|Title:||India life insurance market by number of companies, capital deployed, number of branches, number of employees, individual agents, new-business policies, policies in force, new-business premiums, and renewal premiums in dollars, and units for 2000, and annual data for 2008 to 2011|
Start of full article - but without data
Key Indicators of India's Life Insurance Industry
Parameters FY XX-XX FY XX-XX FY XX-XX
Number of players X XX XX Capital Deployed (US$ billion) X.XXX X.XX X.XX Branches X,XXX X,XXX XX,XXX Employees (million) X.XX X.XX X.XX Individual Agents (million) X.XX X.XX X.XX New Business Policies (million) XX.XX XX.XX XX.XX Policies in Force (million) XX.XX XX.XX XX.XX New Business Premium (US$ billion) X.XX XX.XX XX.XX Renewal premiums (US$ billion) X.XX XX.XX XX.XX Total Premium (US$ billion) X.XX XX.XX XX.XX
FY XX-XX Parameters FY XX-XX (provisional)
Number of players XX XX Capital Deployed (US$ billion) X.XX X.XX Branches XX,XXX XX,XXX Employees (million) X.XX X.XX Individual Agents (million) X.XX X.XX New Business Policies (million) XX.XX XX.XX Policies in Force (million) XX.XX XX.XX New Business Premium (US$ billion) XX.XX XX.XX Renewal premiums (US$ billion) XX.XX XX.XX Total Premium (US$ billion) XX.XX XX.XX
Sources: IRDA; Life Insurance Council
China and India, the two most populous countries in the world, have led the way in life insurance premium growth in Asia as their emerging market economies expand rapidly and their governments encourage the purchase of life insurance.
According to a Swiss Re sigma study, World Insurance in 2010, China ranked fifth in life insurance premiums last year, behind the United States, Japan, the United Kingdom and France. India ranked ninth.
China has about X.X billion people, while India has almost X.X billion people, according to the CIA World Factbook.
In 2010, life insurance direct premiums written in China were up XX.X% versus 2009. New-business premiums in India grew by XX.X% from April 2010 through January 2011, according to India's Insurance Regulatory and Development Authority. However, the country's Life Insurance Council, a trade group, reported in August that new-business premium declined by XX% for the quarter ended June XX.
In both China and India, life insurers are adapting to regulatory changes. China's regulator is seeking to foster stable growth, particularly in the bancassurance distribution channel, according to an A.M. Best Special Report, Asia Pacific Life--Review & Preview, dated May X, 2011. The regulator is also seeking to guide the industry toward prudent risk-management practices.
In India, growth of new business slowed in the first half of the year as a result of guidelines implemented in September 2010 for unit-linked products. The report said this has led companies to become more cost-conscious and to generate more premiums from traditional products.
China: Active Regulation
China's strong economic growth and rising incomes have been driving sales of life insurance. Premiums have risen in each of the last five years and have grown from about XXX billion yuan in 2006 to nearly XXX billion yuan in 2010 (US$XXX.X billion), according to the Best's report. The year-over-year growth rate in the past five years has varied from about XX%, to a high of XX% in 2008.
Such premium growth is not surprising, considering the rapid expansion in both China's gross domestic product and its middle-income class, said Sharon Khor, head of insurance, Greater China, at the Hong Kong office of consulting firm Accenture.
"The current insurance penetration rate is still far below many developing markets', and coupled with government's policy, there is no doubt that the life insurance industry will continue to grow at a phenomenal rate compared to the overall industry at large" she said.
Face-to-face distribution leads the way in China with the tied agency and bank channels contributing more than XX% of total premium, said Khor. Such personal interactions have proven to be the most effective way to close a sale and will continue to dominate the life insurance industry, she said.
However, there is also growth in direct channels. "To meet customer demands and to better manage cost, insurers will continue to venture into new channels for simple products," she predicted.
Khor identified three demographic trends that will drive sales. Tech-savvy groups that are comfortable using the Internet and mobile devices to research and purchase will drive the growth in alternative- and direct-distribution channels. Prospects nearing old age will drive the development and growth of pension and health products. And individuals in their XXs and XXs with families to support will drive more wealth- and health-management types of products and services, she said.
Any challenges the industry may face are likely to be more related to operational aspects, such as solvency, transparency, profitability and cost management, Khor said. "As the industry is experiencing such rapid growth, companies sometimes tend to just ride the wave without building the right foundation that would give them sustainable growth and to weather any storm ha the future," she said.
So far, regulators play a major role in a country that is trying to mix capitalism with government control. MM Lee, general manager at A.M. Best Co.'s Asia-Pacific office in Hong Kong, questioned whether there are any countries that do not try that mix, but he said the Chinese government "takes a more active role in shaping the industry." Recent regulatory initiatives by the China Insurance Regulatory Commission, for example, have caused life companies to shift their mix of products away from unit-linked business and toward more regular-premium business and participating products.
Khor said that moving toward more-traditional products is not a bad thing "as it goes back to the bread and butter of insurers, rather than selling fancy products with complicated terms and conditions, which require better qualified agents to sell."
Meanwhile, the China Banking Regulatory Commission has issued new rules for banks selling insurance that could negatively affect premium growth, Lee said.
In the fourth quarter of 2008, the insurance regulator ordered life compares to slow their sales of products through the bancassurance channel. Sales of investment-linked products through that channel were restricted further in March 2009, when the commission banned sales of investment-linked products at banks' deposit counters.
Instead, banks are allowed to sell these products at their wealth-management centers and counters, according to the A.M. Best Special Report. Among new rules are that banks are required to perform customer risk-profile assessments; highlight all possible risks associated with an insurance product; and only permit bank staff with insurance agent licenses to sell insurance policies.
The new rules are good steps toward making banks take more responsibility in selling insurance products, said Khor. "Hopefully, they will influence the banks to have better-trained sales personnel to conduct insurance sales;' she said.
Khor said she believes that regulators "are still trying to get a good grasp" on how best to regulate the industry in what is an emerging economy.
"The whole industry is still at an infancy stage, although it is growing very rapidly," she said. "Hence, the regulator has to be able to rein in the insurers to grow responsibly while at the same time promote even faster growth. This is not a simple role to play, as it's a delicate balance."
India: Product Focus Changes
India's life insurance density--calculated as premiums per capita in U.S. dollars--was XX.X in 2009, so there is large growth potential in India, according to the Life Insurance Council. That places India still below the average insurance density for emerging nations in the Swiss Re sigma report. "With XX% of the population below the age of XX, there is going to be robust demand for insurance products," said S.B. Mathur, secretary general of the council.
Rising incomes, a burgeoning working population and increasing awareness of life insurance all augur well for growth in the life industry for years to come.
Ashvin Parekh, partner in Ernst & Young Pvt. Ltd and the firm's national leader of global financial services, said the pension sector is likely to grow substantially due to the government's focus on providing social security to its increasing geriatric population.
However, the life industry's growth experienced a slowdown from April through July, the first quarter of India's 2011 fiscal year. New-business life premium declined XX% from the same period in 2010. Mathur said the pullback was primarily due to extraordinary growth from April through August 2010, when linked products were selling briskly ahead of stringent changes in unit-linked regulatory guidelines that took effect Sept. X.
Linked products were popular because they provided both protection and savings, he said. But due to regulatory changes and uncertain global economic conditions, more people are now opting for traditional products. On March XX, 2010, unit-linked products accounted for XX.X% of new premiums, he said.
Regulatory changes are a major challenge facing India's life industry. Mathur said regulations change frequently and lead to changes in product structures and distribution setup. Parekh said that "wholesale regulatory changes" have led companies to repeatedly restructure their business plans, but he said the changes of the past two years were triggered by external factors. Overall, regulations in India are supportive of the life business, Parekh said.