Thread by @ajitsuryak

Insurance Industry - Indian Perspective - Thread 🧵

Growth Drivers :

Increasing Life Expectancy
Favorable Savings
Greater employment

@Atulsingh_asan @caniravkaria  @Coolfundoo @saketreddy @Jitendra_stock

#HDFCLIFE

The growing interest in insurance among people, innovative products, and distribution channels are aiding growth.

High Penetration for digital platforms, with an average of 90% using digital platforms at least once a week

HDFCLIFE - 49% share of digital new business in FY20.

In FY21 (until February 2021), the premium from the new business of life insurance companies in India stood at US$ 31.9 billion.

Basic Terms:

Insurance penetration - Percentage of insurance premium to GDP

Insurance density - Ratio of insurance premium to population.

According to the economic survey, insurance penetration in India increased to 3.76% in 2019 from 2.71% in 2001.

However, it was much lower than Malaysia, Thailand, and China’s, which clocked 4.72, 4.99, and 4.30 percent, respectively in 2019.

Insurance density too has risen in the country, from $11.5 in 2001 to approximately $78 in 2019.

However, here, too, it pales in comparison to Malaysia, Thailand, and China’s 2019 figures of $536, $389, and $430, respectively.

The survey said that the government-funded Pradhan Mantri Jan Arogya Yojana (PMJAY) has improved health insurance coverage, noting that the proportion of households with health insurance increased by 54% for the states that implemented PM-JAY while falling by 10% where it was not

The proportion of households that had health insurance rose by 89 percent in Bihar, Assam, and Sikkim between 2015 and 2019. The figure slumped by 12 percent in West Bengal in the same period.

In the life insurance business, India is ranked 10th in the world. India's share in global life insurance market was 2.73% during 2019.

In the non-life insurance business, India is ranked 15 in the world. India's share in global non-life insurance market was 0.79% during 2019.

The market share of private sector companies in the general and health insurance market increased from 47.97% in FY19 to 48.03% in FY20.

HDFCLIFE share in private markets ~ 25%

NBP is the premium acquired from new policies for a particular year.

HDFC Life NBP for April 2021 stood at Rs. 1,193 crore, up 78.5% y-o-y.

On an NBP basis, the private industry saw a robust increase of 55% y-o-y for April (better than the industry’s 45% in April 2021). The overall life insurance industry’s NBP growth was slower with PSU leader, LIC, seeing 35% y-o-y growth for its NBP for April 2021.

For private companies, APE (Calculated) for April 2021 grew by 79.5% (better than industry growth of ~41% in April 2021).

Growth performance is indicative of continued strong growth traction + lower base effect, with April 2020 impacted by the lockdown.

COVID Impact

Life insurers settle COVID claims of INR19.86b up to 25th March

As per media articles, life insurers (in aggregate) have settled claims worth INR19.86b toward 25,500 COVID-related death claims. This corresponds to 15.7% of the total COVID-related fatalities in FY21

Among the key companies, it is noted that HDFCLIFE, IPRU, and SBILIFE settled 2.3k, 2.5k, and ~5k death claims, respectively, in FY21. Net of reinsurance, these companies have thus incurred a cost of INR1.5b, INR2.6b, and INR3.2b, respectively.

Source: MOSL

Policy:

Union Budget 2021 increased FDI limit in insurance from 49% to 74%.

India's Insurance Regulatory and Development Authority (IRDAI) has announced the issuance, through Digilocker, of digital insurance policies by insurance firms.

In February 2021, the Finance Ministry announced to infuse Rs. 3,000 crore (US$ 413.13 million) into state-owned general insurance companies to improve the overall financial health of companies.

Life insurance is an attractive long-term bet with a long runway for growth, supported by India’s demographics and underpenetrated/
underinsured Indian insurance market.

It is believed that players with a strong balance sheet and business metrics would be able to tide over the challenges, and demand for protection policies and savings products would be likely growth drivers in FY2022E.

Source: ibef.org, Multiple Research Reports, News Reports