Current Market Trends in Life Insurance

Industry in India
&
Strategy for Promotion of PLI and RPLI
17th Feb, 2017, New Delhi

V. MANICKAM, Secretary

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Topics

• Key Parameters for Indian Life Insurance Industry

• Overview of Indian Life Insurance Industry

• Current Market Trends in Life Insurance Industry

• Snapshot of Postal Life Insurance & Life Insurance

Industry

• Strategies for Promotion of PLI and RPLI

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Key Parameters for Indian Life Insurance Industry

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Key Parameters for Indian Life Insurance Industry
- Overview of India’s Demographics
 India’s Current Population is approximately 134 Crore *

 Insurable Population is about 90 Crore.

 Mobile Phone Connection is about 93 Crore.

 Male to female population is 52 :48 (690 Mn male : 647 Mn female).

 72 % of the total population resides in semi-urban and rural areas.

Global Overview
 Out of total world population aged above 80, 6 countries account for about 50 % of population in
2015 (China 23 Mn, USA 12 Mn ,India and Japan 9 Mn each ,Germany and Russia 4 Mn each).

 In 2015, in the world total of aged people above 60 stood at 901 Mn (in India around 100 Mn).

 Globally, 40 % of elders aged 60 years & above live independently or with spouse. This
trend is increasing steadily.

 By 2050, it is estimated that India will have 330 Mn people aged 60 & above and 45 Mn people aged
80 or above.

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Source: UN population Division * - Intl. Inst. For Popln. Sciences (IIPS)
Key Parameters for Indian Life Insurance Industry
- Change in Trend of age structure of Indian population and Projection thereof (%)

Age Group (Yrs) 1970 2000 2005 2015 2025 2050

Up To 14 40.9 35 33.1 28.7 24.7 18.2

15 to 59 53.6 58.3 59.9 62.6 64.2 62.2

60 and above 5.5 6.7 7.0 8.7 11.1 19.6

100
Age up to 14
Age

50
15 to 59

0 60 and above
1970 2015 2025 2050
Year

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Source: UN population Division
 Key Parameters for Indian Life Insurance Industry
- Current Population of Workforce
 Out of total population of 134 crore * (approximately), only 42.7 crore is employed
workforce (2015)

Working population Population % of Pension/ retirement

(Cr) Employed benefits
workforce

Salaried employees 6.7 16

 CG/ SG/ Armed forces 1.5 Yes (Govt. funded)
 Non-Government 3.3 Yes(EPF/ PPF)
 Others 1.9 Voluntary

Self employed 22.7 53 Voluntary

Casual / Contractual workforce 13.3 31 Voluntary

 Around 4% ( 5.4 crore) of the total population is eligible for Pension related benefits.

Source: Indian workforce survey and UN population Division

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* - Intl. Inst. For Popln. Sciences (IIPS)
 Key Parameters for Indian Life Insurance Industry
- Financial Savings of Household sector (In % of GNDI*)
Item 2011-12 2012-13 2013-14 2014-15 2015-16
Gross savings 33.8 33.0 32.3 32.3 NA
Household sector savings 23.0 21.9 20.5 18.7 NA
A. Gross financial savings 10.4 10.4 10.4 10.0 10.8

1. Currency 1.2 1.1 0.9 1.1 1.4

2. Deposits 6.0 6.0 5.8 4.9 4.7
3. Shares and Debentures 0.2 0.2 0.4 0.4 0.7
4. Claims on Government -0.2 -0.1 0.1 0.0 0.4
5. Insurance Funds 2.2 1.8 1.6 1.9 2.0
6. Provident & Pension 1.1 1.5 1.6 1.6 1.5
funds
B. Financial Liabilities 3.2 3.2 3.0 2.5 3.1
C. Net Financial Saving (A-B) 7.2 7.2 7.4 7.5 7.7
* GNDI – Gross National Disposable Income
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Source: IRDAI
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Overview of Indian Life Insurance

Industry

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 Overview of Indian Life Insurance Industry
– Key Indicators

Parameters FY 99-00 FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 Up to

Nov-16 *

Number of 1 24 24 24 24 24 24
players
Capital 5 33,633 34,200 35,021 35,680 34,847 35,000
Deployed
(Rs. Cr)
Branches 2,048 11,082 10,253 11,032 11,030 11,071 10,923

Employees 1,20,000 2,42,682 2,48,703 2,44,522 2,49,221 2,47,713 2,44,927

Individual 7,10,000 26,08,820 23,45,601 21,88,500 20,67,856 20,16,565 20,44,717

Agents

* - Provisional

Source: IRDAI, Life Insurance Council 9

 Overview of Indian Life Insurance Industry
– Business Performance Indicators
Parameters FY 99-00 FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 Up to
Nov-16 *
New Business
Policies (Cr) 1.69 4.41 4.41 4.08 2.59 2.67 1.38

In force Policies
(Cr) 1.01 33.52 33.61 33.54 32.77 32.54 31.94

New Business
Premium 8,280 1,13,942 1,07,361 1,20,319 1,13,328 1,38,862 1,03,472
(Rs. Cr)

Renewal
Premium 17,955 1,73,130 1,79,841 1,93,963 2,14,773 2,28,081 1,35,393
(Rs. Cr)
Total Premium
(Rs. Cr) 26,235 2,87,072 2,87,202 3,14,282 3,28,101 3,66,943 2,38,865

* - Provisional
Source: IRDAI, Life Insurance Council 10
Overview of Indian Life Insurance Industry – Key Indicators
Segment Wise (Individual) N.B Performance of Life Insurance Industry for the last 5 Yrs (Rs. In Cr)
Category 2011-12 2012-13 2013-14 2014-15 2015-16 Up-to Jan-17
(Prov)

Life 61,887 59,807 57,948 51,885 51,840 42,037

(96.04%) (96.52%) (95.68%) (93.76%) (89.01%) (72.05%)

GL. Annuity 1,161 1,446 1,719 2,131 5,111 14,881

(1.80%) (2.33%) (2.84%) (3.85%) (8.77%) (25.51%)

Pension 1,148 522 750 1,204 1,101 1,297

(1.78%) (0.84%) (1.24%) (2.18%) (1.89%) (2.22%)

Health 238 188 144 114 187 130

(0.36%) (0.31%) (0.24%) (0.21%) (0.33%) (0.22%)

Total NB 64,434 61,963 60,561 55,334 58,238 58,344

premium
(100%) (100%) (100%) (100%) (100%) (100%)

Source: L.I. Council

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 Overview of Indian Life Insurance Industry
– Payouts to Policy Holders
a Parameters FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 Up to
Nov-16*

Total Benefits Paid (Cr) 153133 192493 217075 210915 201766 140766

Surrenders (Cr) 71155 105822 106982 100389 80356 60240

Death Claims Paid (Cr) 8409 9370 10861 11789 12637 NA

% 92 91 91 91 91

O/s D/Claims (Cr) 293 318 450 453 444

% 3.2 3.1 3.8 3.5 3.2 NA

D/Claims 451 568 624 702 737

Repudiated/Rejected (Cr) NA
% 4.9 5.5 5.2 5.4 5.3

* - Provisional, NA – Not Available

Source: IRDAI, Life Insurance Council (Up to Nov-16 data is provisional)
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 Overview of Indian Life Insurance Industry – Key Indicators
Total Investments of Life Insurers: Category-Wise (Rs. In Cr)
Category of Investments 2000-01 2012-13 2013-14 2014-15 2015-16

Traditional Products

47,513 5,11,248 6,04,651 7,22,955 8,31,049

Central Govt. Securities (24.49%) (36.55%) (37.19%) (38.36%) (38.44%)

52,524 2,66,003 3,33,951 4,30,554 5,28,206

State Govt. Securities (27.07%) (19.02%) (20.54%) (22.84%) (24.44%)

Infrastructure 24,887 1,16,645 1,55,026 1,74,512 1,86,112

Investments (12.83%) (8.34%) (9.54%) (9.26%) (8.61%)

50,502 4,45,611 5,03,059 5,30,568 5,83,145

Approved Investments (26.03%) (31.86%) (30.94%) (28.15%) (26.98%)

Other than Approved 18,584 59,161 29,118 26,193 33,145

Investments (9.58%) (4.23%) (1.79%) (1.39%) (1.53%)

ULIP

3,25,281 3,22,456 3,52,371 3,28,974

Approved Investments NA (94.97%) (97.22%) (97.14%) (96.64%)

17,226 9,205 10,369 11,438

Other Investments NA (5.03%) (2.78%) (2.86%) (3.36%)

Total
1,94,010 17,41,175 19,57,466 22,47,522 25,02,068
(100%) (100%) (100%) (100%) (100%)

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Source:IRDAI
 Overview of Indian Life Insurance Industry – Key Indicators -
Growth of Life Insurance Sector – Rural Social Sector

3.37 Crore lives covered 69 lakh policies sold

to social sector in 2015-16 in rural areas in 2015-16

Statutory Requirements
Companies have to mandatorily
sell - 20% of new policies in rural
areas and 5% of total business
procured in the preceding Financial
Year in social areas

53% of 11,071 branches are in semi-

urban and rural areas

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Source: Life Insurance Council; IRDA;
Current Market Trends in Life Insurance Industry

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 Current Market trends in Life Insurance Industry
Digitization – the buzzword in the industry

 Online policies picking up in a big way – Term policies are becoming popular.

 Web Aggregators use online space, providing comparable quotes and

generating leads for insurers.

 Usage of Tablets for demonstrating customers with ease under various scenarios – with
various returns and charge structures become very easy.

 Form filling has become a less painful exercise and anywhere any time insurance
through mobile applications has also become popular.

 Comparing products of various Insurers has become easy and faster.

 Premium payments made online –

Instant Payment through online portals have revolutionized the premium collection process.

 IVRS, online mobile applications etc. have also become popular premium payment methods

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 Current Market trends in Life Insurance Industry
E-Insurance Account – a Revolution

First of its kind in the world – holding all insurance policies in electronic form by opening
a single e-insurance account with an Insurance repository.

Free for the customer and the charges are paid by the Insurance company.

Loss of insurance policies and issue of duplicate policies have become history with the introduction
of e-insurance account – facilitates faster settlement of claims.

Single KYC done for e-insurance account instead of each policy – reduces the paper work.

E-insurance account completes the paperless insurance policy system and makes the insurance
purchase seamless.

A customer buying policy online, pays insurance premium online, gets receipt online and also gets
credit of insurance policy account online and

Finally the claims are settled by direct transfer of funds to the account of the nominee/Policyholder.

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 Current Market trends in Life Insurance Industry

Evolution of Alternative channels of Distribution.

Individual agency channel was the only mode of distribution in LIC days (currently 20
lakh). Direct Marketing is a popular channel for reaching customers and generating
leads or selling through a telephone.

Corporate Agency system introduced in 2002 with IRDAI framing regulations

allowing Corporate form of Agencies (currently 428).

This was followed by the Insurance Broking model which allowed the entity to be a
distributor for multiple insurers (currently 370)

Micro Insurance Agent channel to procure New Business from rural and remote rural
areas. (currently 27,041)

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 Current Market trends in Life Insurance Industry

Evolution of Alternative channels of Distribution. ……contd

Web Aggregators are online operators who provide choice of products to customers
online (currently 16).

Insurance Marketing Firms (IMF) – Encourage Entrepreneurship – Ability to sell other

financial products. (currently 81)

Common Service Centers (CSC) – Encourage Rural Entrepreneurship to take insurance to

the remote areas through Village Level Entrepreneurs (VLE). (currently 5373)

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Snapshot of Postal Life Insurance

(PLI & RPLI)

&

Life Insurance Industry

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Snapshot of PLI/RPLI vis-à-vis Life Insurance Industry Statistical Data
– No: of Policies In-force
Policies in Lakh

Year
Source: PLI/RPLI, IRDAI & Life Insurance Council
Snapshot of PLI/RPLI vis-à-vis Life Insurance Industry Statistical Data
– Corpus Fund (Rs. In Cr)
Rs.Cr

Year

Source: PLI/RPLI, IRDAI & Life Insurance Council

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Strategies for Promotion of

PLI and RPLI

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 Strategies for Promotion of PLI and RPLI

Following Strategies are suggested for promoting PLI and RPLI:-

ofthe Industry
Modernize Offices in Phased Manner - To attract New Generation
Customers, and to change the outlook of Offices through modernization with
an aim to solicit more customers.

 Adopt RTM Strategy (Recruit, Training and Motivate)

RTM - Recruit

 Recruit more no. of Direct Agents – Conduct Special Recruitment drive

periodically every year and enhance the number of Direct Agents.

 To empower women, conduct Special Recruitment drive to recruit Women

Direct Agents in large number.

 Incorporate both of the above in business plan every year.

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 Strategies for Promotion of PLI and RPLI contd…
RTM – Training
the ry
 Attach top priority to update the knowledge of insurance to all Direct Agents
through refresher programme in dedicated training centres/through online portals.

 The training should encompass among other things, product knowledge, selling
technique, USP of each product of PLI/RPLI and comparative analysis of similar
products of competitors. This should be a continuous agenda every year
preferably in the 1st half year and 2nd half year must be used for business
solicitation etc.,
Because “Knowledge is Strength”.

RTM – Motivation

 Motivation through Marketing Supervisors – Marketing Supervisors should visit

houses/ workplaces and policy service centres of Direct Agents periodically,
interact with them about NB performance, ascertain feedback and motivate them
suitably for soliciting more New Business.

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 Strategies for Promotion of PLI and RPLI contd…

 While visiting the houses of Direct Agents, Marketing Supervisors should interact with
family members of Direct Agents to ensure congenial working atmosphere for Direct
of the Industry
Agents which will in-turn boost the morale for better NB performance.

 Create multiple tier incentive system through Club Membership (Diamond, Platinum,
Gold, Silver, Bronze, etc.). On the basis of performance of Direct Agents, organize
periodic foreign trip/ exotic locations in India/abroad and motivate them/spouse
appropriately.

 Float Sale competition for Direct Agents to encourage them to sell more policies.
Competition should be floated at every festive and special occasions and the
award/prize should be distributed without any delay to keep their morale high.

 Distribute Congratulatory Plaque with photograph along with Honour Certificates to

Direct Agents periodically on the basis of key Milestone on monthly/quarterly basis and
publish in the in-house magazine.

 All of the above suggestions are aimed to encourage the Direct Agents to inculcate in
them a sense of belonging to the organization.

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 Strategies for Promotion of PLI and RPLI contd…

 3 Flank Strategy (PGS) – Policy servicing, Grievance Redressal and Solicitation of

New Business
of the Industry
 Service Camp to be set up at multiple locations every month for facilitating the 3 Flank
Strategy effectively.

 Utilize the IT effectively and integrate the premium collection and servicing of policies.

 Grievance Redressal Mechanism – Integrate the Grievance Redressal Mechanism to

resolve the grievances of policyholders.

 Increase age at entry – In view of increasing longevity of Indians, it is suggested to

increase the age at entry for PLI/RPLI.

 Increase Sum Assured (SA) – On account of increasing income earning capacity and
health consciousness of Indians, increase the ticket size of policies in terms of Premium
and SA from the current level, which will enhance the corpus fund of PLI/RPLI.

 Offer Riders – As an add on to the existing products wherever necessary.

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 Strategies for Promotion of PLI and RPLI contd…

Premium Payment Facility – To enlarge presence of PLI/RPLI, it is

ofthe Industry
suggested to utilize premium payment through online mode, which is also in
line with Hon. Prime Ministers’ vision of Digital India and thereby enhance
Cashless transactions.

 Conduct workshops at all Central / State / District Government offices,

Central and State Public Sector Undertakings, Universities, Government
aided Educational institutions, Nationalized Banks, Local bodies, autonomous
bodies, JVs of Govt./PSUs, credit co-operative Societies, local police stations,
railway stations, bus stands, hospitals and other civic bodies such as local
Panchayat offices, Primary Health Care Centres, Anganwadi etc.

 The above being your specific turfs, promote insurance awareness to have
maximum reach and insurance penetration.

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 Strategies for Promotion of PLI and RPLI contd…

 Utilize the Services of Gramin Dak Sewaks (GDS) – To cover the length
and breadth of our vast Nation, utilize your foot soldiers (GDS) extensively for
of the Industry
campaigning about the various products/benefits of PLI/RPLI by incentivizing
them suitably. For this purpose, wherever necessary make suitable
amendments to the service rules.

 To conduct Nukkad, Natak, Skit plays and Sales Promotion Seminars

periodically followed by advt. campaigns on television, radio and billboards
etc., highlighting about highest rate of bonus paid for the Products of
PLI/RPLI.

 Setup Wi-Fi enabled kiosks at every postal office so as to enable the

policyholder to access information on insurance, its benefits and thereby
solicit more new business and increase the insurance density.

 PLI/RPLI may engage reputed PR agencies wherever necessary to execute

the Insurance Awareness Campaign.

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Thank You

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