Insurance broking opportunities and exploring new dimensions in India 2017

1. INSURANCE BROKING
OPPORTUNITIES AND EXPLORING NEW
DIMENSIONS

2. Who Are Insurance Brokers ?
 Insurance Brokers are representative of the client's
interest in the insurance contract and not the
insurer, an agent or bank is seen as the
representative of the insurer.
 Though there are many insurance brokers, in India,
insurance brokers are very often misunderstood as
a glorified insurance agent

3. Insurance Brokers, India &
Global Scenario
 Insurance brokers are seen as intermediaries
who ensure that both the parties to a contract
obtain what they require and a third party who
ensures that both the parties to the contract
jointly benefit.
 Insurance brokers in India, are granted license
by Insurance Regulatory & Development
Authority of India (IRDAI), Insurance regulator
in India formed by IRDA Act 1999, In exercise
of powers conferred by sub-section (1) of
section 42D of insurance Act 1938.

4. Insurance Brokers, India &
Global Scenario - Continued
 Global insurance broker has a wider set of duties,
in countries where the insurance industry is more
matured and developed.
 Starting with risk analysis/audit, recommending
Risk Management Program and then suggesting
risk mitigation products if available with insurer or
otherwise design the product, set rates, process
and actual settlement of the claims.
 In many, countries the insurance broker is far larger
than the insurance companies which predominantly
limit itself as an underwriter.

5. Insurance Brokers, India &
Global Scenario - Continued
 Online insurance penetration is abysmally low in India,
though it has shown immense potential in the past two
years, with rapid evolution and exponential growth
happening in this space.
 With the meteoric rise of ecommerce and quick adoption
of internet based transactions in India, the online
insurance industry is definitely finding favour among the
urban consumer. This has opened the market for
insurance broking in direct, reinsurance and composite
segments.
 Globally, direct brokers help their client plan their
insurance needs, identify insurance companies, negotiate
prices and place business. They also provide post-sales
services like changes in policies, negotiation with insurers
in case of claims, policy renewal support etc. Risk
management is another significant area where insurance
brokers look at the businesses in totality and identify
risks, plan out remedial steps and recommend suitable
ideas for handling contingencies. Insurance constitutes
only a part of overall planning and is best suited for large

6. Insurance Brokers, India &
Global Scenario - Continued
 In most developed nations, Insurance brokers market share
is over 70% of the total insurance industry. However, in
India this figure stands at just 30% for the general
insurance industry and less than 1% for the life insurance
industry.
 The field of insurance broking is being positively looked at
by the Indian government as well, which is considering
allowing 100 per cent foreign direct investment in insurance
broking with a view to giving a boost to the sector and
attracting more funds. At present, the FDI policy allows for
at present, allows 49 per cent foreign investment in the
insurance sector that encompasses insurance broking,
insurance companies, third-party administrators, surveyors
and loss assessors. The removal of foreign investment limit
will encourage more players in the market with high
technology, and also increase insurance penetration in

7. Service Offerings by Insurance
Brokers
To Customers
Risk placement
► Structuring
► Price discovery
► Application processing
► Servicing
Risk management
► Risk valuation, control and mitigation
► Business continuity management
Advisory
► Benefits and HR consulting
Customized services and administration
► Claims assistance
To Insurers
Cat Modeling and Valuation/Surveyor

8. Services by insurance brokers
Across major markets in the world, the nature of
services provided by brokers revolves around the
following:
 Understand client’s business and risk management philosophy
 Provide risk management and insurance consulting
 Highlight market knowledge and insights to customers including insurance
 covers and terms
 Provide underwriting information and other services such as modelling to
 insurers
 Help customers in deciding among quotes and policies
 Help customers during servicing and claims stage
 Assist customers and insurers through various value added services

9. Types of Brokers (Licensed by
IRDAI)
• Direct Broker
Carried out the Functions as specified under Regulation
3 either in the field of Life Insurance or General
Insurance or both on behalf of the clients.
• Reinsurance Broker
Arranges reinsurance for direct Insurers with Insurance
and Reinsurance
Companies.
• Composite Broker
Arranges Insurance for its Clients with Insurance
Companies and /Or
Reinsurance for Its Clients (Insurers)

10. Few Important Requirements-
Insurance Brokers
Type
1. Individual
2. Company
3. Co-operative Society
4. Any other approved by Authority Examination
Brokers Syllabus/National
Insurance Academy Pune
Capital
Paid-up Cap
Rs 75 Lakhs Direct Broker
Rs 4 Crores Reinsurance Broker
Rs 5 Crores Composite Broker
Remuneration
1. Life as per table
depending upon type of
product & premium paying
term - Max 30%
2. General- Max 17.5%Qualification Graduate

11. SUMMARY OF INDIAN LIFE INSURANCE SECTOR
PARTICULARS Unit 2013-14 2014-15 2015-16 2016-17
No of companies As on 31st March Nos. 24 24 24 24
No of life offices As on 31st March Nos. 11032 11033 11071 10954
Insurance penetration# In per cent 3.1 2.6 2.72 2.72
Insurance density# US $ 41 44 43.2 46.5
# Source: Swiss Re-sigma reports
BUSINESS FIGURES
Number of new policies issued FY In Lakhs 408.72 259.08 267.38 264.56
First year premium (Including single premium) FY In Crore 120325 113330 138766 175203
Total Premium FY In Crore 314302 328102 366943 418477
Market share of LIC (based on Total Premium) FY In per cent 75.39 73.05 72.61 71.81
Individual Business in Force (Number of policies) FY In Thousands 33802.2 326297 327065 328442
Individual Business in Force (Sum Assured) FY In Crore 6646516 7553045 8494502 9845204
INTERMEDIARIES
No of individual agents As on 31st March Nos. 2188500 2067907 2016565 2088522
No of corporate agents As on 31st March Nos. 689 503 416 456
Commission paid FY In Lakhs 2084637 1946068 2026669 2211715
Operating Expenses related to Insurance Business FY In Lakhs 3746541 3685916 3877789 4613888
POLICYHOLDERS' SERVICES
No. of claims submitted (Individual-death) FY No. of policies 873094 869332 869619 873462
No of claims submitted (Group-death) FY No of Lives 411647 452625 530949 706431
Amount Claimed (Individual) FY In Crore 11533.3 12516.94 13386.39 14479.45
Amount Claimed (Group) FY In Crore 3174.12 3588.61 4891.9 6326.09
Total Benefits Paid FY In Crore 216396 210915 204454 236340
Channel-wise New Business - Amount of Premium
(Individual plus Group)
Individual agents FY In Crore 48831.5 41246.70 41175.78 54983.81
Corporate agents-Banks FY In Crore 11327.2 12830.52 15253.83 20049.29
Corporate agents-Others FY In Crore 1252.36 1421.01 1582.02 1335.6
Brokers FY In Crore 1267.42 1451.03 1441.65 1757.9
Direct selling FY In Crore 57477.6 56218.38 78970.87 96451.74
MI Agents FY In Crore 17.19 21.26 20.22
Common Service Centres(CSCs) FY In Crore 0.32 1 1.54
Web-aggregators FY In Crore 0.03 46.36
IMF FY In Crore 0.03 14.52

12. SUMMARY OF INDIAN LIFE INSURANCE SECTOR (Continued.)
PARTICULARS Unit 2013-14 2014-15 2015-16 2016-17
On-line FY In Crore 302.83 418.06
Point of sale FY In Crore
others if any FY In Crore -1.13 -1.12
Total FY In Crore 120156 113185 138748 175078
Referrals FY In Crore 19.64 7.98 14.61 25.83
Channel Wise-New Business -
No. of Lives Covered (Individual plus Group)
Individual agents FY In Lakhs 484.37 285.89 248.01 237.03
Corporate agents-Banks FY In Lakhs 56.10 69.00 85.16 57.77
Corporate agents-Others FY In Lakhs 53.23 344.16 288.74 69.96
Brokers FY In Lakhs 41.09 57.94 87.62 141.36
Direct selling FY In Lakhs 713.68 725.22 1270.20 1546.75
Common Service Centres(CSCs) FY In Lakhs 0.02 0.08 0.06
MI Agents FY In Lakhs 5.08 5.49 6.86
Web Aggregators FY in Lakhs 0.00 0.19
IMF FY in Lakhs 0.00 0.03
Online FY in Lakhs 2.05 2.60
others if any FY in Lakhs 0.01 0.00
Total FY In Lakhs 1348.47 1487.31 1987.36 2062.61
Referrals FY In Lakhs 0.13 0.09 0.11 0.15
Region Wise distribution of Offices
Metro As on 31st March Nos. 1048 1083 1667 2425
Urban As on 31st March Nos. 2543 2489 3525 3136
Semi-urban As on 31st March Nos. 5381 4803
Rural As on 31st March Nos. 498 590
Unclassified As on 31st March Nos. 7441 7461
Total As on 31st March Nos. 11032 11033 11071 10954
Assets Under Management
Life Fund As on 31st March In Crore 1288225 1495309 1697453 1907953
Pension & General Annuity & Group fund As on 31st March In Crore 337579 389473 464203 566399
Unit ULIP Fund As on 31st March In Crore 331661 362740 340412 379841
Total Fund As on 31st March In Crore 1957466 2247522 2502068 2854193
Profit /Loss after tax As on 31st March In Lakhs 758783 761131 741543 772789
Equity Capital As on 31st March In Crore 25938.5 26239.6 26691.5 26956.94
REDRESSEL OF CONSUMER GRIEVANCES
No of grievances reported during the year FY Nos. 374620 278992 204701 120847
No. of complaints reported with the Ombudsmen at difference centres FY Nos. 17512 14339 17257 16744

13. SUMMARY OF INDIAN GENERAL (Non Life) INSURANCE SECTOR
PARTICULARS Remarks Unit 2013-14 2014-15 2015-16 2016-17
PROFILE
No of General Insurance companies (including reinsurers) As on 31st March 29 29 30 31
No. of foreign reinsurers branches including Lloyd's India As on 31st March 7
No. of branch offices As on 31st March Nos. 9872 10407 10803 11141
Insurance penetration In percent 0.80 0.70 0.72 0.77
Insurance density US $ 11 11 11.50 13.20
BUSINESS FIGURES
Number of new policies issued excluding
Standalone health Insurers FY In Lakhs 1048.23 1202.24 1257.61 1525.33
Gross Direct Premium (Within & Outside India) FY In Crore 79934 87151 99333 130971
Market share of PSUs - Gen.Ins.Cos.
Including specialised (GDP within India) In Percent 55.83 55.09 54.50 53.44
Segment Wise Gross Direct Premium (Within India )
Fire FY In Crore 7362.63 8056.54 8731.46 9538.01
Marine FY In Crore 3161.8 3020.06 2984.38 2917.47
Motor FY In Crore 33822.75 37379.32 42300.86 50250.53
Health FY In Crore 19634.3 22636.57 27457.30 34526.61
Others FY In Crore 13572.34 13593.24 14905.37 30895.72
Total FY In Crore 77553.81 84685.73 96379.37 128128.34
Net Retentions of General Insurers
(including indian reinsurers)
Fire FY In Percent 69.24 64.54 63.01 57.03
Marine Cargo FY In Percent 85.99 81.59 81.01 85.19
Marine Hull FY In Percent 31.94 35.47 44.51 20.03
Motor FY In Percent 100.00 99.67 99.20 97.02
Engineering FY In Percent 71.07 71.80 67.23 68.25
Aviation FY In Percent 1.00 38.91 27.15 27.85
Other miscellaneous FY In Percent 89.43 88.14 84.28 78.83
Total- All Segments FY In Percent 90.32 89.57 87.72 83.17
Incurred Claims Ratio
Fire FY In Percent 76.54 73.78 74.44 84.38
Marine FY In Percent 63.37 67.44 72.05 74.98
Motor FY In Percent 79.50 77.14 81.18 88.17
Health FY In Percent 97.05 96.93 98.46 101.05
Others FY In Percent 72.96 73.91 75.91 81.91
Total- All Segments FY In Percent 81.98 81.70 85.06 90.91
Underwriting Experience FY In Crore -7640.81 -10576 -14959 -18840.41
Assets Under Management As on 31st March 149536 172144 188126 222344
Equity Share Capital As on 31st March 10240.21 11504.31 12603.39 13127.82
Assigned capital of branches of foreign re-insurers As on 31st March In Crore 1117.81
Commission expenses FY In Lakhs 462369 521200 578649 660166
Operating expenses related to Insurance business FY In Crore 16250.67 20206.37 23245 25594.35
Income from investments FY In Crore 14319 16607 19077.82 21730.28
Profit after tax FY In Lakhs 464906 463913 323849 84538
REDRESSEL OF CONSUMER GRIEVANCES
No of grievances reported during the year 63335 60688 59083 52104
No. of complaints reported with the Ombudsmen at difference centres 8803 7145 8920 10883

14. Individual New Business
Performance of Life Insurers -
Brokers
Premium in Crores
INDIVIDUAL NEW BUSINESS PERFORMANCE OF LIFE INSURERS
Particulars Number of Policies Issued Amount of Premium
2013-14 2014-15 2015-16 2016-17 2013-14 2014-15 2015-16 2016-17
Brokers 315765 256740 246421 227614 948.43 1019.93 934.18 972.08
0.77 0.99 0.92 0.86 1.55 1.84 1.6 1.25
Total 40835064 25869356 26702452 26419617 60956.86 55398.95 58320.11 77725.68

15. Group New Business
Performance of Life Insurers -
Brokers
GROUP NEW BUSINESS PERFORMANCE OF LIFE INSURERS
Particulars Number of Schemes NUMBER OF LIVES COVERED
2013-14 2014-15 2015-16 2016-17 2013-14 2014-15 2015-16 2016-17
Brokers 1739 1943 1976 2462 3793588 5537280 8516066 13908119
4.7 4.97 5.51 6.95 4.04 4.51 4.95 7.73
Total 37033 39069 35875 35412 94011968 122861373 172033724 179841286
Amount of Premium
2013-14 2014-15 2015-16 2016-17
318.89 431.1 507.47 785.82
0.54 0.75 0.63 0.81
59199.17 57786 80428.06 97352.24

16. New Business Performance of General/Non
Life Insurers - Brokers Premium in Crores
GROSS DIRECT PREMIUM INCOME -
Non Life/GENERAL INSURANCE Insurance Brokers Total
Percentage
Share of
Brokers
Segment 2013-14 2014-15 2015-16 2016-17 2013-14 2014-15 2015-16 2016-17 2016-2017
Fire 1818.62 2107.99 2393 2844.93 7407.1 8054.69 8701 9537.43 29.83
Marine (Cargo) 741.48 794.58 868 929.71 2027.53 2063.41 2127 2125.24 43.75
Marine (Hull) 151.36 132.33 153 134.39 1127.11 956.3 863 792.33 16.96
Aviation 119.56 104.75 84 94.85 447.64 419.01 447 428.53 22.13
Engineering 901.58 909.39 855 838.84 2495.64 2339.28 2372 2294.37 36.56
Motor Own Damage 4917.26 5451.17 6231 9031.29 17768 18019.14 21325 23728.09 38.06
Motor Third Party 2713.42 3052.77 3945 4632.37 15873.4 19547.21 20989 26522.52 17.47
Liability 604.27 673.25 776 945.33 1253.47 1353.72 1562 1892.61 49.95
Personal Accident 289.19 316.07 390 476.67 1822.53 2163.34 2613 3645.74 13.07
Health Insurance 3978.81 4610.39 6423 8711.99 17204.1 19800.17 24372 30329.75 28.72
Overseas Medical Insurance 76.59 113.34 138 148.33 434.76 489.85 530 586.83 25.28
Crop Insurance 48.24 201.35 59 319.58 4610.75 6247.74 5551 20097.29 1.59
Credit Insurance 87.46 116.11 148 142.21 1429.32 1494.09 1512 1442.74 9.86
Miscellaneous 581.34 608.42 720 1220.96 3501.58 1736.92 3414 4705 25.95
Grand Total 17029.21 19201.92 23184 30471.5 77402.9 84684.87 96379 128128.4 23.78

17. Few Existing Challenges
 The insurance sector is being impacted due to
weak distribution networks, generating the need to
strengthen the distribution network to support the
sector as a whole. The industry is also marred by
issues faced by the consumer such as complicated
policies, policies being ‘mis-sold’, and hassles with
claims. It could be due to information asymmetry
between the insurance players and the customers.
Traditional channels (agents) have been unable to
resolve this, and have sometimes, unwittingly, even
added to the problem. Through technology
powering the buying of insurance products across
insurers in a simple, quick and personal manner for
the user, these issues can be addressed in a
seamless manner.

18. Insurance Industry - The Way
Forward
 The insurance industry is set to undergo a
massive change, moving from a seller’s
market to a buyer’s market, with insurance
broking being the only channel to represent
the customer. Though broking registered
the highest CAGR of 27.7% between FY10
and FY15 among the major channels in
non-life insurance, the channel is still
evolving and needs to meet risk
management requirements of customers
comprehensively. Besides some concerns
about regulations, most brokers are
optimistic about their growth in the coming
years.

19. Insurance Industry – India
 The insurance industry of India consists of 57 insurance companies
of which 24 are in life insurance business and 33 are non-life
insurers. Among the life insurers, Life Insurance Corporation (LIC) is
the sole public sector company. Apart from that, among the non-life
insurers there are six public sector insurers. In addition to these,
there is sole national re-insurer, namely, General Insurance
Corporation of India (GIC Re). Other stakeholders in Indian
Insurance market include agents (individual and corporate), brokers,
surveyors and third party administrators servicing health insurance
claims.
 Out of 33 non-life insurance companies, five private sector insurers
are registered to underwrite policies exclusively in health, personal
accident and travel insurance segments. They are Star Health and
Allied Insurance Company Ltd, Apollo Munich Health Insurance
Company Ltd, Max Bupa Health Insurance Company Ltd, Religare
Health Insurance Company Ltd and Cigna TTK Health Insurance
Company Ltd. There are two more specialised insurers belonging to
public sector, namely, Export Credit Guarantee Corporation of India
for Credit Insurance and Agriculture Insurance Company Ltd for crop
insurance.

20. Insurance Industry – India Continued
Market Size
 Government's policy of insuring the uninsured has
gradually pushed insurance penetration in the country
and proliferation of insurance schemes are expected to
catapult this key ratio beyond 4 per cent mark by the
end of this year, reveals the ASSOCHAM latest paper.
 The number of lives covered under Health Insurance
policies during 2015-16 was 36 crore which is
approximately 30 per cent of India's total population.
The number has seen an increase every subsequent
year as 28.80 crore people had the policy in the
previous fiscal.
 Premium income of the life insurance segment had
increased 14.04 per cent in FY17 to Rs 4.18 trillion
(US$ 64.92 billion). In August 2017, the Life Insurance
industry reported a 24 per cent growth in overall
annualised premium equivalent with the help of both
private players and Life Insurance Corporation.

21. Insurance Industry – India Continued
Market Size
 Post liberalisation, the insurance industry in India
has recorded significant growth.
 The Indian insurance industry is expected to grow
to US$ 280 billion by FY2020, owing to the solid
economic growth and higher personal disposable
incomes in the country.
 Premium income of the life insurance segment had
increased 14.04 per cent in FY17 to Rs 4.18 trillion
(US$ 64.92 billion). The total insurance market
expanded from US$ 23 billion in FY05 to US$
84.72 billion in FY17.

22. Broking Regulations
 Insurance Regulatory and
Development Authority of India
(Insurance Brokers) Regulations,
2018

23. OverView – One of the Regulations for
Insurance Broker
 IRDAI opened Indian market to Insurance
brokers in 2003 and slowly Insurance brokers
in India are taking baby step towards
becoming at par with global insurance
brokers. Of late IRDAI has started permitting
insurance brokers in India to give
consultation to settle claims up to Rs 1 Crore
against a fee. As the process of getting the
insurance broker license in India is very
tough, many times more tough than many
foreign countries, we believe that IRDAI is
laying foundation to a strong insurance
brokerage industry and going forward would
allow lot of additional role to the insurance
broker in India, which would be beneficial to
the clients.

24. Government Schemes
 Karnataka Buildings Construction
Welfare Board
 Karnataka Labour Welfare Board
 Karnataka Government Insurance
Department
 Niramaya Scheme
 Pradhan Mantri Fasal Bima Yojana
 National Health Insurance Scheme
(Aayushman Bharat)
 Other Various Social Security Schemes

25. References
 www.bimagenie.com/content/insurance-brokers-india-global-
scenario
 bwdisrupt.businessworld.in/article/Insurance-Broking
 IC 14 Regulations of Insurance Business Book of Insurance Institute
of India Mumbai
 www.ibef.org/ insurance report
 IRDAI Hand Book on Indian Insurance Statistics 2016-2017

26. Thank You