2014: A volatile year for life insurers

In a year of massive realignment for the life insurance industry due to transition of old products to a new regulatory regime, private sector insurers managed to catch up with public sector behemoth Life Insurance Corporation in terms of new business premium growth.

According to industry data, in the year to November 2014, the industry saw de-growth of 1.3 per cent in total new business premium. LIC saw a 5.2 per cent decline in growth while the private life insurance industry saw a growth of 10.4 per cent.

Tarun Chugh, MD and CEO, PNB MetLife, said the year has been volatile for the life insurance industry. “On the upside, we have seen positive energy in the market due to the economic reforms agenda of the new government, positive views on the Insurance Bill and an additional ₹50,000 to be available under Section 80C for promoting long-term investments.

“On the flipside, the industry continues to grapple with the new product guidelines,” he said.

Product guidelines Vibha Padalkar, ED and CFO, HDFC Life, said the enforcement of revised guidelines for traditional products forced select insurers to re-file their products to ensure compliance with the revised regulations. “This helped restrict the then prevailing complicated ‘par’ products, packaged in ‘non-par’ format and also enforced minimum lock-in period for traditional products, among other changes,” she said.

ULIPs back in favour The surge in equity markets also a saw revival of unit-linked insurance plans (ULIPs), especially for private insurers with LIC not selling ULIPs.

Pankaj Razdan, MD and CEO of Birla Sunlife Insurance, said, “As the capital markets have performed well over the past few months, this has led to increased interest in ULIPs. We believe this is a good time for life insurers to move towards a more balanced product mix with a fair divide between traditional products and ULIPs.” For the around 20 lakh life insurance agents, adjusting to the new products regime was a major challenge, said Anuj Agarwal, MD and CEO of Bajaj Allianz Life Insurance. During the year, the insurance regulator also introduced and asked insurers to introduce policies in demat format.

Tech focus According to Sandeep Batra, Executive Director, ICICI Prudential Life Insurance, the year saw technology assuming a position of great significance in the industry.

Batra’s company has enabled real-time eKYC process which has added a layer of convenience for customers during the buying process.

Sunil Sharma, Chief Actuary of Kotak Life, said in 2015 he expects increased usage of computing equipment such as tablets, laptops and smart phones for insurance need assessment of potential policyholders.

Life insurers also expect the passage of the Insurance Amendment Bill to be a major game changer for theindustry.

Insurance Bill Rajesh Sud, MD and CEO of Max Life Insurance said the ordinance to increase the foreign capital cap in insurance companies to 49 per cent is good news for the industry.

Once it becomes law, it should bring in the much required long-term capital to the sector and allow flexibility of different capital structures, depending on each company’s requirements.

According to Deepak Mittal, MD and CEO of Edelweiss Tokio Life, the passage of the Insurance Bill will see the insurance regulator becoming more empowered and the industry will move towards a regime of stricter penalties. It would also have an appellate tribunal.

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