needs or retirement needs. HDFC Life launches HDFC Life Cancer Care HDFC Life, India's leading long term private life insurance solutions provider announced the launch of HDFC Life Cancer Care, a health plan that provides financial support on diagnosis of early or major stages of cancer. HDFC Life is the only private life insurance company to offer such a product. The plan is distinct from standard critical illness policies as it provides a fixed lump sum benefit on diagnosis of early and major stages of cancer, waives future premiums and also pays regular income on diagnosis for treatment of cancer. 5
Edelweiss Tokio Life Insurance launches GCAP Edelweiss Tokio Life Insurance, India's fastest growing life insurance company, launched Edelweiss Tokio Life GCAP life insurance plan with guaranteed returns. The plan offers fully guaranteed maturity benefit and death benefits along with a Guaranteed Accrual Addition (GAA). The GAA is accrued every year, starting from the 9th policy year till maturity and depends on annualized premium GOVERNMENT INITIATIVES The Government of India has taken a number of initiatives to boost the insurance industry. Some of them are as follows: The Reserve Bank of India (RBI) has allowed banks to become insurance brokers, permitting them to sell policies of different insurance firms subject to certain conditions. The select committee of the Rajya Sabha gave its approval, permitting 49 per cent composite foreign equity investment in insurance companies. A broad agreement has also been achieved with the states on most of the issues concerning the implementation of the single goods and services tax (GST), which is scheduled to be rolled out from April 1, 2016. The Government of India plans to implement a Rs 1,900 crore (US$ 306.41 million) e- governance project called 'Panch Deep' to automate transactions of the Employees State Insurance Corporation (ESIC), said Mr Bandaru Dattatreya, Union Minister for Labour and Employment with Independent Charge, Government of India. Under the project, enterprise resource planning (ERP) solution would be installed across the country which will give a unique card to the employees and facilitate clearance of third party bills. The Government of India plans to launch a new insurance scheme to protect farmers and their incomes against production and price risks. Under the Pradhan Mantri Jan Dhan Yojana, it has been decided that even those accounts which had been opened prior to August 28, 2014 and have zero balance will get Rs 100,000 (US$ 1,612.55) insurance cover. 6
The contents of this Insight newsletter were compiled by S. Kamalthiagarajan Joint-Secretary South Zone. Note: Source: company websites and press reports. Disclaimer: The India Market Life Insurance Update has been prepared by NFSIS for general information purposes only and does not constitute professional advice. The information, opinions and projections contained in this Newsletter are derived from various sources and have not been independently verified by NFSIS. To know more about South Zone Activites / Circulars Visit e-mail id : nfifwisouthzone@gmail.com Password : nationalfederation 7
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