Current Market Trends in Life Insurance Industry in

Current Market Trends in Life Insurance Industry in India & Strategy for Promotion of PLI and RPLI 17 th Feb, 2017, New Delhi V. MANICKAM, Secretary 1

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 2

Key Parameters for Indian Life Insurance Industry 3

Key Parameters for Indian Life Insurance Industry - Overview of India’s Demographics Ø India’s Current Population is approximately 134 Crore * Ø Insurable Population is about 90 Crore. Ø Mobile Phone Connection is about 93 Crore. Ø Male to female population is 52 : 48 (690 Mn male : 647 Mn female). Ø 72 % of the total population resides in semi-urban and rural areas. Global Overview Ø 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). Ø In 2015, in the world total of aged people above 60 stood at 901 Mn (in India around 100 Mn). Ø Globally, 40 % of elders aged 60 years & above live independently or with spouse. This trend is increasing steadily. Ø By 2050, it is estimated that India will have 330 Mn people aged 60 & above and 45 Mn people aged 80 or above. Source: UN population Division * - Intl. Inst. For Popln. Sciences (IIPS) 4

Key Parameters for Indian Life Insurance Industry - Change in Trend of age structure of Indian population and Projection thereof (%) Age Group (Yrs) 1970 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 Age Year Source: UN population Division 5

Key Parameters for Indian Life Insurance Industry - Current Population of Workforce Ø Out of total population of 134 crore * (approximately), only 42. 7 crore is employed workforce (2015) Working population Population (Cr) % of Employed workforce 6. 7 16 Salaried employees Ø CG/ SG/ Armed forces Ø Non-Government Ø Others Pension/ retirement benefits Yes (Govt. funded) Yes(EPF/ PPF) Voluntary 1. 5 3. 3 1. 9 Self employed 22. 7 53 Voluntary Casual / Contractual workforce 13. 3 31 Voluntary Ø Around 4% ( 5. 4 crore) of the total population is eligible for Pension related benefits. Source: Indian workforce survey and UN population Division * - Intl. Inst. For Popln. Sciences (IIPS) 6

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 NA Household sector savings 23. 0 21. 9 20. 5 18. 7 NA 10. 4 10. 0 10. 8 1. Currency 1. 2 1. 1 0. 9 1. 1 1. 4 2. Deposits 6. 0 5. 8 4. 9 4. 7 3. Shares and Debentures 0. 2 0. 4 0. 7 4. Claims on Government -0. 2 -0. 1 0. 0 0. 4 5. Insurance Funds 2. 2 1. 8 1. 6 1. 9 2. 0 6. Provident & Pension funds 1. 1 1. 5 1. 6 1. 5 B. Financial Liabilities 3. 2 3. 0 2. 5 3. 1 C. Net Financial Saving (A-B) 7. 2 7. 4 7. 5 7. 7 A. Gross financial savings * GNDI – Gross National Disposable Income Source: IRDAI 7

- Overview of Indian Life Insurance Industry 8

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 players 1 24 24 24 Capital Deployed (Rs. Cr) 5 33, 633 34, 200 35, 021 35, 680 34, 847 35, 000 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 Agents 7, 10, 000 26, 08, 820 23, 45, 601 21, 88, 500 20, 67, 856 20, 16, 565 20, 44, 717 * - 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. 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 (Rs. Cr) 8, 280 1, 13, 942 1, 07, 361 1, 20, 319 1, 13, 328 1, 38, 862 1, 03, 472 Renewal Premium (Rs. Cr) 17, 955 1, 73, 130 1, 79, 841 1, 93, 963 2, 14, 773 2, 28, 081 1, 35, 393 26, 235 2, 87, 072 2, 87, 202 3, 14, 282 3, 28, 101 3, 66, 943 2, 38, 865 Total Premium (Rs. Cr) * - 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 Life GL. Annuity Pension Health Total NB premium Source: L. I. Council 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 Up-to Jan-17 (Prov) 61, 887 59, 807 57, 948 51, 885 51, 840 42, 037 (96. 04%) (96. 52%) (95. 68%) (93. 76%) (89. 01%) (72. 05%) 1, 161 1, 446 1, 719 2, 131 5, 111 14, 881 (1. 80%) (2. 33%) (2. 84%) (3. 85%) (8. 77%) (25. 51%) 1, 148 522 750 1, 204 1, 101 1, 297 (1. 78%) (0. 84%) (1. 24%) (2. 18%) (1. 89%) (2. 22%) 238 188 144 114 187 130 (0. 36%) (0. 31%) (0. 24%) (0. 21%) (0. 33%) (0. 22%) 64, 434 61, 963 60, 561 55, 334 58, 238 58, 344 (100%) (100%) 11

a Overview of Indian Life Insurance Industry – Payouts to Policy Holders 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 O/s D/Claims (Cr) % 293 318 450 453 444 3. 2 3. 1 3. 8 3. 5 3. 2 D/Claims 451 568 624 702 737 Repudiated/Rejected (Cr) % NA 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) 12

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 Central Govt. Securities State Govt. Securities Infrastructure Investments Approved Investments Other than Approved Investments 47, 513 5, 11, 248 6, 04, 651 7, 22, 955 8, 31, 049 (24. 49%) (36. 55%) (37. 19%) (38. 36%) (38. 44%) 52, 524 2, 66, 003 3, 33, 951 4, 30, 554 5, 28, 206 (27. 07%) (19. 02%) (20. 54%) (22. 84%) (24. 44%) 24, 887 1, 16, 645 1, 55, 026 1, 74, 512 1, 86, 112 (12. 83%) (8. 34%) (9. 54%) (9. 26%) (8. 61%) 50, 502 4, 45, 611 5, 03, 059 5, 30, 568 5, 83, 145 (26. 03%) (31. 86%) (30. 94%) (28. 15%) (26. 98%) 18, 584 59, 161 29, 118 26, 193 33, 145 (9. 58%) (4. 23%) (1. 79%) (1. 39%) (1. 53%) 3, 25, 281 3, 22, 456 3, 52, 371 3, 28, 974 (94. 97%) (97. 22%) (97. 14%) (96. 64%) 17, 226 9, 205 10, 369 11, 438 (5. 03%) (2. 78%) (2. 86%) (3. 36%) 17, 41, 175 19, 57, 466 22, 47, 522 25, 02, 068 ULIP Approved Investments NA Other Investments NA Total Source: IRDAI 1, 94, 010 (100%) (100%) 13

Overview of Indian Life Insurance Industry – Key Indicators Growth of Life Insurance Sector – Rural Social Sector 3. 37 Crore lives covered to social sector in 2015 -16 69 lakh policies sold 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 semiurban and rural areas 14 Source: Life Insurance Council; IRDA;

Current Market Trends in Life Insurance Industry 15

Current Market trends in Life Insurance Industry Digitization – the buzzword in the industry Ø Online policies picking up in a big way – Term policies are becoming popular. Ø Web Aggregators use online space, providing comparable quotes and generating leads for insurers. Ø Usage of Tablets for demonstrating customers with ease under various scenarios – with various returns and charge structures become very easy. Ø Form filling has become a less painful exercise and anywhere any time insurance through mobile applications has also become popular. Ø Comparing products of various Insurers has become easy and faster. Ø Premium payments made online – Instant Payment through online portals have revolutionized the premium collection process. Ø IVRS, online mobile applications etc. have also become popular premium payment methods 16

Current Market trends in Life Insurance Industry E-Insurance Account – a Revolution ØFirst of its kind in the world – holding all insurance policies in electronic form by opening a single e-insurance account with an Insurance repository. ØFree for the customer and the charges are paid by the Insurance company. ØLoss of insurance policies and issue of duplicate policies have become history with the introduction of e-insurance account – facilitates faster settlement of claims. ØSingle 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. 17

Current Market trends in Life Insurance Industry Evolution of Alternative channels of Distribution. ØIndividual 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. ØCorporate Agency system introduced in 2002 with IRDAI framing regulations allowing Corporate form of Agencies (currently 428). ØThis was followed by the Insurance Broking model which allowed the entity to be a distributor for multiple insurers (currently 370) ØMicro Insurance Agent channel to procure New Business from rural and remote rural areas. (currently 27, 041) 18

Current Market trends in Life Insurance Industry Evolution of Alternative channels of Distribution. ……contd ØWeb Aggregators are online operators who provide choice of products to customers online (currently 16). ØInsurance Marketing Firms (IMF) – Encourage Entrepreneurship – Ability to sell other financial products. (currently 81) ØCommon Service Centers (CSC) – Encourage Rural Entrepreneurship to take insurance to the remote areas through Village Level Entrepreneurs (VLE). (currently 5373) 19

- Snapshot of Postal Life Insurance (PLI & RPLI) & Life Insurance Industry 20

Policies in Lakh Snapshot of PLI/RPLI vis-à-vis Life Insurance Industry Statistical Data – No: of Policies In-force Year Source: PLI/RPLI, IRDAI & Life Insurance Council

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

- Strategies for Promotion of PLI and RPLI 23

Strategies for Promotion of PLI and RPLI Following Strategies are suggested for promoting PLI and RPLI: - ofØthe 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. Ø Adopt RTM Strategy (Recruit, Training and Motivate) RTM - Recruit ü Recruit more no. of Direct Agents – Conduct Special Recruitment drive periodically every year and enhance the number of Direct Agents. ü To empower women, conduct Special Recruitment drive to recruit Women Direct Agents in large number. ü Incorporate both of the above in business plan every year. 24 24

Strategies for Promotion of PLI and RPLI contd… RTM – Training the ry ü Attach top priority to update the knowledge of insurance to all Direct Agents through refresher programme in dedicated training centres/through online portals. ü 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 1 st half year and 2 nd half year must be used for business solicitation etc. , Because “Knowledge is Strength”. RTM – Motivation ü 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. 25 25

Strategies for Promotion of PLI and RPLI contd… ü While visiting the houses of Direct Agents, Marketing Supervisors should interact with family members of Direct Agents to ensure congenial working atmosphere for Direct Agents which will in-turn boost the morale for better NB performance. of the Industry ü 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. ü 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. ü 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. ü All of the above suggestions are aimed to encourage the Direct Agents to inculcate in them a sense of belonging to the organization. 26 26

Strategies for Promotion of PLI and RPLI contd… Ø 3 Flank Strategy (PGS) – Policy servicing, Grievance Redressal and Solicitation of New Business of the Industry Ø Service Camp to be set up at multiple locations every month for facilitating the 3 Flank Strategy effectively. Ø Utilize the IT effectively and integrate the premium collection and servicing of policies. Ø Grievance Redressal Mechanism – Integrate the Grievance Redressal Mechanism to resolve the grievances of policyholders. Ø Increase age at entry – In view of increasing longevity of Indians, it is suggested to increase the age at entry for PLI/RPLI. Ø 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. Ø Offer Riders – As an add on to the existing products wherever necessary. 27 27

Strategies for Promotion of PLI and RPLI contd… Premium Payment Facility – To enlarge presence of PLI/RPLI, it is ofØthe 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. Ø 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. Ø The above being your specific turfs, promote insurance awareness to have maximum reach and insurance penetration. 28 28

Strategies for Promotion of PLI and RPLI contd… Ø 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. Ø 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. Ø 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. Ø PLI/RPLI may engage reputed PR agencies wherever necessary to execute the Insurance Awareness Campaign. 29 29

Thank You 30