TOP
Riding the rising awareness of insurance, savings and investments, India’s life insurance industry posted double-digit growth for the decade ending 2010. Since then, however, growth has slowed mainly due to regulatory changes and, to a lesser extent, the economic downturn.
With more than 1.29 billion people (65% below the age of 35), meeting India’s growing consumer demand for life insurance remains extremely relevant. Legislation is following suit. The government’s recent efforts to regulate the industry have focused on customers and driven insurers to review their business models and raise the bar on efficient practice.
To investigate current market practice, Gen Re invited private life insurance companies operating in the Indian Group Insurance market to participate in a survey in early 2015. The participating companies were provided exposure date and claims information and were asked to develop experience ratings based on a few group schemes. Respondents were also asked qualitative questions related to the risk management principles underlying the protection business.
Group Term Life Insurance, especially compulsory employer-employee cover (bundled with riders or offering simple mortality cover), is now a very common product. It also includes voluntary top-up schemes and non-employer-employee groups.
The 12 companies in the survey represent about 80% of the overall private market by premium, excluding Life Insurance Corporate (LIC) of India. The results of the survey were released to the participating companies in August 2015.
The high level of competitiveness represents one of the biggest challenges to life insurance companies operating in the group protection market in India. As a result, the primary focus of the survey was on the rates quoted by the participants on sample schemes.
We studied how the rates quoted change with the level of information available to the scheme underwriters. The results reveal the many different approaches to derive an experience rate for schemes and the preferences of each company. Also, the results show the competitiveness of each company in relation to other (surveyed) market players, while helping identify factors that influence the competitiveness.
Gen Re provides the participating companies with detailed feedback and valuable insights into the evolving Group Protection Business. This allows participating companies to better understand the market and manage the risk.
