TRENDS AND NEW TENDENCIES IN PRODUCTS, DISTRIBUTION & MARKETS Maxim Chernin CEO at IC Sberbank life insurance Ltd., Chairman of the Life Insurance Committee All-Russian Insurance Union Russia 8 499 707 07 37 8 800 555 5595 www.sberbank-insurance.ru
INSURANCE MARKET DYNAMICS IN RUSSIA IN 2014-2015 Business lines GPW, bln rub. % growth 2014 2015 2014/2015 MOD insurance 218,6 187,2-14,4% CMTPL 150,9 218,7 44,9% Voluntary medical insurance 124,07 129,05 4,0% Life insurance 108,5 129,7 19,5% Property insurance 420,4 374,7-10,9% Cargo insurance 21,7 20,2-6,9% TOTAL 987 1 023 3,7% Life insurance is one of the fast growing segments 2
1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 LIFE INSURANCE MARKET Has been rapidly developing since the crisis of 2008-2009 GPW dynamics, billion RUR. 40 30 20 10 0 4 5 5 Life-insurance premiums as a percentage of GDP Total GPW 8 7 8 9 0,06% 11 10 12 Avarage temp of groth 43% 0,06% 16 16 15 21 23 0,09% 26 21 26 27 0,13% 34 23 35 41 1,0% 30 0,15% 1,2% 0,8% 0,6% 0,4% 0,16% 0,2% 0,0% Life insurance market remains one of the fast growing segments of the financial market in Russia, even despite the negative trends in macroeconomics it maintains double-digit growth rates The dynamics of the market growth follows the model of the development of many emerging markets: channel-based growth of bancassurance, the development of innovative product solutions at the junction of the storage and investment insurance. The following 5-7 years must be crucial for the role determining of the life insurance market in the Russian economy. * Life-insurance premiums as a percentage of GDP (ROSSTAT 3
MAKROTRENDS. LIFE IN A CHANGING WORLD What is happening in the economy What is happening in society * The decline in retail lending and growth of delay Increasing of the rate of inflation and the volatility of the ruble The growth of the foreign policy tensions Increasing of the capital cost and limiting of funding sources in terms of economic sanctions Forecasted federal budget deficit Growth in the share of paid education and health services Searching for internal sources of economic growth The tightening of the financial markets supervision Uncertainty in tomorrow Increasing of family importance Reducing of the share of consumer spending Formation of savings "just in case The growing popularity of higher education and increasing in spending on education Trend for a healthy lifestyle, rising healthcare costs and activation of sport activities Continuing growth of Internet users and mobile gadgets Growing awareness of insurance and pension products Based on the results of the research "Current trends and topical life values of the consumers ", prepared by the Agency All Organic, ordered by Sberbank in 2015 4
PRODUCT TRENDS IN 2015-2018 The dynamics of the life insurance market fees on lines of business, bln Market shares of business line 300 Pension Investment 250 Saving Term-life 200 Credit 150 100 50 0 2012 2013 2014 2015 2016 2017 2018 TOTAL 53,8 84,9 108,5 129,7 140,3 186,8 254,6 Credit life insurance Term-life insurance Saving insurance Investment life insurance Pension life insurance 2012 2015 2018 54% 29% 34% 1% 1% 3% 33% 27% 25% 10% 42% 25% 2% 1% 13% Credit life insurance: penetration peak, development depends on credit growth, the probability of reducing rates and the commission under the pressure from the Regulator Term-life insurance: rapid growth through the development of the packaged products and critical illness insurance Saving insurance: growth by expanding product offering to the mass market, tax deduction stimulation Investment life insurance: moderate growth after the rapid growth in previous years, the high level of competition, margin reduction, the search for new ideas Pension life insurance: entrance of insurance companies into the segment of voluntary pensions similar to the developed markets 5
SAVING INSURANCE Retrospective analytics Development prospects GPW dynamics, billion RUR. 40 20 13 18,7 21,4 32,3 34,6 The development of targeted accumulative programs 0 2011 2012 2013 2014 2015 Almost three-fold increase from 2011 to 2015 The development of additional services Difficult selling in the banking channel The launch of packaged products for the mass market Promotion and extension of tax deductions Increased interest in saving insurance because of reducing of credit volumes and deposit interest rates Legislative incentives (2015 tax deductions) Simplification and extension of tax deductions 6
INVESTMENT LIFE-INSURANCE Retrospective analytics GPW dynamics, billion RUR. 60 40 20 0 1,7 5,3 15,6 31,5 53,3 2011 2012 2013 2014 2015 The first products appeared in 2009-2010, now investment life insurance is the leader of market (GPW growth in the 22-fold from 2011 to 2015) Insurance has successfully entered into the product line almost all the top federal banks Investment life insurance surpassed the mutual funds market in volumes Current trends: Using more advanced derivatives The slowdown in growth because of market saturation and macroeconomic factors The need to revise the format of the existing product for the further development and transparency for the customer Development prospects Increasing the share of foreign exchange programs in the short period Reducing the average term of the life insurance policies (Which is not a positive factor) Creating products for the mass market Launch investment life insurance products in the online channel The transition to individual solutions 7
TERM-LIFE INSURANCE Retrospective analytics Development prospects GPW dynamics, billion RUR. 1 0,5 0,6 0,8 0,6 0,5 The transition to the format of "Product Constuctor" with the base package offering base package offering which depends on selecting client portrait for the partnership channel 0 2012 2013 2014 2015 Changing conditions on return of contributions Return of contributions become optional Package products are included in the product line of most companies and are actively promoted through bancassurance The development of products for the premium customer segments Current trends: Integration of sales in the mass retail The development of combined services Increasing medical component (critical illness, medical concierge and etc) Modification of existing products and the addition of critical illness insurance Product promotion in the online and partnership channels 8
PENSION LIFE INSURANCE Retrospective analytics Development prospects GPW dynamics, billion RUR. 2 1,6 1,6 1,5 Launch products for mass and mass highly profitable markets 1 1 1 0 Development of the fixed and variable annuities 2011 2012 2013 2014 2015 The appearance of the first products with fixed and variable annuities in the premium channels (high market) Development of additional services and investment strategies Current trends: Integration of sales in the bancassurance The differentiation of the product range The development of products for the mass highly profitable customer segment Active promotion of products 9
LIFE INSURANCE PRODUCTS: Yesterday Today Tomorrow Credit life insurance Saving insurance Investment life insurance Term-life insurance 10
TRENDS 2015-2018 IN THE SALES CHANNELS GPW structure, 2015 Other partners Individuals Corporate Agents 11% 4,7% Office sales 1,7% Brokers 1,4% 97% 3% Direct sales (online; telemarketing and others.) 0,3% Banks 84% Bancassurance will retain a dominant role on the life insurance market The development of new sales technologies within the banking channel (telemarketing, direct sales, self-service devices) The active use of customer data such as BIG DATA, CRM development and segmented offers Increase in activity in digital sales channels (Internet, mobile devices) The emergence of online aggregators, product simplification and increased price competition by 2018 The development of corporate sales possible after the introduction of stimulating tax measures for employers 11
TOP-10 LIFE INSURANCE COMPANIES, BILLION RUBLES GPW Bln RUR. SBERBANK LIFE INSURANCE 43,9 + 20,3% ROSGOSSRTAKH LIFE 20,5 + 70,5% ALFASTRAKHOVANIE LIFE 13,3 + 32,4% RENAISSANCE LIFE 12,3-0,8% CIV LIFE VTB LIFE INSURANCE RAIFFEISEN LIFE METLIFE OTKRITIE LIFE INSURANCE PPF LIFE INSURANCE 6,6 + 34,7% 6,5 + 3870,2% 3,8+ 7,8% 3,7-43% 3 + 58% 2,7 + 5,2% 129,7 bln RUR + 19,5% 12
DEVELOPMENT OF THE COMPANY 2015 43,9 bln RUR GPW 2014 1th place on the life insurance market 2013 36,5 bln RUR GPW 6,7 mln customers 2012 1. Buying companу with licenses from the Allianz Group 2. Project team formation 0,5 bln RUR GPW 15th place on the life insurance market 9,1 bln RUR GPW 3d place on the life insurance market 0,6 mln customers 1th place on the life insurance market 3,2 mln customers 3. Start of sales 0,04 mln customers 13
FINANCIAL INDICATORS Basic indicators 2015 GPW 43,9 bln RUR Market share 33,8 % The number of customers Net profit Assets under management 6,8 mln 6,7 bln RUR 75,6 bln RUR Expenses Ratio 1,2 % 14
TRENDS AND NEW TENDENCIES IN PRODUCTS, DISTRIBUTION & MARKETS THANKS Maxim Chernin CEO at IC Sberbank life insurance Ltd., Chairman of the Life Insurance Committee All-Russian Insurance Union Russia 8 499 707 07 37 8 800 555 5595 www.sberbank-insurance.ru