The life insurance sector

Transcription

1 BY: DR A. MUTHUSAMY AND A. MEERA WINDS OF CHANGE MARK LIFE INSURANCE MARKET IN INDIA India is still an under-insured country and holds the 18th position in the life insurance market of the world. The life insurance sector plays a vital role in the economic development of our nation. It acts as a mobiliser of savings, financial intermediary, promoter of investment activities, stabiliser of financial markets and a risk manager. However, India is still an under-insured country in the world and holds the 18th position in the global life insurance market. The other advantages provided by life insurance include security of capital, liquidity, tax benefits, etc besides, cover against risk of death. In the wake of reforms and the passage of the Insurance Regulatory and Development Authority (IRDA) Act by the parliament in 1999, Indian insurance sector was opened to private companies. Liberalisation thus facilitated entry of foreign players into the market with their part- Table I Number of Policies Name of the companies Bajaj Allianz Life 1,02,308 1,23,406 1,66,461 3,79,473 8,48,617 ( ) (20.62) (34.89) (127.97) (123.63) ING Vysya Life 53,405 62,207 74,022 74,499 1,34,360 ( ) (16.48) (18.99) (0.64) (80.35) SBI Life ,481 1,29,998 2,01,230 2,50,314 ( ) (39.54) (92.64) (54.79) (24.39) TATA AIG Life 1,06,753 1,25,672 1,62,986 2,11,509 2,81,319 ( ) (17.72) (29.69) (29.77) (33.01) HDFC STD Life 1,06,480 1,14,528 1,23,118 2,01,943 2,25,591 ( ) (7.56) (7.50) (64.02) (11.71) ICICI Life 2,86,508 3,06,205 3,49,823 4,92,423 11,06,798 ( ) (6.87) (14.24) (40.76) (124.76) Birla Sun Life 95,302 98,706 1,12,504 1,50,199 1,69,668 ( ) (3.57) (13.98) (33.50) (12.96) OM Kotak Life 24, ,356 53,843 83,168 ( ) (32.69) (11.24) (48.10) (54.46) Max New York Life 86,885 92,860 1,54,064 2,98,289 3,81,207 ( ) (6.88) (65.91) (93.61) (27.80) Met Life 27,835 38,608 43,862 64,385 68,994 ( ) (38.70) (13.61) (46.79) (7.16)

2 ners. Earlier, the Life Insurance Corporation had enjoyed the monopoly, but now foreign companies under joint venture with Indian companies were allowed in the insurance sector. This has brought in a healthy competition in the insurance market and the entry of private life insurers has considerably changed the sector in India. Some of the private life insurance companies in India are: 1. Bajaj Allianz Life Insurance 2. ING Vysya Life Insurance 3. SBI Life Insurance 4. TATA AIG Life Insurance 5. HDFC Standard Life Insurance 6. ICICI Prudential Life Insurance 7. Birla Sunlife Life Insurance 8. OM Kotak Life Insurance 9. Max New York Life Insurance 10. Met Life India Life Insurance Number of policies Table I gives the total number of policies in private life insurance companies during the period to Table I shows that the total number of policies in Bajaj Allianz was 3,79,473 in It increased to 8,48,617 in showing a percentage increase of per cent during In ING Vysya there were 74,499 policies in , that increased to 1,34,360 in , showing a percentage increase of per cent during the study The number of policies in SBI Life were 2,01,230 in It increased to 2,50,314 in , a percentage increase of per cent. The number of policies in TATA AIG and HDFC were 2,11,509 and 2,01,943 in It increased to 2,81,319 and 2,25,591 in respectively with a percentage increase of per cent and per cent respectively during the study ICICI Prudential Life and Birla Sun Life were 4,92,423 and 1,50,199 in It increased to 11,06,798 and 1,69,668 respectively in , a percentage hike of and per cent respectively. OM Kotak life was 53,843 in , increasing to 83,168 in per cent during the Max New York Life Insurance was Table II Growth in Premium Income of Private Life Insurance Companies Name of the companies Bajaj Allianz Life , , ( ) (86876) (219.21) (353.66) (212.83) ING Vysya Life ( ) (405.01) (318.29) (282.85) (25.53) SBI Life , ( ) (392.78) (211.74) (166.39) (78.87) TATA AIG Life ( ) (283.72) (212.53) (86.05) (77.09) HDFC Std Life , ( ) (344.79) (100.07) (130.59) (128.64) ICICI Prudential Life , ( ) (288.84) (136.88) (138.94) (80.24) Birla Sun Life , ( ) (409.27) (273.49) (70.31) (37.39) OM Kotak Life ( ) (431.92) (273.81) (29.87) (33.39) Max New York Life ( ) (147.98) (122.85) (92.07) (90.36) Met Life ( ) ( ) (263.21) (183.78) (152.66) Source: IRDA Annual report; Note: Percentage figures in brackets (Rs crore)

3 Table III Investment Income of Private Life Insurers (Rs lakh) Name of the company Bajaj Allianz Life ( ) ,171 ( ) ( ) (203.35) (94.69) (261.02) ING Vysya Life ( ) ,430 ( ) ( ) (191.43) (486.27) (306.35) SBI Life ,187 3,909 13,150 ( ) (2,990.48) (136.45) (299.32) (236.40) TATA AIG Life ( ) ,727 3,700 ( ) ( ) (383.49) (12,141) (114.24) HDFC Std Life ,631 4,098 16,346 ( ) (421.82) (388.61) (55.76) (298.88) ICICI Prudential Life 287 2,489 4,971 6,057 42,355 ( ) (764.11) (99.72) (21.786) (599.27) Birla Sun Life ,440 5,021 14,961 ( ) (255.17) (366.12) (248.68) (178.97) OM Kotak Life ( ) ,092 13,375 ( ) ( ) (1,614.63) (197.58) (539.34) Max New York Life ,180 6,443 ( ) (427.27) (116.26) (148.29) (195.55) Met Life ( ) ( ) ( ) (2,466.67) (200) (2,250.7) Source: IRDA Annual Reports; Note: Percentage figures in brackets 2,98,289 in It increased to 3,81,207 in , a percentage increased of per cent during the Met Life Insurance was 64,385 in It increased to 68,994 in showing a percentage increase of 7.16 per cent during Premium income An important source of insurance business is premium income. The premium amounts received under various policies are given in Table II. Table II gives the gross direct premium income of private life insurance companies. The premium earned by Bajaj Allianz was Rs 7.14 crore in , Rs crore in , and Rs crore in , showing a percentage increase of per cent during It has the second position with regard to the gross direct premium earned. ING Vysya earned gross direct premium worth Rs 4.19 crore in , Rs crore in It s earnings increased to Rs crore in , showing a percentage increase of per cent during the study In SBI Life, the premium earned was Rs crore in It increased to Rs 1, crore in showing a percentage increase of during The amount of gross direct premium earned in TATA AIG was Rs crore in It then increase to Rs crore in , per cent during In HDFC Life, premium earned in stood at Rs crore, increasing to Rs 1, crore in , a percentage increase of during ICICI Prudential life is highest premium earner. It earned Rs crore in , hiking to Rs 4, crore in ; a percentage increase of per cent during In Birla Sun Life the figures were Rs crore in The gross premium earned increased to Rs 1, crore in , thereby showing a percentage hike of per cent. The amount of gross direct premium earned in Kotak Life was Rs 7.58 crore in It increased to Rs crore in , showing a percentage gain of during In Max New York Life the corresponding figures stood at Rs in , increasing to Rs crore in showing the percentage increase of Rs per cent during In Met Life the premium earned stood at Rs 0.48 in , increasing to Rs crore in It was at the bottom of the list with the lowest premium income earned. Income from investment Investment is the allocation of monetary resource to assets that are expected to yield gain over a period of time. The investment of private insurance companies include state government securities, central government securities and other approved investments. Income from investments of the private insurance companies is given in Table III. Table III gives the net income from investment of private life insurers. Bajaj Allianz s income was Rs 149 lakh in , increasing to Rs 3,171 lakh in ; showing a percentage increase of per cent during In ING Vysya net income from investment was Rs 35 lakh in It hiked to Rs 2,430 lakh in , showing a percentage increase of per

4 Table IV Profit After Tax of Private Life Insurance Companies (Rs crore) Name of the companies Bajaj Allianz Life ( ) (69.64) (0.97) (37.07) (168.13) ING Vysya Life ( ) (22.37) (66.38) (48.82) (32.28) SBI Life ( ) ( ) (119.09) ( 29.92) ( 120) TATA AIG Life ( ) (69.93) (35.44) ( 14.64) (8.71) HDFC Std Life ( ) (91.95) ( 51.37) ( ) (41.49) ICICI Prudential Life ( ) (40.05) ( 51.30) ( ) (43.49) OM Kotak Life ( ) ( ) (18.69) ( ) ( ) ( ) (137.67) Max New York Life ( 99.66) ( ) ( 57.64) ( ) ( 39.74) Met Life ( 48.81) ( ) ( ) (250.87) (302.39) (30.79) cent during the The net income in SBI life was Rs 21 lakh in , hiking to Rs 13,150 lakh in , showing a percentage increase of per cent during the The net income from investment of TATA AIG was Rs 172 lakh in It increased to Rs 3,700 lakh in , thereby showing a percentage increase of per cent during HDFC Standard Life earned Rs 110 lakh from investment in The ICICI Prudential earned Rs 287 lakh while Birla Sun Life earned Rs 87 lakh in Their earnings increased to Rs 16,346 lakh, Rs lakh and Rs 14,961 lakh in respectively; showing a percentage hike of , and per cent during In OM Kotak, net income from investment stood at Rs 41 lakh in increasing to Rs 13,375 lakh in It had a percentage increase of per cent during the study In Max NewYork Life the corresponding earnings from investment were Rs 77 lakh in , increasing to Rs 6,443 lakh in , showing a percentage increase of per cent during the review Profit after tax Profit is an important parameter to measure the financial performance of private insurance companies. Table IV gives the profit after tax figures of private life insurers in the period during to It may be observed from the table that serious losses were incurred by all private players till Bajaj Allianz incurred a loss of Rs crore in It increased to Rs in , per cent during The ING Vysya Life Insurance incurred a loss of Rs crore in It increased to Rs crore in showing a percentage increase of per cent during In SBI Life Insurance the loss incurred amounted to Rs 0.29 crore in In , it earned a profit of crore. In TATA AIG Life the loss incurred in was Rs crore. In , it increased to Rs crore. In the year , the HDFC Standard Life Insurance suffered losses of Rs crore. It increased to Rs crore in , showing a percentage increase of per cent during The ICICI Prudential also suffered losses amounting to Rs crore in It increased to Rs crore in showing a percentage increase of per cent during In OM Kotak Life Insurance the losses were Rs crore in It increased to Rs crore in , that is per cent during Max New York Life Insurance earned a profit of Rs crores in But in , the company incurred a loss of Rs crore showing a percentage decrease in profit of per cent during the study In Met Life Insurance loss was Rs 2.84 crore in It increased to Rs crore in , showing a percentage increase in loss of per cent during the study From the above analysis it is clear that all the private players suffered losses during the Number of agents The number of licensed agents appointed by private life insurance companies during the study period are given in Table V. Table V gives the total number of agents in all life insurance companies during the period to In Bajaj Allianz the number stood at 0.04 lakh in , it increased to 0.38 in , showing a percentage increase of 2.70 per

5 Table V Number of Agents (Rs lakh) Name of the Bajaj Allianz Life ( ) (2.5) (179.57) ( 5.130) (2.70) ING Vysya Life ( ) (9.0) (2.0) (8.33) (7.69) SBI Life ( ) ( 185.7) (1.0) (2.5) ( ) TATA AIG Life ( ) (128.57) (6.25) (5.88) (5.56) HDFC Std Life ( ) (266.67) (9.09) (16.67) (21.43) ICICI Prudential Life ( ) (109.09) (13.04) (15.38) (46.67) Birla Sun Life ( ) (2.0) (5.0) (22.22) (9.09) OM Kotak Life ( ) (2.0) (33.33) (5.0) (16.67) Max New York Life ( ) (66.67) (2.0) (16.670) (87.71) Met Life (0.06) 0.08 ( ) (1.5) (2.0) (1.0) (33.33) cent during In ING Vysya Life the figure was 0.01 lakh agents in It increased to 0.14 lakh agents in , a percentage increase of 7.69 per cent. The total number of agents in SBI Life was lakh in It increased to 0.05 lakh in In TATA AIG Life the figure was 0.07 lakh agents, while in HDFC it was 0.03 lakh agents and ICICI Prudential Life 0.11 lakh agents in The corresponding figures for all companies in the year , show a percentage increase of 5.56 per cent, per cent and per cent respectively during the study In Birla Sun Life total number of agents were 0.02 lakh in It increased to 0.12 lakh in , 9.09 per cent during In O M Kotak Life the number of agents were 0.01 lakh in , increasing to 0.07 lakh in showing, a percentage increase of per cent during The total number of agents in Max New York were 0.03 lakh and Met Life lakh in The total number of agents increased to 0.13 lakh and 0.08 lakh for these companies respectively during the period , showing a percentage increase of per cent and per cent. Operating expenses Operating expenses include employees remuneration, welfare benefits and other manpower costs, travel, conveyance and vehicle running expenses, training expenses, rents, rates and taxes, repairs, printing and stationary, communication expenses, legal and professional charges medical fees, auditor fees, expenses on advertisement and bank charges. Table VI shows the operating expenses of private life insurers. The amount of operating expenses of Bajaj Allianz was Rs lakhs in It increased to Rs lakhs in showing a percentage increase of per cent during The operating expenses in ING Vysya were Rs lakhs in IT increased to lakhs in showing a percentage increase of per cent during In SBI Life, the operating expenses were Rs lakh, in TATA AIG Rs lakh and in HDFC Standard Life it was Rs lakh in The expenses increased to Rs lakh, Rs lakh and Rs lakh respectively, showing a percentage increased of per cent and per cent respectively, during the study The operating expenses of ICICI Prudential Life were Rs lakh in rising to Rs lakh in , a percentage increase of per cent during the period under consideration. The ICICI Prudential Life notched the highest operating expenses among all the private life insurers. In Birla Sun Life, it stood at Rs lakh in It increased to Rs lakh in , showing a percentage increase of per cent during The operating expenses in OM Kotak Life were Rs lakh, in Max New York Rs lakhs and in Met Life Rs 6.53 lakh in It rose to Rs lakh, Rs lakh and Rs lakh respectively, in showing a percentage increase of per cent, per cent and per cent during the Tables VII and VIII show the correlation between the following: Premium income and number of policies Premium income and number of agents Premium income and profit after tax

6 Premium income and operating expenses Summary of findings Total gross direct premium received in Bajaj Allianz Life Insurance was Rs 7.14 crore in It increased to Rs 3, crore in , showing the percentage increase of per cent during the review It was the Table VI Operating Expenses of Private Life Insurers (Rs lakh) Name of the company Bajaj Allianz Life ( ) (165.71) (98.39) (61.96) (127.07) ING Vysya Life ( ) (149.48) (71.27) (48.1) (43.92) SBI Life ( ) (106.74) (146.13) (117.19) (52.56) TATA AIG Life ( ) (57.46) (81.10) (72.13) (46.72) HDFC Std Life ( ) (69) (40.87) (134.91) (72.69) ICICI Prudential Life ( ) (104.87) (70.51) (55.51) (56.84) Birla Sun Life ( ) (84.95) (62.93) (22.27) (37.49) OM Kotak Life ( ) (65.98) (46.37) (23.92) (20.43) Max New York Life ( ) (31.88) (45.37) (51.42) (37.71) Met Life ( ) (366.15) (46.68) (113.62) (30.79) Table VII Correlation top grosser in gross direct premium received category. On the other hand, Met India Life was at the bottom earning premium income of Rs 0.48 crore in It increased to Rs crore in , showing a percentage increase of per cent during For Bajaj Allianz Life Insurance, the gross direct premium has been pegged at Rs crore in and Rs crore in In Met Life India, the gross direct premium has been estimated to be Rs crore in and Rs crore in The operating expenses of ICICI Prudential Life Insurance were Rs lakh in It increased to Rs lakh in , per cent during It spent more on operating expenses. Top players, however, spent less amount on operating expenses in ICICI Prudential s earned investment income was Rs 287 lakh in It increased to Rs 42,355 lakh in , showing the company earned more income from investment compared to other insurance companies. In Met Life India, the earned investment income was Rs three lakh in It increased to Rs 741 lakh in Name of the company Correlation between Correlation between Correlation between premium income and premium income and premium income and operating expenses profit after tax net commission paid Bajaj Allianz Life Insurance ING Vysya Life Insurance SBI Life Insurance TATA AIG Life Insurance HDFC Standard Life Insurance ICICI Prudential Life Insurance Birla Sunlife Life Insurance OM Kotak Life Insurance Max New York Life Insurance Met Life India Life Insurance

7 Table VIII Correlation Name of the company Correlation between premium Correlation between premium income and number of agents income and number of policies Bajaj Allianz Life Insurance ING Vysya Life Insurance SBI Life Insurance TATA AIG Life Insurance HDFC Standard Life Insurance ICICI Prudential Life Insurance Birla Sunlife Life Insurance OM Kotak Life Insurance Max New York Life Insurance Met Life India Life Insurance , showing a percentage hike of 2, per cent during the study It ranked at the bottom among others. All private companies in life insurance business suffered losses except SBI Life during the year Max earned a profit in to Total number of agents in Bajaj Market Survey Allianz was 0.04 lakh in It increased to 0.38 lakh, showing a percentage increase of 2.70 per cent during the study Majority of the top players have more agents. In Met India Life there were 0.04 lakh agents, increasing to 0.08 lakh during Total number of agents were minimum in Met Life Insurance. Dr A. Muthusamy is doctorate while A. Meera is research scholar, Alagappa University, Karaikudi