LIFE INSURANCE- THE STRUCTURAL STORY REMAINS INTACT!
Life Insurance will become PULL product after this COVID-19 crisis gets over. This disease can act as a alarm which will in turn force people to consider Life insurance as essential product for life.
Life Insurance will become PULL product after this COVID-19 crisis gets over. This disease can act as a alarm which will in turn force people to consider Life insurance as essential product for life.
Lets understand the dynamics of this industry.
New Business premium is the premium acquired from new policies for a particular year.
New Business premium is the premium acquired from new policies for a particular year.
HDFC Life, SBI Life and ICICI Prudential are the top three private players in the industry.
Total premium comprises of Participatory, Non participatory and ULIPS (Market linked).
In Par products, the insured participates in the profits of the underlying investment pool during the term of the policy, where as in Non par products insured doesnt participate in profits.
In Par products, the insured participates in the profits of the underlying investment pool during the term of the policy, where as in Non par products insured doesnt participate in profits.
Persistency ratio measures the % of customers that stay year after year with the company and honor the premiums of their policy. (Higher the better)
Distribution mix - % of policies sold through a particular channel.
Claim settlement ratio is the percentage of insurance claims settled by an insurer compared to the total number of claims received. (Higher the better)
The new business profit margin is used to analyse the profitability of the insurance business. It is calculated as the value of the new business profit as a proportion of the annual premium equivalent. (Higher the better)
The operating expenses can include advertising, employee wages, and commissions for the sales force. (Lower the better)
Embedded value represents the sum of present value of all future profits from the existing business. The more business a company generates, the larger will be the embedded value. (Higher the better)
Conclusion.
The behavioral change towards risk that has been induced after Covid-19 will last across generations, thus increasing the much needed penetration levels of life insurance in India.
The behavioral change towards risk that has been induced after Covid-19 will last across generations, thus increasing the much needed penetration levels of life insurance in India.
