LIFE INSURANCE COUNCIL Press Meet on Overview of Indian life insurance industry: trends & opportunities 20th FEBRUARY, 2014 Hyderabad

Overview of Indian Life Insurance Industry Globally Largest retail financial service provider- 36 Cr. In-force policies Population of 200/203 countries in the world is less than the total number of Indian life insurance customers High capital intensive industry – `34,922 Cr. deployed upto December, 2013 ` 6,046 Cr. FDI by International Joint Venture Partners AUM of Life Insurers is ` 19.40 lakh Cr. as on December, 2013 Major contributor to every 5 Year Plan for Nation Building Activities. >10,000 offices across the country – 72% in semi-urban & rural areas *As on 31st March 2013

Indian life insurance industry has grown over the years… FY99-00 FY08-09 FY10-11 FY12-13 Dec 2013 (Provisional) No. of Players 1 22 23 24 24 Capital (`Cr) 5 18,253 23,662 25,519 34,922 No. of Branches 2,048 11,815 11,546 10,285 10,903 Employees (in Lakh) 1.23 2.85 2.42 2.45 2.41 Individual Agents (in Lakh) 7.14 29.38 26.39 21.22 21.98 Source: IRDA Annual Report & Council MIS Report

…by touching the lives of people across the country Sr. No. State No. of Branches* 1 Maharasthra 1051 2 Uttar Pradesh 1029 3 Andhra Pradesh 928 4 Tamil Nadu 853 5 Gujarat 626 6 Kerala 621 7 West Bengal 642 8 Karnataka 600 9 Rajasthan 494 10 Madhya Pradesh 518 11 Punjab 418 12 Bihar 387 13 Haryana 317 14 Orissa 339 15 Delhi 249 16 Assam 237 17 Jharkhand 232 18 Chhattisgarh 166 19 Uttrakhand 137 20 Himachal Pradesh 114 21 Jammu & Kashmir 94 22 Goa 52 23 Chandigarh 42 24 Tripura 31 25 Meghalaya 26 Puducherry 27 Arunachal Pradesh 28 Sikkim 29 Nagaland 30 Manipur Mizoram 32 Andaman & Nicobar Islands 33 Dadra & Nagra Haveli 34 Daman & Diu 35 Lakshadweep Total 10,285 10,903 No. of branches as on 31st December 2013 1 2 3 4 5 6 7 8 9 10 Top 10 states in terms of no. of branches Source: IRDA Annual Report *As on 31st March 2013

…and has made a significant contribution to the Indian economy Provide stability to Capital Markets Life Insurance companies have invested approximately `60,000 Cr. in the equity markets in 2012-13 Contribution to Nation Building Activities Investment in Central Govt. Securities and State Govt. Securities - `8,51, 914 Cr. upto December 2013 Investment in Infrastructure to the tune of `1,43,192 Cr. Major contributor to every 5 year plan Infrastructure Development Direct employment 2.41 lakh Employment to more than 21.98 lakh individual agents Employment Generation

The industry has witnessed a moderate growth in Renewal Premium over the last few years ` Crore 2,91,639 Please include FYP + Renewal Premium + Investment Income data from April –Dec 2013 and the comparative data for the same period in 2012. New Business Premium Renewal Premium Total Premium Total Revenue Source: IRDA Annual Report

There has been a steady increase in Assets Under Management Category of Investments 2000-01 ` Cr. (%) 2011-12 ` Cr. (%) 2012-13 ` Cr. (%) September 2013 ` Cr. (%) Traditional Products Central Govt. Securities 47,513 (24.48%) 4,68,082 (38.64%) 5,11,248 (36.55%) 5,63,285 (37.29%) State Govt. Securities 52,524 (27.07%) 2,14,515 (17.71%) 2,66,003 (19.02%) 2,88,629 (19.11%) Infrastructure Investments 24,887 (12.80%) 97,320 (8.03%) 1,16,645 (8.34%) 1,43,192 (9.48%) Approved Investments 50,502 (26.03%) 3,85,107 (31.79%) 4,45,611 (31.86%) 4,90,193 (32.45%) Other than Approved Investments 18,584 (9.58%) 46,262 (3.82%) 59,161 (4.23%) 25,002 (1.65%) ULIP - - 3,46,340 (93.61%) 3,25,281 (94.97%) 3,03,667 (95.58%) Other Investments 23,632 (6.39%) 17,226 (5.03%) 14,032 (4.41%) Total 1,94,010 (100%) 15,81,259 (100%) 17,41,175 (100%) 18,28,001 Source: IRDA Annual Report

Industry has increased its focus on Customer Centricity

Customer Grievance Redressal through Integrated Grievance Management System (IGMS) has been successful Year No. of In-force policies No. of Grievances reported No. of Grievances attended No. of Grievances pending 2011-12 33.52 Cr. 3,09,613 3,08,331 (99.59%) 1282 (0.41%) 2012-13 35.87 Cr. 3,42,294 3,41,070 (99.64%) 1224 (0.36%) Please incorporate latest data Source: IRDA Annual Report

Total benefits* paid to customers by Life Insurers Total Benefits Paid (` Cr.) Please incorporate latest data * Total Benefits paid include Death claim, Maturity claim & Surrender payouts. Source: IRDA Annual Report

Consistent improvement in Death Claims Settled by Life Insurers - By No. of Policies Claims Paid 96% 97% Claims Pending 2.1% 1.9% 2% Claims Repudiated 1.8% 1.4% 1%

Driving Growth in Life Insurance Industry in India

Indian demography is favourable to the growth of Life Insurance A mere 10% penetration in the increased insurable population has the potential to give additional new business of >Rs. 1 lakh Cr. Life Expectancy Insurable Population Insurable population is expected to grow to 75 Cr. by FY 2020

However, Household Financial Savings as a % of GDP have dropped in recent past, resulting in shrinking share of insurance within financial savings Share of gross household financial savings within GDP has declined Gross household financial savings as a % of GDP Within household financial savings, insurance has lost some sheen... ... as a result, share of life insurance within GDP has declined % Share of Gross household financial savings Life Insurance Funds as a % of GDP*

Multiple actions taken will bring back growth in the life insurance industry New Products with enhanced features launched from January 1, 2014 367 new products launched Benefits for customers with higher insurance covers Pioneers in the globe to grant license to e-repositories 5 Repositories authorized to open e-Insurance Accounts. Distribution related initiatives Expand distribution reach – Insurers are poised to increase number of agents to more than 3 million in the next 5 years Utilize CSCs to expand reach – 1,00,000 CSCs each serving a cluster of 6-7 villages, covering ~6.5 lakh villages across India Open Architecture – Banks to become brokers Proposed Alternate Distribution Channel for Intermediaries

Projections Life insurance segment has the potential to grow 2-2.5 times its current size by 2020. The Penetration level of Life insurance industry is expected to grow from 3.2% to 5% by year 2020 Expected CAGR of Life Insurance industry will be 12-15% in the next 3-5 years The net Household Financial savings could reach around 30% in the next 3 years from the present level of 23.1% (FY 11-12); Life Insurance being the second most preferred financial instrument will benefit from this.

Life Insurance sector will continue to contribute to nation building Life Insurance employment potential till FY 2020 – 5 Lakh employees Life insurance industry contribution to Infrastructure projects – Rs. 3.5 Lakh Cr. by FY 2020 Increase in FDI up to 10 billion US $ will increase customer coverage in rural and semi urban areas from 72% to 80% and fuel employment growth in the country and contribute to increase in GDP of the country.

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