Challenges and OpportunitiesIN

LIFE Insurance Industry

CILA 24th November 2015

N M Govardhan

CILA

• THREE PRISMS• ACTUARY –Technical Professional Perspective• Chief Executive-OVERALL Perspective• Regulator- Customer INDUSTRY Perspective

Demography

• Changing Demographics• Demography deals with the study of both the

Quantitative and Qualitative aspects of the human population. Quantitative aspects include composition,density,distribution,growth,size and structure of the population.Qualitative aspects are the sociological factors such as education,qualityof life, ,development, diet and nutrition, social class,wealth,well being ,health.

Population Pyramid of India

Population Pyramid: 2001 Projected Population Pyramid: 2026

Impact on PopulationProjections 2001-2026

• 1.2%increase per year• Decline in Crude Birth Rate 23-16• Decline in Crude Death Rate 7.5-7.2• Effect - decrease in population<16• Effect - increase in population 16-60• Effect - increase in population>60

DEMOGRAPHICS

• 459 million between 13-35• 333 million literate young indians• 62% of literate youth live in villages• 66% of population<35• Average Indian in 2020-29 years old• Average USA&CHINAin 2020-37 years old• Average W Europe in 2020-45 years old

DEMOGRAPHICS

• Qualitative Changes• Information Age• Instant Service• Digital Revolution-Smart Phones• Technological Improvements• Social Media• Environment• Political• Economy

ACTUARY

• Protection• Savings- Endowment-ULIPs• Living Benefits-Money Back• Wellness Benefits-Health Insurance• Retirement benefits-Pensions

ACTUARY

• New Products-Regulatory Restraints• Options and Guarantees• Risk based Capital-Solvency II• ERM-Enterprise Risk Management-Economic

Capital• With Profit Committee-Policyholders Bonus• Shareholder Value-Embedded Value-Appraisal

Value-MCEV-New Business margin-Guidelines• IRR

ACTUARY

• Financial Condition Report• Business Analytics• Risk Management• Modelling –Economic scenarios• Stress Testing• Communication Board Public• Sales Presentations• Investments -Strategy

ACTUARY

• Mortality- Morbidity tables• Valuations-Practice Guidelines-Regulatory

constraints• Solvency• Apointed Actuary Role-Responsibilities

Chief Executive

• Marketing-Distribution Channels• Competition-Industry-Financial sector• Corporate governance• Image –Public Perception• Topline-Bottom Line• Market share• Claims Management

Chief Executive

• Shareholder Value• Risk capital• Economic Capital• Organic and Inorganic growth• Investments• Personnel• Planning-Strategy• Publicity

Chief Executive

• Demographic Shifts• Longevity• Instant service• Information Age• Digital Revolution• Mobile Banking Insurance• Apps• Dematerialisation

Chief Executive

• Investment Risk & Return• Inflation proof assets –Flexi drawdown• Stringent Regulations-Pension Funds-

Customer behavior• New Innovative Products• Improving automation• Insurance Apps

Chief Executive

• Paperless Office• Improving market share• Retaining customers-till Pension payments• Assessing & Reducing operational costs• Assessing Key Drivers of Performance• Targeting best practices –Industry leadership• Integrated Outlook• Analytics-Big Data

REGULATOR

• Policyholder Perspective• Regulations- Guidelines• Responsibility for Health and Growth• Principle Based-File and Use• Self Governance• Consultation with Industry –Chief Executives-

Appointed Actuaries-Financial controllers

REGULATOR

• INSURANCE Penetration-GDP-LIVES• Development of Industry• Financial Inclusion• Micro Insurance• Investments• Taxation-Service Tax-Tax on savings in addition

to IT-Reliefs & Rebates-TEE

REGULATOR

• Interaction with PFRDA,SEBI, RBI,Government• Clear Long term Regulations-guidelines• Consultation with Institute of Actuaries,

Chartered Accountants,Company secretaries• Marketing Officials• Policyholders Associtions -NGOs

REGULATOR

• Regulations –Ensure stability• Positive Catalyst in Growth and increased

Penetration• IAIS Core Principles• Corporate Governance• Global Best Practices

Challenges & Opportunities

• Information Age• Social Media• Changing profile of Work and Careers• Product Design• Living Benefits• Health Insurance• Pensions• Data for efficient Risk management

Challenges & Opportunities

• Risk Management• Derivatives-Options and Guarantees• Analytics-Big Data-Social Media• Modelling• Investment Pensions• Reinvention of Annuities

Challenges & Opportunities

• Non Traditional• Risk Based Capital • Enterprise Risk Management• Call Centres-Mobile Apps• Business Processing Units• Investment Managers• Financial Services

Challenges & Opportunities

• Modelling• Econometric Models• Projections• Software• Research• Probability applications• Medico Actuarial Investigations

• THANK YOU