RBSA Advisors is delighted to share its recent research on the Life Insurance sector in India. Pandemic across the nation had impacted the country's overall financial system. The unprecedented nature of this crisis created difficult circumstances, including economic shutdowns. The year 2020 was a watershed year in the Insurance sector. Insurer were forced to rethink their business operations leading to enormous changes in the industry. Currently, life insurance industry is at crossroad.
Through this report we are demystifying the life insurance industry in India and sharing our views on the industry outlook.
Indian Insurance Industry: Reaching out to Exponential Growth Resurgent India
Â
From Insurance being seen as a basic protection instrument against expected losses, the Indian Insurance industry has surely come a long way to become an absolute critical driver of economic prosperity and growth. The sector has helped account for risks; provide funds for capital intensive national building efforts besides lending social security to the citizens. Over a period of decade and a half, the industry has witnessed phases of spurt growth and moderation, intensifying competition and expansion of customer and geographic coverage.
After the bruising general election, Indiaâs new government got down to the business of preparing the Union Budget. Much is expected of the Narendra Modi regime, which projected a pro-business, pro-reform image throughout the campaign.
While reactions to the Budget were mixed, it did include two important policy changes. Foreign direct investment norms for insurance and defence manufacturing were changed to attract more foreign players. Both sectors have been touchy topics, with battlelines drawn between those for liberalised investment norms and those in favour of a more conservative approach.
Whatever the merits of each argument, itâs clear that a long, hard road lies ahead on the economic front and these are the first steps of a fledgling government of which much is expected. There will be other, tougher decisions to make â reducing subsidies, a simpler tax regime that protects statesâ interests and a land acquisition policy that will spur industrial growth while conserving land-ownersâ interests, to name just a few.
With this edition, MSLGROUPâs Public Affairs Round-up takes on a new look and structure too. Now onwards, PAR will be a quarterly. It will have more detailed analyses and content than its earlier avatar, and will incorporate commentary and data that is more relevant to you.
MSLGROUPâs insights team will play the role of an observer of the Indian economic and policy environment, and will provide analyses that we hope will benefit you and your business. As always, we look forward to your feedback.
CII-EY report titled Insurer of the Future reveals that technology will power the new wave of change for the Indian Insurance Industry. The report recommends pursuing technology to improve the traditional insurance process and to re-configure the insurance business model.
Indian Insurance Industry: Reaching out to Exponential Growth Resurgent India
Â
From Insurance being seen as a basic protection instrument against expected losses, the Indian Insurance industry has surely come a long way to become an absolute critical driver of economic prosperity and growth. The sector has helped account for risks; provide funds for capital intensive national building efforts besides lending social security to the citizens. Over a period of decade and a half, the industry has witnessed phases of spurt growth and moderation, intensifying competition and expansion of customer and geographic coverage.
After the bruising general election, Indiaâs new government got down to the business of preparing the Union Budget. Much is expected of the Narendra Modi regime, which projected a pro-business, pro-reform image throughout the campaign.
While reactions to the Budget were mixed, it did include two important policy changes. Foreign direct investment norms for insurance and defence manufacturing were changed to attract more foreign players. Both sectors have been touchy topics, with battlelines drawn between those for liberalised investment norms and those in favour of a more conservative approach.
Whatever the merits of each argument, itâs clear that a long, hard road lies ahead on the economic front and these are the first steps of a fledgling government of which much is expected. There will be other, tougher decisions to make â reducing subsidies, a simpler tax regime that protects statesâ interests and a land acquisition policy that will spur industrial growth while conserving land-ownersâ interests, to name just a few.
With this edition, MSLGROUPâs Public Affairs Round-up takes on a new look and structure too. Now onwards, PAR will be a quarterly. It will have more detailed analyses and content than its earlier avatar, and will incorporate commentary and data that is more relevant to you.
MSLGROUPâs insights team will play the role of an observer of the Indian economic and policy environment, and will provide analyses that we hope will benefit you and your business. As always, we look forward to your feedback.
CII-EY report titled Insurer of the Future reveals that technology will power the new wave of change for the Indian Insurance Industry. The report recommends pursuing technology to improve the traditional insurance process and to re-configure the insurance business model.
Public Affairs Round-up - September 2014 - MSLGROUPAshraf Engineer
Â
After the bruising general election, Indiaâs new government got down to the business of preparing the Union Budget. Much was expected of the Narendra Modi regime, which projected a pro-business, pro-reform image throughout the campaign.
While reactions to the Budget were mixed, it did include two important policy changes. Investment norms for insurance and defence manufacturing were changed to attract more foreign players. Both sectors have been touchy topics, with battlelines drawn between those for liberalised investment norms and those in favour of a more conservative approach.
Itâs clear that a long, hard road lies ahead on the economic front and that these are the first steps of a fledgling government of which much is expected. There will be other, tougher decisions to make â reducing subsidies, a simpler tax regime that protects statesâ interests and a land acquisition policy that will spur industrial growth while conserving land-ownersâ interests, to name just a few.
With this edition, MSLGROUPâs Public Affairs Round-up takes on a new look and structure too. Now onwards, PAR will be a quarterly. It will have more detailed analyses and content than its earlier avatar, and will incorporate commentary and data that is more relevant to you.
MSLGROUPâs insights team will play the role of an observer of the Indian economic and policy environment, and will provide analyses that we hope will benefit you.
MEDICI's new India InsurTech Report 2020 explores the InsurTech sector in India. The report delves into what drives transformation in the sector, regulatory initiatives, funding & investment activity, prominent players, and business models.
MEDICI's new India InsurTech Report 2020 explores the InsurTech sector in India. The report delves into what drives transformation in the sector, regulatory initiatives, funding & investment activity, prominent players, and business models.
October 2016 Edition of BEACON, A Monthly Newsletter by SIMCON.
Inside this issue:
About Us
Our Team
INDUSTRY ANALYSIS : Insurance
Brand Analysis: Bata
Case Study Analysis: Ola
Concept of the month: Bug Bounty
Guest Lecture by Devang Mehta
The present book is a great step in forward direction of Indian Insurance sector ; and I have no doubt that after studying this book in detail and getting through the examination successfully, the insurance agent will gain substantially in accomplishing the tasks that are assigned to him or her. I would keenly look forward to its huge success in the Indian insurance domain in the days to come.
RBSA-RR-A Deep Dive Into The Hospital Industry in India.pdfRBSA Advisors
Â
We are delighted to share our research on the Hospital segment in India, primarily focusing on the Performance of Key Hospital Groups including their future growth plans, and recent PE and M&A deals in this segment.
Public Affairs Round-up - September 2014 - MSLGROUPAshraf Engineer
Â
After the bruising general election, Indiaâs new government got down to the business of preparing the Union Budget. Much was expected of the Narendra Modi regime, which projected a pro-business, pro-reform image throughout the campaign.
While reactions to the Budget were mixed, it did include two important policy changes. Investment norms for insurance and defence manufacturing were changed to attract more foreign players. Both sectors have been touchy topics, with battlelines drawn between those for liberalised investment norms and those in favour of a more conservative approach.
Itâs clear that a long, hard road lies ahead on the economic front and that these are the first steps of a fledgling government of which much is expected. There will be other, tougher decisions to make â reducing subsidies, a simpler tax regime that protects statesâ interests and a land acquisition policy that will spur industrial growth while conserving land-ownersâ interests, to name just a few.
With this edition, MSLGROUPâs Public Affairs Round-up takes on a new look and structure too. Now onwards, PAR will be a quarterly. It will have more detailed analyses and content than its earlier avatar, and will incorporate commentary and data that is more relevant to you.
MSLGROUPâs insights team will play the role of an observer of the Indian economic and policy environment, and will provide analyses that we hope will benefit you.
MEDICI's new India InsurTech Report 2020 explores the InsurTech sector in India. The report delves into what drives transformation in the sector, regulatory initiatives, funding & investment activity, prominent players, and business models.
MEDICI's new India InsurTech Report 2020 explores the InsurTech sector in India. The report delves into what drives transformation in the sector, regulatory initiatives, funding & investment activity, prominent players, and business models.
October 2016 Edition of BEACON, A Monthly Newsletter by SIMCON.
Inside this issue:
About Us
Our Team
INDUSTRY ANALYSIS : Insurance
Brand Analysis: Bata
Case Study Analysis: Ola
Concept of the month: Bug Bounty
Guest Lecture by Devang Mehta
The present book is a great step in forward direction of Indian Insurance sector ; and I have no doubt that after studying this book in detail and getting through the examination successfully, the insurance agent will gain substantially in accomplishing the tasks that are assigned to him or her. I would keenly look forward to its huge success in the Indian insurance domain in the days to come.
RBSA-RR-A Deep Dive Into The Hospital Industry in India.pdfRBSA Advisors
Â
We are delighted to share our research on the Hospital segment in India, primarily focusing on the Performance of Key Hospital Groups including their future growth plans, and recent PE and M&A deals in this segment.
RBSA-RR-Specialty Chemicals-An opportunity for Make in India.pdfRBSA Advisors
Â
These are interesting times for the Specialty Chemicals industry in India, in view of the current global market trends in this sector. The supply chain issues faced by manufacturers around the world, have brought greater momentum to the China +1 theme thereby creating incentives for Indian manufacturers to invest and grow.
RBSA-RR-Industry Valuation Multiples Series 6th Edition.pdfRBSA Advisors
Â
We are delighted to share our â6th Edition of Industry wise Valuation Multiplesâ for Indian listed corporates. Our report coverage comprises of 13 largest industrial sectors in India.
SEBI streamlines the process of Buy-back of securities.pdfRBSA Advisors
Â
With the intent to simplify the Buy-back process of securities, level the playing field for investors, and encourage ease of doing business, the Securities & Exchange Board of India (âSEBIâ) has relaxed certain norms in the SEBI (Buy-back of Securities) Regulations, 2018 pursuant to SEBI (Buy-back of Securities) (Amendment) Regulations, 2023. Further, Operational Guidance on Buy-back was issued by SEBI on 8th March 2023. The amended regulation has come into force w.e.f 9th March, 2023.
RBSA-Budget-Finance Bill 2023-Key Proposals.pdfRBSA Advisors
Â
Keeping a people-centric approach, various amendments in individual tax provisions and amendments providing benefits under the new tax-rate regime is a welcome move.
Through this report, we share our views on the prevailing framework/rules under the Income Tax Act, 1961 for determination of Fair Valuation in case of Shares/Securities.
Opendatabay - Open Data Marketplace.pptxOpendatabay
Â
Opendatabay.com unlocks the power of data for everyone. Open Data Marketplace fosters a collaborative hub for data enthusiasts to explore, share, and contribute to a vast collection of datasets.
First ever open hub for data enthusiasts to collaborate and innovate. A platform to explore, share, and contribute to a vast collection of datasets. Through robust quality control and innovative technologies like blockchain verification, opendatabay ensures the authenticity and reliability of datasets, empowering users to make data-driven decisions with confidence. Leverage cutting-edge AI technologies to enhance the data exploration, analysis, and discovery experience.
From intelligent search and recommendations to automated data productisation and quotation, Opendatabay AI-driven features streamline the data workflow. Finding the data you need shouldn't be a complex. Opendatabay simplifies the data acquisition process with an intuitive interface and robust search tools. Effortlessly explore, discover, and access the data you need, allowing you to focus on extracting valuable insights. Opendatabay breaks new ground with a dedicated, AI-generated, synthetic datasets.
Leverage these privacy-preserving datasets for training and testing AI models without compromising sensitive information. Opendatabay prioritizes transparency by providing detailed metadata, provenance information, and usage guidelines for each dataset, ensuring users have a comprehensive understanding of the data they're working with. By leveraging a powerful combination of distributed ledger technology and rigorous third-party audits Opendatabay ensures the authenticity and reliability of every dataset. Security is at the core of Opendatabay. Marketplace implements stringent security measures, including encryption, access controls, and regular vulnerability assessments, to safeguard your data and protect your privacy.
Chatty Kathy - UNC Bootcamp Final Project Presentation - Final Version - 5.23...John Andrews
Â
SlideShare Description for "Chatty Kathy - UNC Bootcamp Final Project Presentation"
Title: Chatty Kathy: Enhancing Physical Activity Among Older Adults
Description:
Discover how Chatty Kathy, an innovative project developed at the UNC Bootcamp, aims to tackle the challenge of low physical activity among older adults. Our AI-driven solution uses peer interaction to boost and sustain exercise levels, significantly improving health outcomes. This presentation covers our problem statement, the rationale behind Chatty Kathy, synthetic data and persona creation, model performance metrics, a visual demonstration of the project, and potential future developments. Join us for an insightful Q&A session to explore the potential of this groundbreaking project.
Project Team: Jay Requarth, Jana Avery, John Andrews, Dr. Dick Davis II, Nee Buntoum, Nam Yeongjin & Mat Nicholas
Adjusting primitives for graph : SHORT REPORT / NOTESSubhajit Sahu
Â
Graph algorithms, like PageRank Compressed Sparse Row (CSR) is an adjacency-list based graph representation that is
Multiply with different modes (map)
1. Performance of sequential execution based vs OpenMP based vector multiply.
2. Comparing various launch configs for CUDA based vector multiply.
Sum with different storage types (reduce)
1. Performance of vector element sum using float vs bfloat16 as the storage type.
Sum with different modes (reduce)
1. Performance of sequential execution based vs OpenMP based vector element sum.
2. Performance of memcpy vs in-place based CUDA based vector element sum.
3. Comparing various launch configs for CUDA based vector element sum (memcpy).
4. Comparing various launch configs for CUDA based vector element sum (in-place).
Sum with in-place strategies of CUDA mode (reduce)
1. Comparing various launch configs for CUDA based vector element sum (in-place).
Show drafts
volume_up
Empowering the Data Analytics Ecosystem: A Laser Focus on Value
The data analytics ecosystem thrives when every component functions at its peak, unlocking the true potential of data. Here's a laser focus on key areas for an empowered ecosystem:
1. Democratize Access, Not Data:
Granular Access Controls: Provide users with self-service tools tailored to their specific needs, preventing data overload and misuse.
Data Catalogs: Implement robust data catalogs for easy discovery and understanding of available data sources.
2. Foster Collaboration with Clear Roles:
Data Mesh Architecture: Break down data silos by creating a distributed data ownership model with clear ownership and responsibilities.
Collaborative Workspaces: Utilize interactive platforms where data scientists, analysts, and domain experts can work seamlessly together.
3. Leverage Advanced Analytics Strategically:
AI-powered Automation: Automate repetitive tasks like data cleaning and feature engineering, freeing up data talent for higher-level analysis.
Right-Tool Selection: Strategically choose the most effective advanced analytics techniques (e.g., AI, ML) based on specific business problems.
4. Prioritize Data Quality with Automation:
Automated Data Validation: Implement automated data quality checks to identify and rectify errors at the source, minimizing downstream issues.
Data Lineage Tracking: Track the flow of data throughout the ecosystem, ensuring transparency and facilitating root cause analysis for errors.
5. Cultivate a Data-Driven Mindset:
Metrics-Driven Performance Management: Align KPIs and performance metrics with data-driven insights to ensure actionable decision making.
Data Storytelling Workshops: Equip stakeholders with the skills to translate complex data findings into compelling narratives that drive action.
Benefits of a Precise Ecosystem:
Sharpened Focus: Precise access and clear roles ensure everyone works with the most relevant data, maximizing efficiency.
Actionable Insights: Strategic analytics and automated quality checks lead to more reliable and actionable data insights.
Continuous Improvement: Data-driven performance management fosters a culture of learning and continuous improvement.
Sustainable Growth: Empowered by data, organizations can make informed decisions to drive sustainable growth and innovation.
By focusing on these precise actions, organizations can create an empowered data analytics ecosystem that delivers real value by driving data-driven decisions and maximizing the return on their data investment.
RBSA-RR-Demystifying Life Insurance Industry in India (1).pdf
1. Demystifying Life
Insurance Industry in India
MARCH
2023
Valuation | Investment Banking
Restructuring | Transaction Services
Transaction Tax | Risk Consulting
2. The insurance industry in India is going through a paradigm shift. Rising awareness, accessibility,
affordability, structural reforms are some of the major factors impacting the life insurance industry.
Over the last decade, the Indian life insurance industry has grown exponentially with an overall growth of
13% in New Business Premium (NBP) for 2022.The size of the Indian life insurance sector was approx. INR
6.9 trillion on a total premium basis in 2022, making it the ninth largest life insurance market in the world.
India is going to emerge as one of the fastest-growing insurance markets in the coming decade with an
overall premium growth of approx. 15% annually, leading to approx. 4x increase in total life insurance
premium to INR 24 trillion by 2031
The pandemic has brought enormous changes in insurance industry in terms of operations, products,
processes, etc. It has also led to more awareness about health and financial risks making consumers opt
for life insurance. Further, the young and growing insurable population is a blessing for Indian insurers.
This has urged insurers to make their products more youth-oriented to appeal to new age millennials and
GenZ leading to a paradigm shift among the targeted customers of insurance products.
Insurance, one of the subsector of financial services sector, plays crucial role in economic growth of India
and its importance is on the rise in the growing economy. Insurance companies, together with mutual and
pension funds, are one of the biggest institutional investors into stocks, bonds and real estate markets. It
helps in mobilization of long-term savings, provides protection and long-term income and annuity
solutions.
Insurance industry can be broadly categorized as life insurance, non-life insurance and reinsurance.
However, this report covers Indian life insurance sector.
02
Executive Summary
Rajeev R. Shah
Managing Director & CEO
Demystifying Life Insurance Industry in India
Demystifying Life Insurance Industry in India
3. 01 04
Indian Life Insurance Industry -
Overview
02 05
Key Parameters
03 19
Recent Deals
04 21
Road Ahead
05 22
Annexures
Contents
4. Indian
Life Insurance Industry
04
There are 24 life insurance companies at present in India. Among all life insurance companies, Life Insurance
Corporation (LIC) is the only public sector life insurance company in India. In terms of total premium, the Indian
life insurance industry grew at 4-year CAGR of approx. 10.8%.
Over the last decade, market share of private players, based on total premium, has increased from approx. 29%
to approx. 38%. With a market share of approx. 62% in 2022, LIC continues to be the market leader, followed by
SBI Life Insurance in the private sector.
The Indian life insurance market is a huge business opportunity and still needs to be exploited. Letâs delve
deeper into the areas that can boost the future growth and understand the link between pertinent
macroeconomics indicator and key performance indicators of this sector.
Figure 1: Gross written premium of life insurance
industry in India (in INR trillion)
Figure 2: Market share of insurers in 2022
LIC HDFC Life ICICI Pru Life
SBI Life Others
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2018 2019 2020 2021 2022
Demystifying Life Insurance Industry in India
Others refer to unlisted private players as
mentioned in Annexure A
5. Insurance penetration
and Insurance density
Insurance penetration and density, which are the key ingredients of the insurance industry. Overall insurance
penetration is of approx. 4.2% of GDP far lower than global average of approx. 7% of GDP.
Life insurance penetration in India was 3.2% in 2022, almost twice more than the emerging markets and a tad
above the global average and total premium registered YoY growth of approx. 10.8% in 2022, with new
businesses contributing approx. 46% of the total premium received by the life insurers.
Insurance penetration and density are two metrics, often used to assess the level of development of the
insurance sector in a country. While insurance penetration is measured as the percentage of insurance
premium to GDP, insurance density is calculated as the ratio of premium to population (per capita premium).
During the first decade of insurance sector liberalization, the sector reported increase in insurance penetration
from 2.7% in 2002 to 5.2% in 2010. Since then overall insurance penetration deteriorated till 2015 due to decline
in life insurance penetration owing to factors such as lower rates of renewal and lesser disposable income
available to invest. However, the insurance penetration started gaining the momentum from 2015-16 and
reached 4.2% in 2022. While the penetration of life insurance sector has gone up from 2.15% in 2001-02 to 3.2%
in 2022, non-life insurance penetration has gone up from 0.6% to 1.0% during the same period.
Inspite of growth in the penetration and density, India is still highly under insured compared to other countries
owing to factors such as lack of awareness of benefits of life insurance products amongst Indians or lack of
understanding on how it works or may be due to high premium cost on account of higher cost of acquisition
for the insurance companies.
Figure 3: Insurance penetration(%) and density (in USD) in India, 2013-2022
3.2 3.2
-
10
20
30
40
50
60
70
80
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
69
43
Density (USD)
Penetration (%)
05
Demystifying Life Insurance Industry in India
6. 06
Others includes corporate agents, direct sale, brokers, e-aggregators, online selling, marketing firms, etc.
Role of
Distribution Channels
For life insurance companies, creating and maintaining a robust and spatial distribution network is paramount
to marketing their products effectively and generate new business.
Insurance distribution channels has predominantly been traditional, where individual agents and
bancassurance, both of them are still dominant in their market share/contribution with reference to customer
retention, product mapping to customer needs, etc.The contribution of distribution channel to individual NBP.
The individual agents continue to be dominant distribution channel in procuring individual NBP with a share
of 55% for the year 2022.
LIC has the largest network of individual agents which contributes majority of individual new business of the
company whereas private players are relatively dependent on bancassurance for new business.
COVID-19 pandemic has compelled insurers to develop and increase the digital distribution of their products
and gain direct control of customer relationships. Insurers are also tying up with partners within the
non-traditional ecosystem (e.g. e-commerce companies, fintech, cab aggregators) to diversify their distribution
mix further. Digitization is redefining the way the customers engage with insurers and simplifying their journey
from purchase to payout.This helps in substantially reducing the turnaround time and also enhances channel
productivity. It also helps customers to make informed decisions, which in turn helps in increasing the
persistency ratio for players in the long run and also reduce mis-selling of policies.
Figure 4: Distribution channel-wise contribution in individual NBP
, 2018-2022
0%
20%
40%
60%
80%
100%
2018 2019 2020 2021 2022
Individual Agents Corporate Agents - Banks Others
Demystifying Life Insurance Industry in India
7. 07
07
Savings products are designed to enable
disciplined savings while delivering steady
returns. As they are primarily a life insurance
product, these plans also provide risk cover.
Insurance
Products
Savings Product
These products pay a lump-sum amount in
case of occurrence of an event which is
covered under the product. Risk covered in
most cases covers death of the insured but
may also include permanent disability or
diagnosis of critical illness.
Protection Product
Life insurance companyâs profitability and growth is highly dependent on its product portfolio. Life insurance
products in the form of individual or group policies can be broadly categorized basis the component of either
savings or protection or combination of both, depending on the needs of the policyholder.
Non-linked products are traditional products with a protection and savings element built in or pure-protection
products. Non-linked savings products can be further segregated into participating products and
non-participating products whereas linked products are tied to the performance of debt and equity markets and
are also savings-cum-protection products.
Majority of products sold in India have a savings component with only a minimal protection aspect â Economic
Survey 2022-23.
Figure 5: Non-linked products and Linked products to total NBP
, 2018 - 2022
Demystifying Life Insurance Industry in India
0%
25%
50%
75%
100%
2017 2018 2019 2020 2021 2022
Industry Private
8. 08
Participating Products
For participating products, an insurer invests the premiums received in a pooled participating fund to
pay for certain fixed benefits as well as to share the surplus in the form of bonus as a discretionary
benefit.
Non Participating Products
Non-participating products provide a fixed amount of benefits on contingent event(s) covered under
the product.The policyholders do not participate in profits or losses of the underlying business .This
category includes pure term products (covering death benefit only), savings product (providing survival
benefits in addition to death cover), and immediate or deferred annuity (providing series of payments).
Unit Linked Investment Plan (ULIP)
A ULIP is a combination of insurance and investment, providing life cover as well gives the potential to
create wealth through market-linked returns from systematic investments.
Pension or Annuity plans
These plans can be protection plan as well as savings plan. It provides for a series of payments to be
made at regular intervals in return for a certain sum paid up front or option to pay premium for certain
period.The same can be an immediate or deferred annuity.
Variable life insurance
Savings product where the benefits are partially or wholly dependent on the performance of an
approved external index / benchmark which is linked to the product.
Insurance
Products
Life insurance companyâs profitability and growth is highly dependent on its product portfolio. Life insurance
products in the form of individual or group policies can be broadly categorized basis the component of either
savings or protection or combination of both, depending on the needs of the policyholder.
The following are the major categories of insurance products:
Demystifying Life Insurance Industry in India
9. 09
Insurance
Products
In terms of total NBP for the life insurance industry, the contribution of non-participating products have
amplified in comparison with the participating products.
Change in market needs over a period, augmented demand for non-participating saving, protection and
annuity products. Furthermore, w.e.f April 2021, income earned on contribution beyond INR 0.25 million per
annum in Unit-Linked Insurance Premium (ULIPs) was made taxable reducing the incentive for ULIPs and
driving a shift towards protection and other savings/ annuities products. Further, pandemic has brought
enormous changes across the industries, with no exception to the insurance industry. Earlier, life insurance
products which were considered for tax-saving products has now become essential against unforeseen
circumstances. Insurance companies must exploit this opportunity to make deeper inroads into the market.
However, based on the statistics, there is secular decline in gross saving rate since 2015. Further, household
savings, constituting the bulwark of the economyâs gross savings rate, has also shown signs of stagnation
owing to factors such as high inflation and interest rates. These factors could impede the growth in the life
insurance savings business
Further, government proposal in recent budget, to levy tax on maturity proceeds from life insurance policies
excluding ULIPs with aggregate annual premium of over INR 0.5 Mn, will make life insurance policies less
attractive as pure tax saving instruments. According to the industry experts, this proposal is likely to dent the
sales of non-par products, which have been witnessing strong growth over the last few years, especially during
the pandemic. As the cap of INR 0.5 Mn is applicable to all life insurance policies across insurers, it may deter
individuals from purchasing additional policies if they have exhausted their limit with their primary insurer.
This move would primarily impact companies that have a higher exposure to HNIs.
While the disclosures with regard to ticket sizes of premium contributions exceeding INR 0.5 Mn are not
available, Industry experts anticipates the overall impacted portfolio for major listed private life insurers -
according to the nine-monthly FY23 disclosures on an annualised premium equivalent basis - are as follows:
Figure 6: Product mix of par and non-par products (%) to the total NBP
, 2018-2022
35%
of their product mix
45%
of their product
30%
of their product mix
LIC will not be impacted
much as it has a larger number
of low-ticket policies
Considering the impact in topline of the companies, Insurers have appealed to relook the proposal, but a
conclusive dialogue has yet to take place.
Demystifying Life Insurance Industry in India
-
20
40
60
80
100
2018 2019 2020 2021 2022
Non-Participating Participating
10. 10
Interest
Rate
8%
The impact of interest rate movement for a life insurance company generally depends on its product portfolio
i.e., proportion of Saving type products vis-Ă -vis Pure protection oriented products.
Fixed income instruments represent a significant proportion of the investment portfolio of a life insurance
company as they generally provide good match to their long-term liabilities and regulatory capital
requirements.
Investment income is a significant source of income for Saving type products. Declining interest rate generally
affect savings type products negatively as it reduces Insurance companyâs investment returns and
underwriting profits, although it may be partially offset by reduction in the lapse rate. Declining interest rates
reduces alternative investment opportunities for policyholders and may reduce the lapse rate of savings type
policies. Further, if the original interest rate is guaranteed, the policyholders may tend to increase the premium
payments or sums insured or extend the contract beyond the original maturity date thereby increasing the
reinsurance risk for an insurance company. Interest rate movement (both increases and decreases) can impact
the expected cash flows of the life insurance business and the insurance companies may have to recalibrate
their Asset-Liability Matching (ALM) and hedging strategies.
For the Pure protection-oriented products, the main source of profit is life risk (i.e., the amount by which
premiums charged to policyholders exceed mortality pay-outs). For such products, investment income is not
the main source of earnings, and hence interest rate movement may not have material impact on the
profitability.
Demystifying Life Insurance Industry in India
11. 2
Inc42 Report 11
Key
Performance Indicator
EV is a measure of the consolidated value of the shareholdersâ interest in the life insurance business. It is
calculated as the sum of the Companyâs Adjusted Net Asset Value (ANAV) and the Value of In-force business
(VIF).
There are broadly two principles to calculate EV viz: European EV and Market consistent EV.The European
CFO Forum issued European EV Principles in May 2004, and Market Consistent EV Principles in June 2008.
In May 2016, the CFO Forum issued revised European EV and Market Consistent EV Principles and
Guidance, updated for the Solvency II regime which came to effect on 1/1/2016. These are further
categorized inTraditional EV and Indian EV. Below are the two common components considered for any
adopted principle to arrive at EV:
A. Embedded Value (EV)
The VIF includes the present value of future profits attributable to shareholders from the in-force business
of the Company (which includes the new business written during the previous year). Future profits are
computed based on assumptions such as persistency, mortality, morbidity and external factors like interest
rates and capital market performance.
1. Value of In-Force business (VIF)
Figure 7: Components of VIF
Present
value of
Future of
profits
Time
Value of
Options &
Guarantees
Value of
In-Force (VIF)
Cost
of
Capital
Demystifying Life Insurance Industry in India
12. Capital raised
Capital distributed
New business contribution
Return on in-force business
Expected return
Operating assumption changes
Development costs
Expected return on Free surplus
Operating return before after tax and before
exceptional items
Investment return variances
Effect of currency movements
Effect of economic assumption and other
business assumptions (mortality, persistency,
expenses, future asset allocation, etc.)
Exceptional items
12
Key
Performance Indicator
Present Value of Future Profits (PVFP):
PVFP represents the present value of future post taxation shareholder cash-flows projected to emerge
from the in-force covered business and the assets backing liabilities of the in-force covered business.
Cost of Capital
The cost of capital is the cost of having to pay the shareholders a higher return on capital then the return
the company can earn on the assets backing the capital.
Time Value of Financial Options and Guarantees (TVFOG)
Financial option and guarantee can be defined as those features of the covered business conferring
potentially valuable underlying guarantees, or options embedded with the covered policies, whose
potential value is impacted by the performance of financial variables.
Net assets of shareholder including free surplus and required capital.
Movement of Embedded Value
The opening and closing EVs, together with a breakdown of the change in EV over the period.
Presentation of the breakdown is at the discretion of the company, however the following items would be
typical:
A positive EV variance is indicative of superior performance by the Company as compared to what was
assumed in arriving at EV at the beginning of year.
In terms of growth in EV, Amongst the private players, HDFC Life Insurance leads the life insurance sector
with the highest 5-year CAGR of 21.5%, owing to factors such as significant new business sales, improved
new business margins and increase in share of protection business.
2. Adjusted Net-Asset Value (ANAV):
Demystifying Life Insurance Industry in India
13. However, prevalence of different
methodologies to report EV brings major
challenges in analyzing and comparing EV
results of private players at times.
Any changes in assumption in EV during
the year, impacts the Embedded value
significantly as was the case in the
calculation of EV of LIC at the time of IPO.
The EV of LIC as on 31 March 2021 was INR
95,605 crore. In period of six months, the
EV surged to INR 5.4t.This was majorly due
to increase in shareholdersâ interest in
non-participating funds to 100%. The entire
surplus from non-participating fund was
allocated to the shareholders and the ratio
in par business eventually reduced to 90:10
in line with the private players. Along with
changes in distribution of profit, EV was
increased due to marked-to-market gains
of non-par equity book. All these changes
had led to a comparatively higher valuation
multiples of LIC.
13
Key
Performance Indicator
Figure 8: Embedded value (in INR Crores) and-year
CAGR of EV
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
EV (2022) 5 Yr CAGR - EV
SBI Life
Insurance
HDFC
Life Insurance
ICICI
Prudential
Demystifying Life Insurance Industry in India
VNB is the present value of expected future earnings from NBP during any given period and is a key gauge
for future growth of the company.
B. Value of New Business (VNB)
Figure 9: Value of new business (in INR Crores) of Private Players, 2018-2022
-
1,000
2,000
3,000
4,000
SBI Life HDFC Life ICICI Pru Life
2018 2019 2020 2021 2022
14. SBI Life Insurance with rising share in annuity business is well poised with a growth in VNB margin to
approx. 25%
HDFC Life Insurance has shown consistent VNB Margin of approx. 26% in the past, however, due to
acquisition and merger of Exide life the same are impacted and are estimated to neutralize in 2023 and
2024.The change in product mix from participating to non-participating products has marginally improved
VNB margin of the company.
ICICI Prudential Life Insurance has been through rough patch in terms of VNB & APE growth (%) but started
showing good sign of growth in 2022. Over the years, they have change their product mix with more focus
on high margin products.
Incase of LIC, since it got listed in May 2022, we donât have information for the past years. Currently, VNB
of LIC is INR 7,600Crore with VNB margin of approx. 15%.
APE is the sum of annualised first year premiums on regular premium policies and ten percent of single
premiums, from both individual and group customers. It is considered as fresh revenue of an insurance
company for the relevant period.
Except ICICI Prudential Life Insurance, other private players have shown sign of consistent growth.
Changes in product mix and business volume led to growth in VNB and VNB margins of SBI Life Insurance.
It has increased its share of non-par products in terms of APE.
HDFC Life Insurance has been consistent in terms of APE growth over the period and thus enjoyed
premium valuation in the industry. Announcement of acquiring Exide Life was seen as a deterrent by
investors and it is expected that neutrality and synergies from the merger will be visible in the coming
years.
C. Annualised Premium Equivalent (APE)
14
Key
Performance Indicator
Demystifying Life Insurance Industry in India
Figure 10: Annualised Premium Equivalent (in INR Crores) of Private Players, 2018-2022
2018 2019 2020 2021 2022
-
4,000
8,000
12,000
16,000
SBI Life HDFC Life ICICI Pru Life
15. 15
Key
Performance Indicator
Figure 11: Persistency Ratio (%) based on Regular Premium as on March, 2022
Persistency of policies is the backbone of long-term sustainability and growth in life insurance business. It is
derived by understanding the number of premium paid by policyholders against the number of premiums
payable and measured at different stages in life of the policy. These stages are like first year (13th month),
second year (25th month), etc.This ratio disclosed by life insurers considers both the number of policies by
count and premiums.
Persistency ratio of 13th month represents customerâs stickiness and quality of sales as it assess the likelihood
of premium being paid beyond the first year while ratio for 49th month and 61st month reflects the success of
products with a long-term perspective and helps in preventing high surrenders. This ratio also helps in
understanding the quality of the sales the company is undertaking.
In the recent past, LIC had lower 13th month persistency ratio amongst peers. Since the cost of new customer
acquisition is high, maintaining persistency ratio is imperative, and major players have shown improvement
in persistency ratio in the past few years. With increasing competition, innovative products, maintaining a
similar improvement in the persistency will remain a challenge and a key monitorable for the life insurance
industry.
Persistency ratio
-
20
40
60
80
100
13th 25th 37th 49th 61th
LIC SBI Life Insurance HDFC Life Insurance ICICI Prudential
Demystifying Life Insurance Industry in India
16. 07
16
Key
Performance Indicator
Solvency Ratio is the companyâs ability to settle the claims depending on its financial capacity. Essentially, an
insurerâs solvency is its financial capacity to meet its obligations.The solvency margin is the extra capital the
companies must hold over and above the claim amounts they are likely to incur. It acts as a financial backup in
extreme situations, enabling the company to settle all claims. A high ratio means the company is financially
sound and it has enough capital to pay all valid claims. The higher the assets are against the liabilities, the
higher is this ratio. IRDAI mandates insurance companies to maintain minimum solvency ratio of 1.5.
Solvency Ratio
The ratio measures the commission (including rewards and remuneration) paid by the insurance company
against the total gross premium.The higher the ratio, the higher is the commission paid by the insurer to the
distribution channel.
Amongst all the insurers, LIC has the highest commission ratio of approx. 5.5%, due to the bulk of LICâs
individual policies are sold by individual agents.The lowest commission ratio is for SBI Life Insurance approx.
3.5%.The higher commission is because LIC primarily relies on its agency force to distribute policies, whereas
many private insurers have a large part of their distribution through bancassurance
Commission Ratio
Figure 12: Commission ratio (%)on total premium, 2020-2022
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
2020 2021 2022
LIC SBI Life
HDFC Life ICICI Prudential
Demystifying Life Insurance Industry in India
1.85
2.05
2.04
1.76
March 2022 March 2022
March 2022 March 2022
17. 17
Valuation
Multiples
For life insurance providers, we do not typically look at the same valuation multiples as with other companies
(P/E, P/B, etc.), instead, the market assessment of life insurers is evaluated based on the following:
P/EV is the primary valuation multiple when comparing life insurers, it represents what premium the market
assigns to a company based on its embedded value.
Indian life insurers trade between 2.5x-6x P/EV, while international peers tend to be below 2x
Amongst the private players, HDFC Life Insurance commands the highest market premium at 3-6x P/EV while
the other 3 are between 2-3x P/EV.
LIC got listed in May 2022, accordingly information related to multiples are available post May 2022. P/EV of
LIC is approx. 0.7x , cheapest amongst the global peers.This may be due to adverse persistency metrics (e.g,
volatility in market, regulatory change, investment portfolio risk, etc) could have a material adverse effect on
companyâs financial condition
Price to Embedded Value (P/EV)
Figure 13: Price to Embedded Multiple, 2018-2022
SBI Life Insurance HDFC Life Insurance ICICI Prudential
Demystifying Life Insurance Industry in India
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
FY 18 FY 19 FY 20 FY 21 FY 22
18. 18
Valuation
Multiples
Figure 14: Price to VNB Multiple, 2018-2022
We calculate this ratio by first subtracting the EV from the market cap of the company then dividing the arrived
figure by the VNB. It represents how many years the company would need to earn back its premium valuation
at its current rate of profit.
HDFC Life Insurance used to trades at a higher multiple of 35-50x as compared to its peers which are between
20-35x.
HDFC Life Insurance has shown consistent VNB Margin of approx. 26% in the past, however, due to acquisition
and merger of Exide life, lower demand in high margin segments and volatile interest rates movements, have
impacted the P/VNB and P/EV multipled ICICI Prudential Life Insurance has been through rough patch in terms
of VNB & APE growth (%) but started showing good sign of growth from 2021 onwards. Over the years, they
have change their product mix with more focus on Non-Par and Non-Linked products, which generally offers
higher VNB margins.This has reflected in their P/VNB multiples
Price to VNB Multiple (P/VNB)
SBI Life Insurance HDFC Life Insurance ICICI Prudential
Demystifying Life Insurance Industry in India
0.0x
10.0x
20.0x
30.0x
40.0x
50.0x
60.0x
70.0x
80.0x
FY 18 FY 19 FY 20 FY 21 FY 22
19. 19
Recent
Deals
Name: Ageas Federal Life Insurance Company Ltd.
OperationalYear: 2007-08
About the transaction: During September 2022, IDBI
Bank sold its remaining stake in Ageas Federal for a total
transaction value of INR 580 crore, to Ageas Insurance
International N.V. (AIINV) which held 49% stake in the
company at the time of announcement.Transaction was
announced considering revision in FDI investment limit in
life insurance companies from 49% to 74%.
Ageas Federal Life Valuation (INR Crore)
Name: IndiaFirst Life Insurance Company Ltd.
OperationalYear: 2009-10
About the transaction: During April 2022, Bank of
Baroda, majority shareholder in IndiaFirst Life Insurance
Company Ltd. acquired an additional 21% stake from
Andhra Bank (now known as Union Bank of India) for a
total transaction value of INR 766 Crore. Post this
transaction, the revised shareholding in the company is
Bank of Baroda 65%, Carmel Point Investments India 26%
and Union Bank of India 9%.
IndiaFirst Life Valuation (INR Crore)
Name: Future Generali India Life Insurance Company Ltd.
OperationalYear: 2007-08
About the transaction: During March 2022, Generali
Participations Netherlands N.V. (GPNNV) increased their
direct and indirect holding in Future Generali India Life
Insurance Company Ltd. from 49% to 68.5%.The increase
in the stake was undertaken through acquisition of 16.6%
stake from Industrial InvestmentTrust Ltd and preferential
issue of 18 crore shares at par value of INR 10/share.
Transaction value of direct stake was INR 405 Crore.
Future Generali India Life
Valuation (INR Crore)
Name: PNB MetLife India Insurance Company Limited
OperationalYear: 2001-02
About the transaction: MetLife International Holdings
LLC had acquired an additional stake of 15.3% in PNB
MetLife for total transaction value of INR 1,906 crore.
Revised stake of Metlife International is 47.3%.
PNB Metlife Valuation (INR Crore)
Dec'20 Sep'22
2,205
2,320
Feb'19 Apr'22
2,733
3,648
Dec'13 Mar'22
1,511
1,715
Mar'19 Feb'22
9,250
12,480
Demystifying Life Insurance Industry in India
20. 20
8%
Recent
Deals
Name: Exide Life Insurance Company Ltd.
OperationalYear: 2001-02
About the transaction: During January 2022, HDFC Life
Insurance insurance Company Ltd. acquired Exide Life
Insurance Company Ltd.The transaction was a stock & cash
deal, wherein cash consideration of INR 726 crore was paid
and approx. 8.7 crore equity shares of HDFC Life Insurance
were issued on preferential basis, priced at INR 685/- per
share. Share issued in lieu of purchase consideration
represent approx. 4.1% of paid-up capital of HDFC Life
Insurance as on March 31, 2022.
Exide Life Valuation (INR Crore)
Initial Public Offering (IPO)
Life Insurance Corporation of India
In May 2022, the Union government came up with Offer for
sale of its stake in Indiaâs insurance behemoth via initial
public offer. In this process, the Union government realized
INR 20,516 crore by disinvesting approx. 3.5% of its stake of
total paid-up equity in LIC.
IndiaFirst Life Insurance Company Ltd.
LIC Valuation (INR Crore)
TotalTransaction value: approx. INR 20,516 Crore
Stake sold: 3.5%
Implied Price to Embedded Value: 1.1
Implied Price to Book: 56.3
As per annual report 2022 of LIC, company had net
premium income, total income and total asset of INR
427,419 crore, INR 721,103 crore and INR 4,159,345 crore
respectively.
The insurance company is coming up with IPO and has filed
DRHP with SEBI.The offer consists of fresh issue of up to
equity shares aggregating up to INR 500 crore and Offer for
Sale of up to 14 crore Equity Shares aggregating approx.
21% of paid-up capital as on March 31, 2022.
Mar'13 Jan'22
1,099
6,687
Implied Equity
value based
on IPO price
Market
Cap as on
Dec 31st, 2022
5,86,171
4,33,009
Demystifying Life Insurance Industry in India
21. 21
Road
Ahead
In Budget 2023, Insurers suffered a double whammy with government proposal to levy tax on maturity
proceeds from life insurance policies excluding ULIPs with aggregate annual premium of over INR 0.5 Mn and
governmentâs push to drive people towards new tax regime, will make life insurance policies less attractive as
pure tax saving instruments. However as per industry experts, the attractiveness of a life insurance product
might diminish in the next fiscal, but it will not vanish as it offers savings for long term.
We understand, firstly, this move will help to change the notion of considering insurance products, a push
product, merely as an investment rather than protection for unforeseen future and secondly the proposed
budget would primarily impact insurers that have a higher exposure to HNIs. However, considering the impact
in topline of the companies, insurers have appealed to relook the proposal, but a conclusive dialogue has yet
to take place. Irrespective of the outcome, insurers would need to strategize to accelerate the growth by
evaluating other alternatives such as diversifying product portfolio, shift focus on lower ticket size business
which may compel to compromise a bit on margins and to focus on volume growth with the help of healthy
distribution channel including digital distribution.
Insurers would need to leverage technology to make pricing more precise and align it with risk appetite.This
will help to deliver the products to customer at a fraction of the cost and will lead to increase insurance
penetration which will eventually contributes in the overall development of the country.
IRDAI is determined to achieve its mission of âInsurance for all by 2047â, with aggressive plans to address the
industryâs challenges and to make Indian insurance sector globally attractive. At penetration of 3.2%, India
ranks 9th in the global life insurance market and ahead of China (at 2.1%). It is expected to grow in coming
years as industry has witnessed numerous transformations in terms of new developments, regulations,
proposals for amendments, etc (Refer Annexure B). These developments will boost potential growth for the
insurance industry while ensuring that insurers stay relevant with changing times and the latest digital
disruptions.
Hence, in order to be âfit for growthâ, insurer needs to build awareness of the products and introduce innovative
products acknowledging customers needs while keeping pace with the disruptive developments in the
marketplace.
Sources: IRDAI Handbook, IRDAI Annual Report,
Media Reports, other databases and RBSA Analysis Demystifying Life Insurance Industry in India
22. 22
Annexure A
List of insurance players in India
Sr.
No. Name of Insurance Company
Date of
Registration
Year of
Operation
Public Sector
01-Sep-56 1956-57
1 Life Insurance Corporation of India
Private Sector
Aditya Birla Sunlife Insurance Company Ltd.
Aegon Life Insurance Company Ltd.
Ageas Federal Life Insurance Company Ltd.
Aviva Life Insurance Company India Ltd.
Bajaj Allianz Life Insurance Company Ltd.
Bharti AXA Life Insurance Company Ltd.
Canara HSBC OBC Life Insurance Company Ltd.
EdelweissTokio Life Insurance Company Ltd.
Exide Life Insurance Company Ltd.*
Future Generali India Life Insurance Company Ltd.
HDFC Life Insurance Company Ltd.
ICICI Prudential Life Insurance Company Ltd.
IndiaFirst Life Insurance Company Ltd.
Kotak Mahindra Life Insurance Ltd.
MaxLife Insurance Company Ltd.
PNB Metlife India Insurance Company Ltd.
Pramerica Life Insurance Company Ltd.
Reliance Nippon Life Insurance Company Ltd.
Sahara India Life Insurance Company Ltd.
SBI Life Insurance Company Ltd.
Shriram Life Insurance Company Ltd.
Star Union Dai-ichi Life Insurance Company Ltd.
TATA AIA Life Insurance Company Ltd.
31-Jan-01
27-Jun-08
19-Dec-07
14-May-02
03-Aug-01
14-Jul-06
08-May-08
10-May-11
02-Aug-01
04-Sep-07
23-Oct-00
24-Nov-00
05-Nov-09
10-Jan-01
15-Nov-00
06-Aug-01
27-Jun-08
03-Jan-02
06-Feb-04
29-Mar-01
17-Nov-05
26-Dec-08
12-Feb-01
2000-01
2008-09
2007-08
2002-03
2001-02
2006-07
2008-09
2011-12
2001-02
2007-08
2000-01
2000-01
2009-10
2001-02
2000-01
2001-02
2008-09
2001-02
2004-05
2001-02
2005-06
2008-09
2001-02
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
*Merged with HDFC Life Insurance in January 2022
Demystifying Life Insurance Industry in India
23. 23
Annexure B
Regulatory Changes
Heading Particulars Brief Industry Impact
Currently minimum capital requirement has
been seen as a barrier for entry into the
insurance industry. Lowering or aligning the
same to size, scale etc. will give a boost to the
industry as a whole and will also provide the
avenue for smaller players to enter the
industry.
New age Insurers have started adopting a
more virtual presence than physical footprint
as traditional insurers have. For such
insurers, having the same capital
requirement as a traditional insurer may be
seen as rather onerous.
Minimum
Paid-up
capital
Presently prescribed minimum
capital for insurers is INR 100 crore
for life, general and health insurance
businesses, and INR 200 crore for
reinsurance business.
Vide the Amendment Bill, it is
proposed to have minimum paid up
equity capital as may be prescribed
by regulation based on the size and
scale of operations, class or
sub-class of insurance business and
the category or type of insurer.
There is a need to make the industry more
customer-focused in their approach and offer
a wide range of related or incidental services
to their customers with the core insurance
product.
Proposed amendment are necessary to
compete at global level as well as to provide
customer centric services. Provisions
pertaining to incidental services and financial
products is yet to be notified by the authority,
which may include Mutual fund schemes,
debt instruments etc.
Other /
Ancillary
Services
It is proposed to allow insurers to
provide services related or incidental
to insurance business and may also
distribute other financial products as
specified by and subject to
regulations.
This move shall pave the way for a single
insurance company to potentially undertake
multiple classes/ sub-classes of insurance
business (except reinsurance business).
It is yet to be seen whether the minimum
capitalization requirements will be enhanced
by the IRDAI through regulations, for such
composite insurers. Other jurisdictions such
as Singapore, Malaysia and the United
Kingdom allow the operation of composite
insurers.
Composite
insurance
registration
The proposed amendment to Section
3(2) of the Act indicates that an
applicant may apply for registration
of one or more classes/ sub-classes
of insurance business of any
category or type of insurer. However,
an entity which seeks registration to
undertake reinsurance business, is
ineligible to seek registration of any
other class or sub-class of insurance
business.
Extract of Changes proposed in Insurance Laws (Amendment) Bill, 2022
Demystifying Life Insurance Industry in India
24. 24
Annexure B
Regulatory Changes
Heading Particulars Brief Industry Impact
Differential
Solvency
Margin
Subject to the IRDAI specifying the
particulars in the regulations, it
appears that the proposed
amendment to the Act enables the
possibility of a differential solvency
margin regime. The proposed
addition of the proviso to Section
64VA(3) of the Act prescribes that in
specifying the solvency margin,
consideration may be given to the
different classes and sub-classes of
insurance business of an insurer.
This proposal is seen to be bringing share
transfer of insurers on par with the Reserve
Bank of Indiaâs prescription for banks.
This move also aligns with the business
-friendly approach that IRDAI is keen to
show-case.
Share
Transfer
Threshold
It is proposed to increase the share
transfer threshold for prior IRDAI
approval in connection with transfer
of shares of insurers, from 1% to 5%
of the paid-up equity capital.
Source: Proposed amendment posted at DFS for comments
While the proposal prescribes the boundary
condition of investment by insurers in assets
of value not less than the net liabilities of
insurer to policyholders, the restrictions and
conditions subject to which investments can
be made by insurers shall be specified by the
IRDAI as per regulations.
The cap of 5% on investments into group
companies that are owned/ controlled by
promoters of the insurers is proposed to be
enshrined in the Act.
It remains to be seen whether the IRDAI will
cater to the demands of the insurance industry
and liberalize the investment regime by
amending the Investment Regulations,
including facilitating acquisitions/
subsidiarization of insurtech companies.
Simplifying
Investment-
related
Conditions
The proposed amendment to Section
27 of the Act and the deletion of
Sections 27A, 27B, 27C and 27D and 31
of the Act result in the simplification of
investment related conditions that are
contained in the Act. The key
conditions are set out below:
⢠Insurer needs to keep earmarked
and invested assets of value not less
than that of liabilities;
⢠Insurer can invest up to 5% of
earmarked assets in a company/
body corporate owned or controlled
by promoter;
⢠Investments need to be
unencumbered; and
⢠Period of holding, manner,
limitations, and restrictions to be as
per regulations
Under the extant regulations issued by the
IRDAI, the control level of solvency is specified
as a solvency ratio of 150%. In light of the
proposed amendment to Section 64VA(3) of
the Act, the IRDAI has the power to set the
control level of solvency higher or lower (and
potentially be made proportionate to the class/
sub-classes of insurance businesses
undertaken by an insurer), in light of the
possibility of registration of composite
insurers and differentiated insurers pursuant
to the removal of minimum capital
requirements, as discussed above.
The movement away from a one-size-fits-all
approach is commendable and necessitated in
light of the proposed amendment to Section 6
of the Act.
This is perhaps the initial step towards
transition of the Indian insurance industry
from a factor-based solvency regime to a
risk-based solvency regime.
Demystifying Life Insurance Industry in India
25. 25
⢠Business & Equity Valuation
⢠Valuation of Brands, Goodwill, Other Intangible Assets &
Intellectual Property
⢠Valuation of Financial Securities, Instruments & Derivatives
⢠Valuation of Industrial Assets and Plant & Machinery
⢠Valuation of Real Estate
⢠Valuation of Infrastructure Assets & Specialized Assets
⢠Purchase Price Allocations (PPA) for Mergers & Acquisition (M&A)
⢠Impairment Studies forTangible Assets
⢠Impairment Studies for Cash Generating Units, Intangible
Assets & Goodwill
⢠Mines, Mineral Advisory and Valuation
⢠Valuation of ESOPs and Sweat Equity
⢠Valuation forTax,Transfer Pricing and Company Law Matters
⢠Fairness Opinions
⢠Valuation under Insolvency & Bankruptcy Code (IBC)
⢠Determination of Swap Ratio under Mergers and Demergers
⢠Valuation of Inventory / Stocks and Debtors / Receivables
⢠Litigation and Dispute Valuation Services
Valuation
⢠Valuation Services
⢠Damages & Loss of Profit Analysis
⢠Independent Expert testimony
⢠Anti-trust & Competition Advisory
⢠Post-Acquisition Disputes, Joint Venture & Shareholder Disputes
⢠Civil & Construction Disputes, Real Estate Disputes
⢠Intellectual Property Rights Dispute
Dispute & Litigation Support
⢠Buy side due diligence and closing due diligence
⢠Vendor due diligence and vendor assistance
⢠Setting up and managing dataroom
⢠Advice on sale and purchase agreements (SPA) and business
transfer agreements (BTA)
⢠Assistance in deal negotiation
Transaction Services (Due Diligence)
⢠Insolvency Professional services as per IBC
⢠Turnaround Advisory and Business transformation
⢠Interim Management Services
⢠CRO (Chief Restructuring OďŹcer) Services
⢠Process Improvement and Financial Restructuring
⢠Outside NCLT â Restructuring Services
⢠Priority and Interim Funding
⢠Process Advisors
⢠Pre-pack and Cross Border Insolvency
⢠Advisor to Committee of Creditors
⢠Preparation of Resolution Plan and Information Memorandum
⢠Independent Bid Evaluation Services
Restructuring
DealTax Advisory (Strategic, IBC, PE/VC)
â˘Tax Due-Diligence
â˘Tax Structuring
⢠Deal Negotiation Review
â˘Transaction Documentation Review
⢠Post-Deal Integration
Corporate Restructuring
⢠Group Restructuring
⢠Financial/Capital Restructuring
Succession Planning
Holistic Implementation Support
⢠Merger/Amalgamation
⢠Demerger/Spin-off
⢠Capital Reduction
Transaction Tax
⢠Share Buyback
⢠BusinessTransfers
⢠Liquidation/Wind-up
⢠M&A Advisory:
⢠Sell Side & Buy Side
⢠Domestic & Cross Border
⢠Partner Search, Joint Ventures & Strategic Alliances
⢠Government Disinvestment & Privatization
⢠Fund Raising - Equity, Mezzanine, Structured Finance & Debt
(Corporate & Project Finance)
⢠Distressed Investment Banking - One-Time Settlement, Priority
and Interim Funding, Rescue Financing, and Buyouts
⢠Capital Market Advisory
Investment Banking (Category 1 Merchant Bank)
Risk Consulting
Strategic & Risk Advisory Services
â˘Techno Economic Feasibility Studies & Viability assessment
⢠Business Plan Review
Technical Support Services
⢠Lenderâs & Investorâs / Independent Engineer Services
â˘Technical Due Diligence,Technical Opinions
⢠Chartered Engineers Opinion & Certification
⢠Project Cost Investigation and Monitoring
Agency for Specialized Monitoring (ASM)
⢠Cash outflow / Inflow and project monitoring, Ensure the end
usage of the Fund
Financial &Treasury Risk Advisory
⢠Assessment of risks - ALM, Credit, Market, Interest Rate &
Liquidity Risk
⢠Asset Quality Review & StressTesting
⢠Assessment of Expected Credit Loss
Business Risk Advisory
⢠Risk based Internal Audits & Enterprise Risk Manangement (ERM)
⢠Flow Chart Base Process Mapping & Process Excellence Studies (SOP)
⢠Compliances Studies, Assets management & Business support
SERVICES
Demystifying Life Insurance Industry in India
26. 26
Arpita Mehta
+91 22 6130 6061
arpita.mehta@rbsa-advisors.com
Ajay Malik
Managing Director & Head
Investment Banking
+91 22 6130 6015
ajay.malik@rbsa.in
Vinod Nair
Managing Director & Head
Risk Advisory Services
+91 22 6130 6015
vinod.nair@rbsa.in
Management
Rajeev R. Shah
Managing Director & CEO
+91 79 4050 6070
rajeev@rbsa.in
Manish Kaneria
Managing Director & COO
Co - Head Valuation
+91 79 4050 6090
manish@rbsa.in
Mitali Shah
Managing Director & Head
Banking & Restructuring
+91 79 4050 6050
mitali@rbsa.in
India OfďŹces Global OfďŹces
Project Leader
Rahul Jain
rahul.jain@rbsa-advisors.com
Aditya Kumath
aditya.kumath@rbsa.in
Research Team Creatives
Tarun Vataliya
+91 79 4050 6033
tarun.vataliya@rbsa.in
1121, Building No. 11, 2nd
Floor,
Solitaire Corporate Park, Chakala,
Andheri Kurla Road, Andheri (E),
Mumbai - 400 093
Tel: +91 22 6130 6000
Mumbai
607, 6th
Floor, Shangrila Plaza,
Road No. 2, Opposite KBR Park,
Banjara Hills,
Hyderabad - 500 034
M: +91 90526 60300
Tel: +91 40 4854 6254
Hyderabad
Bengaluru
104, 1st
Floor, Sufiya Elite,
#18, Cunningham Road,
Near Sigma Mall,
Bangalore - 560 052
M: +91 97435 50600
Tel: +91 80 4112 8593
Dubai
6001 Beach Road,
#22-01 Golden MileTower,
Singapore - 199589
M: +65 8589 4891
Email: singapore@rbsa.in
Singapore
Unit No. 1102, Al Jamal Building,
Al Ghatfah St, Al Danah,
Abu Dhabi
M: +971 52 617 3699
Email: abudhabi@rbsa.in
Abu Dhabi
2001-01, Level 20, 48 Burj GateTower,
Downtown, Sheikh Zayed Road,
PO Box 29734, Dubai, UAE
M: +971 52 382 2367
+971 52 617 3699
Tel: +971 4518 2608
Email: dubai@rbsa.in
Ahmedabad
912, Venus Atlantis Corp. Park,
Anand Nagar Road,
Prahladnagar,
Ahmedabad - 380 015
Tel: +91 79 4050 6000
2nd
Floor, IAPL House,
23 South Patel Nagar,
New Delhi - 110 008
M: +91 99585 62211
Tel: +91 11 2580 2300
Delhi
Ravishu Shah
Managing Director
Co - Head Valuation
+91 22 6130 6093
ravishu.shah@rbsa.in
Ravi Mehta
Managing Director & Head
TransactionTax
+91 22 6130 6052
ravi.mehta@rbsa.in
Chetan Khandhadia
Managing Director & Head
Transaction Services
+91 22 6130 6095
chetan.khandhadia@rbsa.in
Gift City (IFSC)
Unit No. 16, Office No. 7,
Wing D GIFT Aspire Block 12,
Road 1-D, GIFT SEZ,
Gandhinagar - 382 355
M: +91 97243 43847
CONTACT US
Demystifying Life Insurance Industry in India