Overview of Life insurance industry Date : 15.11.2017 INDEX 1. - - PowerPoint PPT Presentation
Overview of Life insurance industry Date : 15.11.2017 INDEX 1. Meaning 2. Glossary 3. Type of Life insurance 4. How they earn 5. Industry evolution 6. World Data 7. Domestic Data 8. Risk 10. Data about major private life insurers
Date : 15.11.2017
INDEX
Life Insurance :
Life Insurance Business means the business
human life, including any contract whereby the payment of money is assured on or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human.
Term Description APE (Annualized Premium Equivalent) APE (Annualized Premium Equivalent) is the sum of annualized first year premiums
business written during any period from both our individual and group customers. The APE is adjusted for any new business cancellations effected during the period. Bonus (to policyholders) The non guaranteed benefits added to a participating policy and represents the share
Expense of Management Cost or total cost refers to total expenses including commission and including provision for doubtful debts and bad debts Embedded Value (EV) The measure of the consolidated value of shareholders’ interest in the existing life insurance business. It represents the present value of shareholders’ interests in the earnings distributable from the assets allocated to the business after sufficient allowance for the aggregate risks in the business and is generally expressed as a sum
determined as per the requirements and principles prescribed in the Actuarial Practice Standard 10 issued by the Institute of Actuaries of India is referred to as Indian Embedded Value.
Term Description Persistency Ratio The ratio of policies remaining in force to all policies issued in the period 13 month/25 month etc, prior to the date of measurement and is referred to as 13th month/25th month persistency etc It is the percentage of policies that have not discontinued paying premiums or surrendered. It can be measured in terms of number of policies or in terms of premium. Value of new business (VNB)” and “VNB margin VNB is the present value of expected future earnings from new policies written during any given period and it reflects the additional value to shareholders expected to be generated through the activity of writing new policies during any given period. VNB for any period reflects actual acquisition costs incurred during that period VNB margin is the ratio of VNB to APE for any given period and is a measure of the expected profitability of new business
Types of insurance Participating Participating Life Insurance Participating Pension Non- Participating (Non Linked) Term Insurance Health Insurance Endowment Annuity Non Participating (Unit Linked) Linked Life Linked Pension Linked Health
charges levied
the policyholders funds net of expenses & claims
income from investments
to policy holders on annual basis.
the bonus is transferred to shareholders
Participating Product Non Participating (Non linked) Health insurance Non Participating (Unit Linked)
1999-2005 2006-2011 2012-2016
linked products(Reduction in commission, cap on surrender charges, increase in lock in period)
38% 3% 23% 2% 1% 33% 58% 8% 8% 16% 1% 10% ASIA LATIN AMERICA NORTH AMERICA AFRICA OCEANIA EUROPE
WORLD LIFE INSURANCE MARKET
Life insurance market Share Population Share
97% 93% 82% 3% 7% 18% 1995 2005 2015
LIFE INSURANCE PREMIUM MARKET SHARE
Advanced economies Emerging economies
16.7% 16.2% 11.5% 7.2% 7.6% 7.4% 6.1% 5.5% 4.7% 3.7% 3.0% 3.5% 3.2% 3.0% 2.8% 2.7% 2.3% 2.3% 0.6% 0.5% 0.3%
LIFE INSURANCE PENETRATION AS % OF GDP
3700.03 3598.70 3033.30 2894.50 2803.00 2227.00 2049.60 1724.90 1558.50 1150.00 616.00 353.00 298.30 298.00 222.00 195.50 46.50 22.40 21.20 9.20
LIFE INSURANCE DENSITY IN US$
48.10% 51.80% 51.50% 49.50% 49.40% 47.40% 59.00% 60.50% 62.60% 63.20% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 LIFE INSURANCE COVERAGE SUM ASSURED AS % OF GDP
LIFE INSURANCE PREMIUM HISTORY
804 1076 1348 1556 1652 1731 1798 1940 2148 2279 2429 754 930 871 1093 1258 1142 1070 1196 1131 1387 1750 1558 2006 2219 2649 2910 2873 2868 3136 3279 3666 4179 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Renewal Premium New Business Premium Total Premium
29% 11% 19% 10%
0% 9% 5% 12% 14%
0% 5% 10% 15% 20% 25% 30% 35% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TOTAL PREMIUM GROWTH( YOY %)
64% 54% 59% 56% 63% 76% 83% 88% 87% 87% 87% 36% 46% 41% 44% 37% 24% 17% 12% 13% 13% 13% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
PREMIUM PROFILE
Non Linked Linked
83% 88% 87% 86% 79% 65% 54% 45% 45% 45% 44% 17% 12% 13% 14% 21% 35% 46% 55% 55% 55% 56% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
PRIVATE PLAYER-MIX
Linked Non Linked
64% 50% 43% 48% 54% 63% 62% 62% 51% 48% 46% 36% 50% 57% 52% 46% 37% 38% 38% 49% 52% 54% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TREND IN MARKET SHARE-INDIVIDUAL WRP PREMIUM
LIC Private Sector
72% 5% 5% 5% 3% 2% 9%
INDUSTRY MARKET SHARE TOTAL PREMIUM
LIC ICICI Pru Life HDFC Standered SBI Life Max Life Bajaj Allianz Others
71% 4% 5% 6% 2% 2% 10%
INDUSTRY MARKET SHARE NBP
LIC ICICI Pru Life HDFC Standered SBI Life Max Life Bajaj Allianz Others
19% 17% 18% 9% 5% 32%
PRIVATE PLAYER-MARKET SHARE TOTAL PREMIUM
ICICI Pru Life HDFC Standered SBI Life Max Life Bajaj Allianz Others 18 Players
16% 17% 20% 7% 6% 34%
PRIVATE PLAYER-MARKET SHARE NBP
ICICI Pru Life HDFC Standered SBI Life Max Life Bajaj Allianz Others 18 Players
Changes in regulations Variation in persistency experience Interest rate fluctuations Concentration Risk
Business Performance Data of Key Private Players
Click Here : This document contains comparative analysis of five biggest private sector life insurers of India
Sources of information :
Basic Premium Calculation Table :
Commission structure for regular premium based insurance products linked and non-linked : Premium paying Terms Maximum Commission or Remuneration in any form as % of premium 1st Year Renewal Premiums 5 15 7.5 6 18 7.5 7 21 7.5 8 24 7.5 9 27 7.5 10 30 7.5 11 33 7.5 12 years or more 35 7.5
Brochure of ULIP Policy :
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*Just for illustrative purpose only.
Sample of financial statement of Life insurance company:
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