Avinav Rahul

8/8/2019 Avinav Rahul

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Abhinav RahulVice President Corporate Communications

Max New York Life Insurance


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Agenday Needs and financial instruments

y Indian life insurance sector at inflection point

y Life Insurance sector reasons for a bright futurey Life Insurance sector as career choice


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-Protection

- Life Stage Needs

- Life Insurance Needs it serves


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0 Years 25 Years 60 Years 75 Years

Dependency

Child Birth House Childrens Marriage

Post retirement planning

Life line can break

ANYTIME

It is important to save to reach these milestones

BUT

First Job

Marriage

Child

Career Progression

Child Education &

Marriage

Self Dependency

Retirement

Spending years Spending yearsEarning years

Financial needs vary with life stages


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?

?

?

DisabilityDisease

Death

Life is

full ofworries

Protect against uncertainties


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and plan for life stage needs

FirstCar

First House

Marriage

ChildrenBirth

ChildrenEducation

Marriage of

Children

Retirement


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Saving Tools

Fixeddeposits

Shares& MF

PPF, EPFGovtBonds

Savings

Savings AC

NSE

KVP

Gold,ETF

Property LifeInsurance

Selection depends on ten re

Win

,

rtifacts


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Selection depends on risk appetite

Saving Tools

i

osits

S ar s

, ovt on s

Savings

Savings

S

!

ol" ,# T $

% ro &'

rtyLif'

Insuranc

'

Win'

,( rtifacts


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Some important statisticsMax New York Life NCAER India Financial Protection Survey found

Savings

EmergenciesEducation

of children

Old

age

Social

ceremonies

Buy or

build

house

Improve

or

enlarge

business

Buy

consumer

durable

goods

Gifts,

donations

and

pilgrimagesAll india 82.8 80.9 68.9 62.7 46.8 46.8 22.4 18.4

Rural 81.2 79.0 66.7 63.9 44.8 43.5 19.8 17.5

Urban 86.6 85.3 73.9 60.1 51.5 54.4 28.5 20.4

Figures in %Saving Trends in India

Savings

formsKeep at home Bank Post Office

Co-operative

SocietyInsurance Others

Percentage 35.8 50.9 5.0 3.2 2.2 2.9

But Where Are They Saving ?


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8-10 Times

your

income

Life Insurance

Protection Long TermWealth Creation

Provides

Continuity of income

Mortgage protection

Protection against disabilities

Childrens education

Marriage expenditure

Retirement fund

Role ofLife Ins rance


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-10 years of private life insurance

- Regulatory agenda

-Future gazing the next decade


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Insurance premium

as % of GDP

Insurance premiumper capita ( S$)

~2.3%

14.75

Number of players 14

Premium income*( S$ million)

2,873

FY 04

Life Insurance

FY 01 FY 10

23

41.2

>4.2%

9,432

~1.2%

~7

1

1,947

LIC market share (%)* 78 34100

*Individual FYP adjusted for 10% single premium

Source: IRDA, Swiss Re sigma

1st decade ofprivatization was

eventful


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Changes over the last decadey Products Traditional endowments to ULIPs

y Distribution Agency to multi-channel

y Service Customer query resolution toCRMy Brand Category promotion to brand awareness

y Customer 40-50 years old to 25-45 years old

y Some more

y Tax Savings to invest / savings

y Higher case size

y Strong underwriting


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Regulations focusing on core value

of life insurancey Recent regulations step in the right direction

y Focus on improved customer centricity

y Reposition life insurance to its core purposey Long-term savings and protection

y Some changes need to be considered

y Exit barrier for customer to serve long-term needs

y Reconsider minimum guaranteed returns in pensionplans

y Provide access to long-term investment instruments


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Brings life insurance focus back to longer term

Focus persistency for income from renewals

Focus on the protection needs Maximize protection multiple

ULIP Changes Impact

Five Years Lock in

and PremiumPayment Term

Increase inminimum sum

assured

Net Reduction inYield for Every

Year from Year 5

Will allow the customer to buy the product withhigher confidence

Will make customer stickiness dependant on sales

pitch

R

egu

lato

ry ch

anges


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Cap on Surrender

Charges

No partialwithdrawals in

pension products

Minimumguaranteed return

Even spread ofcharges during

the lock-in period

Sell for life stage needs to ensure long-term

customer persistency

Pension products will be used for purpose they arebought proposition needs to be revisited

Investment policy inclination towards debt

instruments

Better commission earning if the customercompletes the policy term

Regulatory changes

ULIP Changes Impact


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Change in c r rateagenc & referral nor s

ini

erfor ancestandards for agents

Customer ersistenc& commissionsalignment

Role of agent advisors and banks will enhance

Will weed out non committed agent advisors Enhanced customer trust on serious agent advisors

and increase in business opportunity

P

ro

po

sed regu

lato

ry ch

angesProposed Changes Impact


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Expected change inTraditional Plans

norms

Will promote need based sales

Mandatory needanalysis

Promote professionalism and need based sales

Proposed regulatory changesProposed Changes Impact


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Product

Distribution

Persistency

Balanced product portfolio Traditional products and Universal life designs likely

to gain

Simplicity of design

Hig er emp asis on improving kno ledge andproductivity

Needs based sales, transparency in transaction andcontinued service ill be t e key to customerretention

Key emerging trends


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Customer

centricity

Transparency

Cost

Customer life time value Distribution focused toCRM

Corporate governance and financial reporting norms Risk based capital

Review the overall business model in light of the pricecontrol

Key emerging trends


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-Economic and demographic factors

- Unfulfilled need for life insurance


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India Will Drive Economic Growthin

Futurey Indias GDP expected to grow faster than China by 2010 and overtake

USAby 2030

y Expected growth of 9% for FY11 (Vs 6.7% in FY09 and 7.2% for FY10)

y Per capita income is expected to touch Rs.18 lakh by 2050

y Rise in disposable income will drive savings and consumption

y Significant improvement in Consumer confidence

y Consumer confidence Index rose to more than 73% registering a 7.8%

increase in March 2010

y Working age population with rise faster than other economies of the

world

y Will contribute 136 million people to the workforce in the next 10 years


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Life Insurance will remain

important

y Only financial instrument to offer protection

y Helps in long-term contractual savings

y Products aligned to various life stage needs


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Low protection and need for

deepening ofsavings pool


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Consumer needs life insurance primarily

for Savings and Protection

Consumer Research


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-Opportunities in life insurance

-What makes it attractive


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Opportunities in life insurancey Distribution

y Direct selling

y Third party selling

y Marketing

y Human Resource

y Operations and customer service

y Technical areasy Actuarial

y Underwriting

y Product Management

y Investment


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What makes it attractive career

choice?y High growth

y Significant contributor to economy

y People oriented businessy High scope for innovation

And

y Performance driven compensation


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Abhinav [email protected]+91 98102 79666

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Avinav Rahul