International Environment

of Management
Articles on life insurance industry

Submitted by :
Mitesh unadkat
Division : A
Roll no. :19029

Submitted to :
Dr.yogesh c. joshi

G.H.Patel post graduation

Institute of business management
2020-21
1. How life insurers are looking at 2020?
Life Insurance industry is poised to grow at 15% CAGR in next three years and as the year ends,
life insurers discuss how 2019 fared for the industry and what do they make of 2020.
The insurance sector continues to remain one of the fastest growing markets with a Compound
Annual Growth Rate (CAGR) of 12% from FY14 to FY19 according to EY-ASSOCHAM
report. As of FY18, India is the 11th largest insurance market in the world and has bagged the
10th position in the life insurance segment in terms of the total premium. There are 24 life
insurance and 33 non-life insurance companies in the Indian insurance market currently
competing on price and services to attract customers.
According to a report by the India Brand Equity Foundation (IBEF), the Indian insurance
industry is expected to grow to Rs 19,56,920 crore (US$ 280 billion) by FY2020, owing to the
solid economic growth and higher personal disposable incomes in the country. The overall
insurance penetration in India touched 3.69% in 2017 from 2.71% in 2001. Gross premiums
written in India reached Rs 5,78,000 crore (US$ 82.8 billion) in FY19, with Rs 4,08,000 crore
(US$ 58.5 billion) from life insurance and Rs 1,69,000 crore (US$ 24.3 billion) from non-life
insurance.

2.COVID fears: Life Insurers go slow on issuing fresh policies

Term insurance and other covers have been put on hold for 3-6 months for high-risk cases Life
Insurance Corporation of India (LIC) has put fresh policy issuances on hold amidst rising
coronavirus cases.

In a guideline on new underwriting norms – a copy of which is with Moneycontrol – it is

mentioned that policy issuance to non-resident Indians (NRIs), persons of Indian origins (PIO)

and resident Indians with travel history or future plan to travel abroad is postponed by three

months to one year.

While the firm would continue to issue immediate annuity plans, other life insurance plans for

high-risk individuals, especially those above 55 years, deferred annuity and single premium
policies would be put on hold for a period of six months.

3.PNB to retain stake in two life insurance ventures as Irdai gives nod
State-owned Punjab National Bank NSE -5.98 % (PNB) will retain stake in two life insurance
ventures as the lender has got permission from Insurance Regulatory and Development Authority
of India (IRDAI).Following the merger of Oriental Bank of Commerce on April 1 with PNB, 23
per cent of stake of the former in Canara HSBC OBC Life Insurance stands transferred to latter.

Already, PNB is a promoter of PNB Metlife Insurance with the highest stake of 30 per cent since
2012.

Founded in 2001, PNB Metlife's other shareholders include US-based Metlife with 26 per cent,
Elpro (21 per cent) and M Pallonji & Company (18 per cent).

"At this point of time there is no compulsion to exit. We have spoken to Irdai. There is a
continuity. There is a time we will take a decision on that," PNB Managing Director S S
Mallikarjuna Rao told PTI when asked if regulation restricts a lender having stake in two life
insurers.

4.HSBC to buy out life insurance joint venture partner in China

The move will allow London-headquartered HSBC, which gets the bulk of its revenue from Asia
Reuters
    

HSBC Holdings PLC said on Monday its insurance unit had agreed to acquire its China life

insurance venture partner's 50% stake to own fully the company under the new rules on foreign

ownership that came into effect in January.

The move will allow London-headquartered HSBC, which gets the bulk of its revenue from

Asia, to further expand its footprint in the world's second-largest economy, where it has

deployed billions of dollars as part its Asia "pivot" strategy.

Financial details of the transaction were not disclosed.

The transaction to buy the stake in HSBC Life Insurance Co Ltd (HSBC Life China) from joint

venture partner the National Trust Ltd will be structured as a transfer of equity interest and is

subject to regulatory approvals, the lender said

5) Debate: Should life insurers offer indemnity-based health

policies?
Will this work in favour of customers? Industry voices weigh in on the debate
Your life insurer could soon double up as your health insurance provider too, if a committee set
up by insurance regulator IRDAI votes in favour of this proposal. Will this work in favour of
customers? Industry voices weigh in on the debate.

Life insurance and health Insurance are both insurance contracts on a human life. Life Insurers

already offer fixed health benefit products such as Critical Illness, Hospital Cash and Cancer

cover. As the underlying risk remains the same, health insurance remains a logical growth path

for a life insurance company. Being risk managers for a longer term, life insurers have a natural

advantage to offer a better value proposition to meet the healthcare needs of their customers.

Globally, this is one of primary reasons why the same insurer is responsible for both life and

health insurance covers.

From a customer’s perspective, access to health insurance, coupled with savings-linked product

structures, empowers life insurers to offer innovative health insurance products, which provide

better choices to customers – e.g., utilising initial year savings to fund future health expenses.

This will help strengthen customers’ proposition through combined insurance solutions for life
and health.
6) Life Insurance wrap 2019: Regulator IRDA steps in to enhance product
features, makes them customer-friendly

Though the changes have been announced, clarifications on the taxation limits need clarity from
the 2020 Union Budget.
    

“Sabse Pehle Life Insurance,” was the life insurance industry’s first unified advertisement
campaign started this year. While the industry has been looking to attract more eyeballs, the
insurance regulator has ensured that the product per se became more investor friendly by
modifying the surrender clauses, changing the revival period and ensuring that customers
understand what they are paying for, through customised benefit illustrations.

While the fresh policies compliant with these rules were supposed to have hit the market from

December 1, 2019, the insurance regulator IRDA granted a two-month extension to life insurers.

These firms were given additional time to roll out the new compliant products owing to the

challenges in system preparedness and training. But there would be no further extensions and,
hence, by February, you can be assured of getting life insurance policies with improved features.

7) 3 Point Analysis | Life insurers: Healthy premium growth in February

Private players’ unweighted total premium grew 17 percent YoY, much slower compared to the
42 percent YoY growth for Life Insurance Corporation of India (LIC).
Moneycontrol News
    
The unweighted total premium of the life insurance industry grew 33 percent year-on-year
(YoY) to Rs 18,209 crore in February, as per data released by IRDAI on March 13. Private
players’ unweighted total premium grew 17 percent YoY, much slower compared to the 42
percent YoY growth for Life Insurance Corporation of India (LIC). Sakshi batra does a 3 point
analysis of which private player should you look at investing and why.
8)Managing Money with Moneycontrol | Why & how should you get

life insurance
In this episode of Managing Money, Abhishek Bondia, Co-founder & principal officer,
SecureNow explains the importance and helps choose the perfect cover for yourself.

Moneycontrol News
    

Buying life insurance is one of the most important financial decisions, but believe it or not, only

10 percent of Indians are insured.

Lots of people die a prematurely every year from illness or accident and if this happens to the

sole breadwinner in the family, the kin's life would be affected harshly. This is where life

insurance could play an important part

9)Only 21% of life insurance holders have term insurance: Survey

Of those who own term insurance, 57 percent do not have any awareness of the sum assured they
are guaranteed on their policy.
PTI
    

Only one out of five life insurance policyholders have term insurance in urban India despite the

product being the cheapest form of protection, according to India Protection Quotient (IPQ)

survey conducted by Max Life and Kantar IMRB.

Urban India stands at the Protection Quotient of 35 out of 100, as per the survey.
Term insurance is a form of life insurance that covers the insured person for a certain period of

time, the term that is specified in the policy. It pays a benefit to a designated beneficiary only

when the insured dies within that specified period which can be one, five, 10 or even 20 years.

Term life policies are renewable but premiums increase with age.

The survey was conducted on 4,566 people across 15 metropolitan and tier one cities in India.

10)Insurance products that every person should have in their financial

portfolio
To minimise the risk of financial loss, your insurance cover should offer protection for not only
your possessions, income but also, for the loved ones.
    You work hard throughout your life to build wealth and live a comfortable life. However, you
should not forget that life is full of uncertainties. The untimely death of a bread earner, or any
burglary home can cause huge financial loss. To minimise the risk of financial loss, your
insurance coverage should offer protection for not only your possessions, income but also, for
the loved ones you will someday leave behind.

Thus, it is better to safeguard yourself from these risks by transferring them completely to an
insurance company.

Life insurers report healthy premium

growth in February; buy ICICI Pru
-Best time to invest in cyclical play such as ICICI Pru is when it is beaten down

The unweighted total premium of the life insurance industry grew 33 percent year-on-year

(YoY) to Rs 18,209 crore in February, as per data released by IRDAI on March 13. Private
players’ unweighted total premium grew 17 percent YoY, much slower compared to the 42

percent YoY growth for Life Insurance Corporation of India (LIC).

11) Private players ahead in individual WRP growth

The more appropriate metric to look at is retail weighted received premium (WRP) which is a

measure of premium received on individual products.  It is the sum of the first-year premium on

renewal policies and 10 percent of single premium policies.

Private players’ individual WRP growth picked up in February 2019 to 16 percent YoY, while

industry growth was 12 percent YoY.

Private players like Birla Sun Life, Tata AIA and Bajaj Allianz exhibited robust growth.

Among listed players, HDFC Life was the only large player that reported a decline in individual

WRP by 6 percent YoY in February. However, in FY19 until February end, it has seen 6 percent

YoY growth.

On the contrary, ICICI Prudential life (ICICI Pru) witnessed 8 percent YoY growth in the month

of February but its performance in FY19 is lagging behind and it has reported a decline.
12) An Empirical Analysis of Life Insurance Industry in India
Since inception the Indian life insurance industry passed through many hurdles and hindrances in
order to attain the present status. However, the income earning capacity, eagerness and
awareness of the general public are the key determinants of the growth of any insurance industry.

In the Indian context, the insurance habits among the general public during the independence
decade was rare but there was a remarkable improvement in the Indian insurance industry soon
after the economic reform era (1991) due to healthy competition from many national as well as
international private insurance players. In this paper attempt has been made to analyse the overall
performance of Life Insurance Industry of India between pre- and post economic reform era. To
measure the current status, volume of competitions and challenges faced by the Life Insurance
Corporation of India and to measure the effectiveness of investment strategy of LIC over the
period 1980 to 2009. Data were analysed by using T test and Anova. The study reveals that there
is a tremendous growth in the performance of Indian Life Insurance industry and LIC due to the
policy of LPG. Insurance industry also improved a lot due to the emergence of Private sector and
opening up for foreign players. Further there is also a huge change in the investment pattern of
LIC. There is a increasing trend toward the investment in Stock market by LIC from 60% to 93%
from 1980 to 2009 due to the effective regulation of SEBI and increasing transparency of stock
market.

13) Where do insurers stand as they enter 2020?

THE insurance industry remains resilient, continuing to generate growth around the world and
maintaining overall profitability despite turbulence in the global economy.

In the United States, the world’s biggest insurance market, the property and casualty (P&C)
sector is building upon a strong 2018 in which the industry saw net income soar 66 percent to
US$60 billion, thanks to a 10.8 percent boost in net premiums written and nearly breaking even
on underwriting (after losing US$23.3 billion the year before).1 US insurer results deteriorated a
bit but were still positive in the first half of 2019, with the industry posting an underwriting gain
of US$5.4 billion (down from US$6.1 billion for the same period in 2018) and a profitable
combined ratio of 97.3

14.New Trends Emerge in Life Insurance Industry

The life insurance industry has undergone several changes in its regulatory framework which
has impacted the business sector and its engagement with its customers.

As per a report of the India Brand Equity Foundation, the insurance industry is expected to
reach US$280 billion by 2020.

Due to the Covid-19 pandemic, the life insurance industry has become more technologically
advanced and customer-oriented with better operational performance and efficiency.   

Cover for COVID-19 pandemic: 

The novel coronavirus outbreak in 2020 has led life insurance companies to provide
prevention against such other diseases caused by viruses. Though the customer’s point of
view has changed, insurance industries are pushed to re-imagine their product strategies
during this pandemic. Insurance companies worldwide are offering various life-insurance
policies and Covid-19 specific policies to ensure financial stability as well as health
assistance.

Customer Segment Health and Wellness Initiative:

The insurance industry at its emerging state used to offer an overall approach (general
approach) to policies, but as we move forward, customers are provided with advanced
customized solutions for their current needs. Hence life insurance has made customer-
specific plans which focus on the health and wellness of the customer and are flexible. It is
one of the remarkable trends in 2020. By taking the initiative for the customer’s health and
wellness, life insurers are open to broad market opportunities and an enhanced customer
relationship .

15) Why life insurance companies want your Fitbit  data

I recently predicted that health data from electronic sources could soon be compiled into a health
or wellness report and shared with insurance companies to help them determine who they’ll
cover.

And now John Hancock, the U.S. division of Canadian insurance giant Manulife, requires
customers to use activity trackers for life insurance policies in their Vitality program if they want
to get discounts on their premiums and other perks.

Customers can withhold their fitness data, but that will result in higher premiums, which may put
life insurance out of reach for low-income earners. This in turn could have an impact on whether
would-be homeowners can take out mortgages, some of which can require a life insurance policy
on the principle borrower.

The fact that insurance companies track the physical activities of customers has been making
headlines for years, but previous initiatives were pilot projects.

16) New life insurance code riddled with loopholes

Life insurance has stood out as an industry without a code of practice when others such as
general insurers have one. The latest attempt by the Financial Services Council to remedy this
may be a last chance for life insurers to reform, before the government forces them to.

The code from the Financial Services Council focuses on the relationship between the insurer
and the customer and aims at high standards of consumer service; professional behaviour and
industry consistency. It should complement the legislation announced in 2015 to deal the
problems of excessive up front premiums, remuneration practices and commissions which were
incentives for insurers to churn customers through policies.

The code is also a result of the Trowbridge Report on retail life insurance which gave the life
insurance industry a final opportunity to shape its future through a co-regulatory approach, rather
than being reformed by the government alone.

Hopefully this latest attempt at reform does not go the same way as the earlier 1995 code of
practice for the industry, which lapsed in 2001. This covered similar territory to the Financial
Services Council code, but made little difference to the way the industry behaved. A positive
sign is this new code was developed in consultation with industry, while the last one wasn’t.
17) 5 Recent Developments in the Life Insurance Industry
Strong economic factors and the government pushing the right buttons with the implementation
of technology has propelled all sectors of the Indian industry on a glorious path.  Life Insurance
industry has also made a significant contribution in putting our country on this glorious growth
trajectory
Adopting life insurance for risk management and using it as a preferred tool for achieving major
life goals has made a noteworthy contribution to the growth of the life insurance industry.
Insurance density of life sector has grown to 55 US $ in the year 2017-18, a growth from the
previous figure of 46.5 US $ in the year 2016-17. Similarly, Insurance penetration has grown to
2.76% in the year 2017-18 from the previous figure of 2.72% for the year 2016-17.
1) Growth in premium
2) Outstanding claim ratio
3) Better fraud management practices
4) Digital push
5) Better reach

18) How Crucial Is Your Term Life Insurance?

Take charge today! The pandemic around us is real and the world is yet to identify a solution for
now. While there is no solution that is available immediately, there is no need to fear or panic. It
is important to recognise that this is new and completely unknown that has hit all of us. A
pandemic of this magnitude calls for action in behaviour, drop tactical thinking and prepare for
long term!
Just as the pandemic has bought upon the masses these lessons, planned, systematic behaviour in
protecting their families milies is the key for a successful financial stability in the long term.
Here are three reasons to buy your term insurance plan
• It is simple and affordable: A term plan helps one prepare for uncertainties. One of the most
cost-effective methods by which one can mitigate risk is term insurance. This product is popular
primarily because it offers high sum assured at very low premiums.
• It protects the most important people in your life: Many young people avoid buying insurance,
thinking it is an unnecessary expense. People in their early 30’s believe that they are fit, and
nothing can happen to them ever. However, 30’s is the best age to purchase, as one gets married
and have kids at this age. So, if you love your family, and would love to protect your most
important people in life, buy a term plan.
• It gives you peace of mind: Term insurance gives you peace of mind knowing that your loved
ones will be financially secure when you are not around. They will have the much-needed
financial security to not only meet their day-to-day needs but also to fulfil their dreams. The
main aim of your life is always to see that the loved ones happy and secure.

19) Give Your Life Insurance Policy Firepower With Add-Ons

insurance has become a necessity for the primary earning member of the family. The benefits of
buying a life insurance policy go beyond protecting the policyholder’s family in tough times.
Insurance policies act as a financial cushion, can be a valuable saving and investment tool,
provide mental peace and can help in effective tax planning. Among various life insurance
policies that are currently available, term plans are the most famous, simple and cost-effective.
Term insurance is a type of life insurance policy that provides coverage for a certain period of
time or a specified "term" of years. If the policyholder dies within the specified term or during
the active period of your policy, then the death benefit is paid to the nominee. However, if you
outlive the “term” of your term insurance policy then the funds that you paid as premium are
forfeited. Term plans alone may not be sufficient in certain cases. For instance, if the
policyholder gets severely injured in an accident or is diagnosed with a life-threatening disease, a
term plan may not help bear the major expenses of prolonged treatment. To prepare for such
eventualities, individuals can consider buying add-on covers or riders.
A rider is an attachment, amendment, or endorsement made in an insurance policy that gives the
policyholder supplementary coverage. Riders strengthen an insurance policy by providing
multiple additional benefits, apart from the core offering of a death benefit.
Riders can typically be attached to any insurance plan be it a term plan, endowment plan, unit-
linked plan (ULIP) or money back plan. The policyholder has the choice to select riders based on
individual and family needs since they can enhance the life cover and secure the financial well-
being of the family more comprehensively

20) Claim Management In Life Insurance

The death claim settlement ratio of insurance companies ranges between 85.3-99.07 per cent for
the year 2018-19, according to IRDA’s annual report 2019. The report exhibits that TATA AIA
has the best death claim settlement ratio at 99.07 per cent. Tata AIA, followed by HDFC, Max
Life and ICICI Prudential Life with claim settlement ratio of 99.07 per cent, 99.04 per cent,
98.74 per cent and 98.58 per cent stand ahead of LIC (97.79 per cent) in settling individual death
claims.
Digging deep into the report, the average claim settlement amount paid by LIC is just around Rs
1.75 lakh whereas it is over Rs 15 lakh by Aegon. New-age life insurance companies like Aegon
aggressively sell high sum assured term plans, unlike LIC which has been giving prime
importance to the endowment and money-back policies.
Insurance companies operate in a highly competitive environment, therefore, a smooth, speedy,
and customer-oriented claim management process is vital for long term survival of an insurer.
Claim management is one of the key drivers of the success of an insurer and a core function in
insurance operations along with underwriting and policy administration.

21) Significance and challenges in life insurance

Customer service experienced during the claim management process is crucial from an insurer's
growth perspective. An efficient claim management process with high service standards plays a
pivotal role in increasing the profitability of a business and enhancing customer confidence and
reliability. Additionally, prompt settlement of death claims builds customer’s trust in the insurer
and strengthens the relationship.
The biggest challenge for life insurance companies is to ensure that invalid claims are identified
as timely to avoid incurring losses. The other key issues are high operational costs, inconsistent
service delivery, poor integration, data inaccuracy, and a threat to data security.

22) Insurance Companies Will Process COVID-19 Death Cases:

Life Insurance Council
With the number of coronavirus patients and deaths due to the disease rising every day, Life
Insurance Council, the face of the Indian life insurance industry, on Monday announced that all
life insurers, both public and private, are committed to process any death claim pertaining to
COVID-19 at the earliest.
The Council also confirmed that the clause of ‘Force Majeure’ will not apply in case of COVID-
19 death claims. This step was taken to reassure customers who had reached out to individual life
insurance companies seeking clarity on this clause in their contract as well as to dispel rumours
to the contrary. All life insurance companies have also communicated to their customers
individually in this regard.
“The spiraling global and local impact of COVID-19 pandemic has emphasized the fundamental
need for life insurance in every household. The life insurance industry is taking every measure to
ensure that the disruption caused to policyholders, due to the lockdown is minimal, by providing
them uninterrupted support digitally, be it for honoring death claims related to COVID-19 or for
servicing their policy. We reiterate that all life insurance companies stand by their customers in
these difficult times and the customer should not be swayed by misinformation or
misrepresentation,” said S.N.Bhattacharya, Secretary General , Life Insurance Council.
23) Salaried Women See An Increase In Life Insurance
Ownership, 
Ownership of life insurance by Indian women residing in urban areas witnessed a sharp increase,
reveals a recent study. In a 12-month survey that ended in January 2020, life insurance
ownership witnessed 8 per cent increase up to 67 per cent. Comparatively, life insurance
ownership by men witnessed 3 per cent increase up to 71 per cent, during the same period.
Affluent and salaried people mainly led an increase in life insurance ownership. While the
salaried class witnessed a 4 per cent increase in life insurance ownership up to 75 per cent, the
affluent saw a 6 per cent increase up to 79 per cent, as compared to previous year, noted India
Protection Quotient 2.0 report prepared by Max Life Insurance and Kantar. They collected
samples from 7014 respondents aged between 25 and 55 years, earning an annual household
income of more than Rs 2 lakh.
Overall, life insurance ownership increased by 500 bps up to 70 per cent from last year, with
term insurance ownership witness an increase of 700 bps up to 28 per cent. On the scale of 0 to
100, the knowledge index was at 48, and term awareness increased to 57 per cent, the report said.
The report measured attitudes, mental preparedness around future uncertainties, awareness, and
ownership of life insurance products as survey’s major touch-points for calculation.
While the life insurance ownership for working women in Tier-II cities stood at 60 per cent, term
insurance made merely 16 per cent of that as they had never thought about term insurance at all,
while others said they do not have enough money to buy it. On the other hand, women in metros
focused more on returns than on long-term financial protection.

24)First Year Premium Of Life Insurance See Decline Of 32.6%

The COVID-19 has badly impacted the life insurance sector after it reported a drop in monthly
first year premium collection, reveals CARE Ratings research. The sector has witnessed a
decrease of 32.6 per cent in the first year premium to Rs 6,728 crore in April 2020 from Rs 9,982
crore in April 2019. Also, the overall sum assured saw a drop of 16.4 per cent from Rs 2.72 lakh
crore in April 2019 to Rs. 2.27 lakh crore in April 2020.
“The decline in first year premium growth for private companies has been more pronounced as
they had reported an increase of 61.2 per cent in April 2019, compared to a drop of 33.3 per
cent in April 2020. On the other hand, LIC had reported a growth of 21 per cent in April 2019,
compared to a drop of 32 per cent in April 2020,” says Sanjay Agarwal, Senior Director, CARE
Ratings.
Further, the private companies which reported a 32.8 per cent increase in sum assured in April
2019 also reported a fall of 9.9 per cent in April 2020. However, LIC which reported a sum
assured growth of 6.3 per cent in April 2019, witnessed a significant drop of 69.5 per cent in
April 2020. “If the above trend continues, the life insurance business could witness negligible
growth in the first quarter of FY21 due to the extended lockdown. However, protection plans
could witness an increase due to rising awareness and the online channels could see robust
growth

25) ICICI Bank Sells 1.5% Stake In Life Insurance Arm For Rs 840
Crore
ICICI Bank on Monday said it has sold 1.5 per cent stake in its life insurance subsidiary for
around Rs 840 crore to strengthen the balance sheet.
Last week, the lender had informed exchanges about selling a little less than 4 per cent stake in
its general insurance subsidiary for Rs 2,250 crore.
While announcing its results for 2019-20 on May 9, ICICI Bank had said it would look at further
strengthening the balance sheet as opportunities arise.
"In line with this intent and under approval granted by the Board, the Bank has today divested
2,15,00,000 equity shares of face value of Rs 10 each of ICICI Prudential Life Insurance
Company, representing 1.50 per cent of its equity share capital at March 31, 2020, on the stock
exchange for an approximate total consideration of Rs 8.40 billion (Rs 840 crore )”,ICICI Bank
said in a regulatory filing.
Following this, the bank's shareholding in ICICI Prudential Life stands at approximately 51.4 per
cent, it further added.
On Friday, it had informed exchanges about selling 3.96 per cent stake, equivalent to 1.8 crore
shares in ICICI Lombard General Insurance, through open market for Rs 2,250 crore. Following
this, the bank's stake in the subsidiary has come down to 51.9 per cent.
ICICI Bank stock was trading 1.54 per cent up at Rs 369.85 on BSE. ICICI Prudential Life scrip
was trading higher by 4.12 per cent at Rs 407.90.