PWC'S INSURANCE INSIGHTS - ANALYSIS OF REGULATORY CHANGES AND IMPACT ASSESSMENT FOR APRIL 2018 - PWC INDIA
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PwC’s Insurance Insights
Analysis of regulatory changes and
impact assessment for April 2018
Click to launch
Our point of view on recent trends in Other key guidelines issued by the
Preface Contacts
the insurance sector Authority in April 2018
Preface
For the insurance sector, agents have traditionally been the main method of selling
policies. However, recently, a dip has been observed in the number of agents in the
private life insurance sector. This is primarily due to agents not being able to meet
their sales targets and hence losing their jobs. However, contrary to this trend, the Life
Insurance Corporation of India (LIC) has continued to introduce more agents into the
system. This demonstrates LIC’s dominance in the life insurance sector in India.
Individual agents of life insurers
1400000.00
1200000.00
1000000.00
800000.00
600000.00
400000.00
200000.00
0.00
Private life insurers LIC
No. of agents as of 01 April 2017 Net no. of agents as on 31 March 2018
Source: Life Insurance Council
2 PwC PwC’s Insurance Insights
Our point of view on recent trends in Other key guidelines issued by the
Preface Contacts
the insurance sector Authority in April 2018
Preface
In March 2018, the insurance sector continued to witness a significant Life insurance sector
increase in the amount of premiums collected. LIC continues to dominate
the life insurance market. A brief overview of the general and life Premium in crore INR
insurance sectors, in terms of premium collection, market share, number of
policies issued and lives covered, as well as the number of agents in the life 160000.00
insurance sector, is presented below. 140000.00
120000.00
1. The figures clearly depict the dominance of the public sector in terms of 100000.00
premium collection and market share in both life and general insurance. 80000.00
60000.00
2. Within the life insurance market, although LIC’s market share is still 40000.00
very high, there has been a slight dip from 70% to 69%. 20000.00
0.00
3. Within the general insurance sector, there has been growth in the For March For March Up to Up to
revenues earned by companies. Private and public sector general 2017 2018 31 March 2017 31 March 2018
insurers both continue to enjoy a large market share in the general Private life insurers 9376.04 10423.15 50626.23 59314.55
insurance sector.
LIC 25299.69 18748.16 124396.27 134551.68
4. There has been a significant reduction in the number of life insurance
agents in the private sector. In contrast, there has been a significant rise Private life insurers LIC
in life insurance agents in LIC.
Market share up to March 2018
31%
Private life insurers
LIC
69%
Source: IRDAI
3 PwC PwC’s Insurance Insights
Our point of view on recent trends in Other key guidelines issued by the
Preface Contacts
the insurance sector Authority in April 2018
Preface
General insurance sector
New business premium (in crore INR)
160000.00
140000.00
Premium in crore INR
120000.00
100000.00
80000.00
60000.00
40000.00
20000.00
0.00
Private and public sector Stand-alone private Specialised
general insurers health insurers PSU insurers
General insurers
For March 2017 For March 2018 Up to 31 March 2017 Up to 31 March 2018
Market share up to March 2018
6%
6%
Private and public sector general insurers
Stand-alone private health insurers
Specialised PSU insurers
88%
Source: IRDAI
4 PwC PwC’s Insurance Insights
Our point of view on recent trends in Other key guidelines issued by the
Preface Contacts
the insurance sector Authority in April 2018
Our point of view on recent trends in the insurance sector
Digital insurance (DI) – an overview
In this edition, we wish to emphasise the role of digitalisation in the insurance
industry and the impact that it has had on insurers specifically and on the insurance
sector as a whole. Insurance companies have started using digital technology to
further improve customer experiences. Various tools such as customer self-service
capabilities and digital portals have been recently introduced and implemented by
insurance companies to not only help reduce their costs but, more importantly, to
help improve the way business is conducted.
For a long time, the traditional insurance business model proved to be remarkably
resilient. But it is now beginning to feel the impact of digital. Digital technology is
changing how products and services are delivered, and increasingly, it will change
the nature of insurance products and services and the business model itself.
The importance of digitalisation is only recognised when a solid platform is built.
This base helps companies to meet not only the current expectations of customers
but also their future needs through data analytics and market research. Through
such a platform, companies can support their business models and technology needs
over and above the standard core issues such as billing, policy issuance and claims.
While it is important to have a strong digital base, if companies cannot understand
and identify the needs of their customers, it becomes increasingly difficult to
generate a return on their investment. It is imperative for companies to understand
customer needs to improve customer value. Digital platforms assist with this
process. The real value in the process is realised when these digital processes are
incorporated from the beginning, helping to create a framework to effectively
measure the impact and viability of each scheme and product.
5 PwC PwC’s Insurance Insights
Our point of view on recent trends in Other key guidelines issued by the
Preface Contacts
the insurance sector Authority in April 2018
Our point of view on recent trends in the insurance sector
Indian regulation on DI Applicability of DI
The rise and impact of DI have been seen worldwide. Recognising the need for DI in The general insurance sector has seen a major increase in the amount
the Indian insurance sector, IRDAI, in a notification dated 13 April 2017, laid down of digital interactions with the customer. In the case of health and
rules for insurance web aggregators titled IRDAI (Insurance Web Aggregators) motor insurance, customers have been widely encouraged to use their
Regulations, 2017, which superseded the IRDAI (Web Aggregators) Regulations, 2013. mobile devices to pay premiums and file for any claims. This has allowed
insurance companies to process these claims more quickly, leading to
These regulations came into force with the twin objectives of supervising and better customer satisfaction and increased efficiency. Travel insurance
monitoring web aggregators as intermediaries, responsible for maintaining websites has seen an increase in the usage of blockchain, which has helped
that allow insurance prospects to compare the price and features of products offered tremendously in initiating and closing customer claims and reducing
by different insurers and other related matters. the time from days to minutes. These technology-driven changes
Over the last two years, there has been a drastic increase in the amount of new have helped in providing greater convenience to insurance customers
business premiums collected. For FY 2015–16, the total amount of premium collected specifically in India.
through web aggregators was 0.03 crore INR. However, by the end of FY 2016–17, the
Implications of DI
total premium collected through this medium rose to over 46 crore INR.
Having a strong framework in place helps companies to continue to
Channel-wise new business – amount of premium collected by web aggregators (in crore INR)
focus on achieving their business strategies and, at the same time, to
50.00 2016-17, 46.36
continue to invest in more data-driven exercises to further improve
45.00 customer value. Also, the framework will help to continue building the
back-end processes that will in turn help support platform stability.
40.00
35.00 Way forward in DI
30.00 One of the key factors
The advent of technology has already led to the digitalisation of
25.00 highlighting the importance and
insurance companies. Most of the processes that are in place have
20.00 applicability of web aggregators
already improved due to the adoption of digital technology. Along
is that they are now permitted
15.00 with this, leaders in the market are continually striving to improve
to sell low-cost unit-linked
10.00 and bring in new technologies that can help create and search for new
insurance plans (ULIPs) with
opportunities. However, the Indian market is still lagging behind in
5.00 premiums of up to 1.5 lakh INR.
2015-16, 0.03 terms of average investment in digital technologies as compared to
0.00 the rest of the world. With the rise of smartphone usage in India and
2015-16 2016-17
2015-16 2016-17 greater Internet penetration, there lies a huge opportunity for greater
Source: IRDA: Handbook on Indian Insurance Statistics 2016-17 investment in the field.
6 PwC PwC’s Insurance Insights
Our point of view on recent trends in Other key guidelines issued by the
Preface Contacts
the insurance sector Authority in April 2018
Other key guidelines issued by the Authority in April 2018
Compliance on Order of Preference1
Applicability: To all CEOs/CMDs of all insurance companies/
Ref: IRDAI/RI/CIR/061/04/20181 Date of issue: 11 April 2018
reinsurance companies/ FRBs
Introduction
Regulation 5 of IRDAI (Registration and Operations of Branch
Offices of Foreign Reinsurers other than Lloyd’s) (First
Amendment) Regulations, 2016, dated 28 January 2016,
states that every Indian insurer shall obtain the best terms for
their facultative and treaty surpluses from Indian reinsurers,
fulfilling certain criteria as laid down by the said regulation.
These best terms of participation shall then be offered by
Indian insurers in the following order of preference:
1. Indian re-insurer(s) having a minimum credit rating as
under regulation 4(a) of the above guidelines
2. To the Indian re-insurers that have a granted certificate of
registration as per 4(b) of the regulations
3. To the branch office of foreign reinsurers set up in special
economic zones, this is only after reinsurers of (a) and (b)
have been covered.
4. If there is any balance remaining, then this will be offered
to Indian insurers and other overseas re-insurers.
However, these regulations are not being complied with by all
insurers. If they fail to, they are likely to face regulatory action.
1 https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.
aspx?page=PageNo3443&flag=1
7 PwC PwC’s Insurance Insights
Our point of view on recent trends in Other key guidelines issued by the
Preface Contacts
the insurance sector Authority in April 2018
Other key guidelines issued by the Authority in April 2018
Re: Compliance of Motor Third Party Obligations
Applicability: To all CEOs/CMDs of General
Ref: IRDA/NL/CIR/MOTP/065/04/20182 Date of issue: 26 April 2018
Insurance Companies
With reference to the IRDAI regulations dated 2 June 2015 regarding compliance of motor third party obligations, insurers who have been licensed to underwrite
the direct motor insurance business in India are required to use the gross direct premium figures as published on the IRDAI website for computing motor third
party obligations.
2 https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo3463&flag=1
8 PwC PwC’s Insurance InsightsOur point of view on recent trends in Other key guidelines issued by the
Preface Contacts
the insurance sector Authority in April 2018
Contacts
Vivek Iyer Joydeep K Roy
Partner Partner
vivek.iyer@pwc.com joydeep.k.roy@pwc.com
Mobile: +91 9167745318 Mobile: +91 9821611173
Dnyanesh Pandit Saigeeta Bhargava
Director Associate Director
dnyanesh.pandit@pwc.com saigeeta.bhargava@pwc.com
Mobile: +91 9819446928 Mobile: +91 9560518833
Yugal Mehta Varsha Mehrotra
Manager Consultant
yugal.mehta@pwc.com varsha.mehrotra@pwc.com
Mobile: +91 9970163293 Mobile: +91 83890640211
Prateek Kannan
Consultant
prateek.kannan@pwc.com
Mobile: +91 9840753109
9 PwC PwC’s Insurance InsightsAbout PwC At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 2,36,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com In India, PwC has offices in these cities: Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India’s service offerings, visit www.pwc.com/in PwC refers to the PwC International network and/or one or more of its member firms, each of which is a separate, independent and distinct legal entity. Please see www.pwc.com/structure for further details. © 2018 PwC. All rights reserved pwc.in Data Classification: DC0 This publication contains certain examples extracted from third party documentation and so being out of context from the original third party documents; readers should bear this in mind when reading the publication. The copyright in such third party material remains owned by the third parties concerned, and PwC expresses its appreciation to these companies for having allowed it to include their information in this publication. For a more comprehensive view on each company’s communication, please read the entire document from which the extracts have been taken. Please note that the inclusion of a company in this publication does not imply any endorsement of that company by PwC nor any verification of the accuracy of the information contained in any of the examples. © 2018 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity. AW/May 2018-12837
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