India Market Life Insurance Update March 2016

We are pleased to release our 62nd quarterly newsletter on the life insurance industry in India, covering developments during December 2015 to February 2016.

As per data released by the Insurance Regulatory and Development Authority of India (IRDAI), the life insurance industry collected weighted new business premium of INR373 billion over the first three quarters of FY2015-16, a year-on-year growth of 6.5%. While the private life insurance sector witnessed a double digit growth of 13% in its weighted new business premium collections, the new business growth for the state-owned Life Insurance Corporation of India (LIC) was a modest 1% during the same period.

Foreign partners in life insurance joint ventures in India are at varying stages of increasing their respective stakes, with further progress made during the previous quarter. Bharti AXA Life and Aegon Life became the first two insurers to have completed the process for increasing the stake for the respective foreign partners in joint venture from 26% to 49%.

Max India has completed its de-merger into three entities with its life insurance subsidiary, Max Life now the sole business of the newly created Max Financial Services. This marks the first listed company in India to be solely focussed on life insurance business.

The Union Budget 2016-17 has proposed several reforms for the insurance and pensions sector including a proposal to allow foreign investment in insurance sector through automatic route up to 49%. Additionally, the regulator has initiated several proposed changes for the life insurance sector with exposure drafts on expenses of management, remuneration to insurance agent and intermediary, corporate governance and convergence to the Indian Accounting Standards being the key highlights of the reporting period.

The previous quarter witnessed 28 new product launches across the life insurance industry, with nearly three-fourths of them being traditional non-linked products. Several of these products offer implicit interest rate guarantees to policyholders. Life insurers are proactively looking at managing their risk exposures – including hedging using derivative instruments.

We provide an overview on these and other market developments in this edition of the newsletter. We hope you continue to find the newsletter interesting and informative and look forward to receiving your feedback.

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