PwC’s Insurance Insights

Analysis of regulatory changes and impact

assessment, July 2018

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PwC’s Insurance Insights

Preface Key guidelines issued by the Authority in July 2018 Contacts

Importance and emergence of group insurance globally

Importance and emergence of group insurance globally1

This edition highlights the importance
and emergence of group insurance
policies over the last few years.
The group insurance market has
an approximate value of around 65
billion US$. Although there has been
consistent growth of around 3.5-4%
over the last few years, the changing
dynamics of employer-employee
relationship and the need to reform
group benefit needs has led to this
market becoming an attractive area
of investment.
Drivers in the change in
employee-employer dynamic
One of the key issues affecting the
growth of group insurance has been
the change in the relationship between
employers and their employees. With
the workforce having a more modern
outlook, employers are now having to
offer relevant solutions to meet their
expectations. Another driver affecting
the relationship between two parties
is that employers are now looking
for ways to enhance experiences of
employees outside of the workplace.
This includes activities such as flexible
working hours and rewards based
on the well-being of the employee.
Recently, employers have had to look
for ways to provide self-directed tools
and advice that allows employees
to manage their overall well-being
and enhance their productivity at
work. These trends have continued
to shape the group insurance market
and made group insurers reposition
their business and operating models.
Understanding these trends has
helped group insurers to deliver high
quality products with more focus on
improved customer experience.
Global regulations
Regulation in insurance has become a
very important issue over the last few
years. Insurance plays many different
roles in different countries. However,
in order to ensure that people that are
being insured are being fairly treated,
it is important that regulations are in
place. In case of group policies in the
UK, the Financial Conduct Authority
( FCA) requires that a firm should
provide information to its customers
to pass on to other policyholders and
also that the customer should be told
that to provide information to each of
the policyholders.

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PwC’s Insurance Insights
Importance and emergence of group insurance globally
Group insurance in India
In India, group insurance guidelines
were introduced by the IRDA in
2005. These guidelines stated the
applicability, the administration and
the marketing of group insurance
policies. In 2011, IRDA had issued a
clarification regarding implementing a
service charge, and that this should be
disclosed as an additional cost and not
as part of the premium from members
of the policy. In the life insurance
market, we see that there are more
lives that are being covered under
group schemes, which matches the
trend that is seen globally. However,
what is interesting to note is that over
the last one year particularly, there is
more premium that is generated from
private life insurers as compared to
public sector life insurance companies.
In the case of LIC, there has been a fall
in premium generation from group
schemes of more than 48%.
Especially in group insurance, private
life insurers enjoy more than 90% of
the market share.
3 PwC
Preface Key guidelines issued by the Authority in July 2018 Contacts
Number of lives covered under group schemes
Type of Insurer Up to 30 June 2017 Up to 30 June 2018 Growth in %
Private Life 28395353 36199531 27.48
LIC 6368953 3308615 -45.08
Grand Total 34764306 39508146 -
Our point of view
Group insurance is increasingly
becoming important as a business
platform to meet the needs of
employees including employee’s
health, wealth management and long-
term career needs. It is also helping
employers offer different solutions
to their employees to maintain
employee satisfaction levels and
therefore, continue to increase worker
productivity. The existing players in
this market will not be able to stay
stagnant due to different ideas and
business models that are arising and
are changing the dynamics of the
group insurance market. The focus for
new players in the market should be
on creating customer-centric operating
models that use new business and
technologies to enhance the business
to customer relationship.
PwC’s Insurance Insights
PwC’s Insurance Insights

Importance and emergence of group insurance globally Key guidelines issued by the Authority in July 2018 Contacts

Preface

A snapshot of premium underwritten Life insurance sector

across the life insurance industry and Premium in crore (INR)
total number of policies issued by the
general insurance industry have been 30000.00
highlighted below:
25000.00
• In the life insurance segment, there has 20000.00
been no change in the market share
15000.00
of LIC for June 2018 and it continues
10000.00
to enjoy 67% of the market share.
LIC continues to be the leading life 5000.00
insurance provider in the country. 0.00
Upto 30 June 2017 Upto 30 June 2018
• Over the last ten years, the total
gross direct premium generated Private life insurers LIC
from the general insurance industry Source: IRDA
has increased by almost five times.
In 2007-08 the total premium was General insurance sector
29,298 crores INR and by the end of Total Gross Direct Premium ( INR Crores)
the 2017-18 financial year, this amount Year Total
has gone up significantly to 128,178 2007-08 29498
crores INR. 2008-09 32488
• Over the last ten years, it was observed 2009-10 38043
that the gross insured claims in the 2010-11 46949
general insurance sector has risen 2011-12 58090
22,036 crores INR during the financial 2012-13 69186
year 2007-08 to 112,371 crores INR at
2013-14 77525
the end of the financial year 2016-17.
2014-15 84686
The compound annual growth rate
(CAGR) was 19.8% during this period. 2015-16 96379
2016-17 128128
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Importance and emergence of group insurance globally Key guidelines issued by the Authority in July 2018 Contacts

Preface

Gross Direct Premium ( INR Crores) Growth Rate in Premium

140000 35

120000 30

100000 25
80000 20
60000 15
40000 10
20000 5
0 0
2008-09
2007-08

2009-10

2010-11

2014-15

2016-17
2012-13

2013-14

2015-16
2011-12

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17
Source: Indian Non-Life Insurance Industry Yearbook 2016-17 Source: Indian Non-Life Insurance Industry Yearbook 2016-17
Percentage growth in premium in general insurance Gross insured claims ( INR crores)
Year Total Year Total
2007-08 12.98 2007-08 22036
2008-09 10.13 2008-09 27900
2009-10 17.10 2009-10 31925
2010-11 23.41 2010-11 40254
2011-12 23.43 2011-12 54201
2012-13 19.10 2012-13 51105.00
2013-14 12.05 2013-14 64087
2014-15 9.24 2014-15 72046
2015-16 13.81 2015-16 79257
2016-17 32.94 2016-17 112371

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PwC’s Insurance Insights

Importance and emergence of group insurance globally Key guidelines issued by the Authority in July 2018 Contacts

Preface

Gross insured claims (INR crores)

120000 112371
100000
79257
80000 72046
64087
60000 54201 51105
40254
40000 27900 31925
22036
20000
0
2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

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PwC’s Insurance Insights

Importance and emergence of group insurance globally Preface Contacts

Key guidelines issued by the Authority in July 2018

PUC Certificate at the time of renewal of insurance of vehicle-directions2

Ref: IRDA/NL/CIR/MISC/104/07/2018 Date of issue: 6 July 2018 Applicability: All CEOs and CMDs of general insurance companies

Introduction Implications for insurers Our point of view

With reference to the order dated
10 August 2017, passed by the
Honourable Supreme Court of India
in Writ Petition (Civil) No. 13029 of
1985 in M.C. Mehta v. Union of India
and Others, the honourable court
has directed insurance companies
to insure vehicles only if it has a
valid pollution under control (PUC)
certificate on the date of renewal of
the insurance policy.
• At the time of renewal of motor
insurance, insurance companies
will now be required to obtain PUC
certificates from clients whereas
previously no additional documents
were required for renewal of third-
party motor insurance.
• The linking of vehicle insurance
with the PUC certificate is expected
to have a strong and positive impact
in the levels of compliance of
vehicle drivers.
• As PUCs are now mandatory
for clients to renew their motor
insurance, the regulator has ensured
that there are social benefits
arising from this. This will require
vehicle drivers to maintain their
motor vehicles properly, hence
benefiting the environment also.
This will ensure increased levels of
compliance from vehicle drivers.

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Importance and emergence of group insurance globally Preface Contacts

Key guidelines issued by the Authority in July 2018

Payments to IRDAI Bank Accounts3

Ref: IRDA/ INT/CIR/IMF/102/07/2018 and IRDA/

Date of issue: 6 July 2018
SUR/CIR/MISC/103/07/2018

Introduction
Basis the said circulars, IRDAI has brought to the notice of all concerned that any remittances to be made to IRDAI bank accounts should be through designated
bank accounts only, whose details are given below:

Applicability Bank account no. Nomenclature of the account Nature of payment Name of bank, branch and IFSC
IMFs and 860120110000663 IRDAI IMF FEES • Registration fees Bank of India, Basheer Bagh Branch
prospective • Renewal, annual and license fees BKID0008601
applicants
• Processing fees
• Any other fees, which may be applicable from time to time
860120110000682 IRDAI PENALTY RECEIPTS • All penalties levied by Bank of India, Basheer Bagh Branch
• the Authority on all regulated entities. BKID0008601
Surveyors and 076202000003000 IRDA • All the fees related to Surveyors. Indian Overseas Bank Parliament Street
prospective • Any other fees which may be applicable from time to time Branch, New Delhi
applicants IOBA0000762
860120110000682 IRDAI PENALTY RECEIPTS • All penalties levied by the Authority on all regulated entities. Bank of India, Basheer Bagh Branch
BKID0008601

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Importance and emergence of group insurance globally Preface Contacts

Key guidelines issued by the Authority in July 2018

In addition to the above, it is necessary

for the applicants to inform the
Accounts Department of IRDAI that
the remittance made in the bank
accounts mentioned above should be
in the prescribed format according
to Annexure I. The same should be
mailed to accounts [at] irda [dot] gov
[dot] in with a copy marked to imf [at]
irda [dot] gov [dot] in, in case of IMFs
and prospective applicants. It should
be mailed to accounts [at] irda [dot]
gov [dot] in with a copy marked to
surveyors [at] irda [dot] gov [dot] in,
in case of Surveyors and prospective
applicants, on the day of making the
remittance.

Implications
In case any remittance is made to
the above mentioned bank accounts
violating the prescribed format and
done without sending the above
mentioned confirmation mail will not
be taken into account by IRDAI.

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Importance and emergence of group insurance globally
Unclaimed amount of policyholders4
Ref: Master Circular IRDA/F&A/CIR/
Misc/173/07/2017 dated 25 July 2017
Introduction
Reference is drawn to Para 6(10)
of the issued vide Circular Ref:
Master Circular IRDA/F&A/CIR/
Misc/173/07/2017 dated 25 July
2017, insurers need to disclose
amounts remitted to the Senior
Citizens’ Welfare Fund (SCWF) as
contingent liability as part of their
financial statements. Currently, this
rule stands withdrawn and they do not
need to disclose the amount that has
been remitted to SCWF effective
from FY 2018-19.
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Preface Contacts
Key guidelines issued by the Authority in July 2018
Date of issue: 11 July 2018 Applicability: To, CMDs/CEOs all Life/General/Health Insurers
Our point of view
This is a good drive initiated by the
regulator as it allows for the benefits
of senior citizens to be looked after.
After a tenure of 10 years, if there
is any unclaimed amount from
policyholders, it will be transferred
to the SCWF, which will help manage
senior citizens funds, thereby
providing a benefit to the entire
social sector.
PwC’s Insurance Insights
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Importance and emergence of group insurance globally
Constitution of working group on life insurance product regulations5
Ref: IRDAI/ACT/REG/ PRO/ 111/07/2018
Introduction
With reference to the order dated
12 January 2017 for reviewing
IRDA (Linked Insurance Products)
Regulations 2013 and IRDA (Non-
Linked Products) Regulations 2013,
a committee was constituted by the
Authority. A report dated 7 December
2017 was submitted by the Committee,
with their recommendations on the
above mentioned regulations.
The Authority further constituted a
working group, whose responsibilities
are as follows:
• Review recommendations of the
‘Committee on Review of Product
Regulations – Life’.
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Preface Contacts
Key guidelines issued by the Authority in July 2018
Date of issue: 17 July 2018 Applicability: To all
• Examine the feedback received from the regulator aims to have products
various stakeholders on the above that are customer-centric in nature,
mentioned Committee report. which in turn, will provide benefits to
policyholders. With this committee
• Prepare the draft product
in place, the regulator will be able
regulations considering the
to review the product regulations,
above report and feedback as
and thereby receive feedback on the
reference points.
various products currently being
Furthermore, the working group offered in the insurance market.
should meet once a month from
the date of constitution of the
working group for submitting their
recommendations to the Member
(Actuary).
Our point of view
With the focus of the committee
being on reviewing linked insurance
products and non-linked products,
PwC’s Insurance Insights
PwC’s Insurance Insights

Importance and emergence of group insurance globally Preface Contacts

Key guidelines issued by the Authority in July 2018

Constitution of committee for motor third party pricing for 2019-206

Ref: IRDA/NL/ORD/MOTP/112/07/2018 Date of issue: 20 July 2018 Applicability: To all

Introduction • Any other matter relevant to motor

Based on the circular, IRDAI has decided
to constitute a committee for the
purpose of examining matters pertaining
to Motor Third Party pricing as well as
to provide recommendations on pricing
for the year 2019-20. The tenure of the
Committee will be up to 31.12.2018.
The functions of the Committee are
as follows:
• Examine motor third party insurance
pricing aspects, which mainly includes
data related, and recommend prices
for 2019-20.
• Revisit the classification of vehicles
keeping in view latest developments in
the industry.
third party pricing.
Our point of view
• With the formation of the committee,
the regulator is focusing on the
importance of third party motor
insurance. This is a good drive initiated
by the regulator wherein with the
growing complexity of automation and
Insurtech, steps are being taken to set
realistic premiums with respect to the
Motor Third Party Insurance, which
will in turn, benefit the policyholders
in the long run.

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Importance and emergence of group insurance globally
Constitution of working group for standardisation of exclusions in Health Insurance Contracts7
Ref: IRDAI/HLT/ORD/Misc/113/07/2018
Introduction
With the growing importance given
to standardisation in the health
insurance industry and to enhance
transparency and uniformity, the said
circular mentions guidelines issued by
the Authority such as standardisation
of terminology, which is to be used in
Health Insurance Policies and Standard
Nomenclature and Procedure for Critical
Illnesses. Furthermore it is stated in
the circular that it is desirable for the
industry to adopt a uniform approach
while incorporating the ‘exclusions’ as
part of product design as well as for the
wording of the ‘exclusions’.
For the purpose of scrutinising the
above mentioned issue and submitting
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Preface
Date of issue: 24 July 2018
appropriate recommendations, a
working group was formed with the
following functions:
• Examine exclusions that are prevalent
in health insurance policies
• Rationalise exclusions by minimising
the number, to enhance the scope of
health insurance coverage granted
• Rationalise the exclusions that
disallow coverage with respect to
new modalities of treatments and
technologically advanced medical
treatments
• Identify the type of exclusions which
should not be allowed
• Study wordings or language of
exclusions and standardise the
Contacts
Key guidelines issued by the Authority in July 2018
Applicability: To all
wordings of exclusions in a simple and Our point of view
easily understandable language
With the panel examining exclusions
• Study the scope for allowing individual that are predominant in the health
specific and/or ailment or disease insurance industry, the view of the
specific permanent exclusions at regulator is to enhance the scope of
the time of underwriting so that the insurance coverage in terms
policyholders are not denied health of critical illnesses covered. In a
insurance claims unrelated to significantly consumer-centric step, the
exclusions regulator has focused on minimising
the number of illnesses or diseases that
• Any other matter relevant to the
are not covered under various existing
subject of exclusions
health insurance policies.
Furthermore, it is advisable that the
working group should hold meetings
as and when required, and is mandated
to submit a report along with the
recommendations within eight weeks
from the date of this order.
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Importance and emergence of group insurance globally
Modified guidelines on standards and benchmarks for hospitals in the provider network8
Ref: IRDAI/HLT/GDL/CIR/114/07/2018
Introduction
Reference is drawn to Clause (a) and
Clause (b) of Chapter IV of Guidelines
on Standardization in Health
Insurance issued vide Circular Ref:
IRDA/HLT/REG/CIR/146/07/2016
dated 29 July 2016, on examining the
standards and benchmarks specified
in the same.
The modified clauses (a) and (b) are
issued stating the following:
• It is mandated by the authority that
all the existing network providers,
within twelve months from the
date of notification of modified
guidelines, should comply with the
following:
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Preface
Date of issue: 27 July 2018
1. Register with Registry of Hospitals
in the Network of Insurers
(ROHINI) maintained by Insurance
Information Bureau (IIB).
[https://rohini.iib.gov.in/].
2. Obtain either Pre-entry level
Certificate (or higher level of
certificate) issued by National
Accreditation Board for Hospitals
and Healthcare Providers (NABH)
or State Level Certificate (or higher
level of certificate) under National
Quality Assurance Standards
(NQAS), issued by National
Health Systems Resources Centre
(NHSRC).
From the date of notification of these
modified Guidelines, the network
Contacts
Key guidelines issued by the Authority in July 2018
Applicability: To all insurance companies and third
party administrators (TPAs)
providers should comply with the
requirements stipulated in Clause
(a) (i) as mentioned above. On the
other hand, these network providers
are required to comply with the
requirements specified in Clause (a)
(ii) as mentioned within one year
from the date of enlisting as a Network
Provider and this should be one of
the conditions of Health Services
Agreement.
• Insurers and TPAs may also
strive to get hospitals involved in
reimbursement claims to meet the
requirements specified in Clause (a)
(i) and (a) (ii) as mentioned above.
These modified guidelines are
applicable with immediate effect.
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Importance and emergence of group insurance globally Preface Contacts

Key guidelines issued by the Authority in July 2018

Modified guidelines on standards and benchmarks for hospitals in the provider network8

Applicability: The Chairman- Cum- Managing Directors/ Chief

Ref: IRDA/NL/GDL/F&U/115/07/2018 Date of issue: 31 July 2018
Executive Officers of General Insurance Companies

Introduction companies to generate UIN for their

products. The generation of this
According to the Guidelines on
number is subject to the products
Product Filing Procedures, general
meeting interests of policyholders
insurance products are required to
and also meeting respective
use the ‘use and file’ procedure. In
regulatory guidelines.
terms of managing the diligence
of the procedure, the product Our point of view
management committee and the
The UIN allows for greater
senior management of the insurance
monitoring of products by the
company are responsible for making
regulator. The IRDA can further
sure that products are designed
scrutinise whether products are
appropriately and are within
meeting minimum specifications.
the interests of the policyholder.
By having a centralised system,
According to the policy, the
the regulator can further assess
authority will be allocating Unique
the impact these products are
Identification Numbers (UIN) to
having on policyholders, whether
these products. From 1 August 2018,
these products are beneficial to the
the Business Analytics Project (BAP)
policyholder.
tool will allow general insurance

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Importance and emergence of group insurance globally Preface Key guidelines issued by the Authority in July 2018

Contacts

Vivek Iyer Joydeep K Roy Dnyanesh Pandit Saigeeta Bhargava

Partner Partner Director Associate Director
vivek.iyer@pwc.com joydeep.k.roy@pwc.com dnyanesh.pandit@pwc.com saigeeta.bhargava@pwc.com
Mobile: +91 9167745318 Mobile: +91 9821611173 Mobile: +91 9819446928 Mobile: +91-9560518833

Yugal Mehta Varsha Mehrotra Prateek Kannan

Manager Consultant Consultant
yugal.mehta@pwc.com varsha.mehrotra@pwc.com prateek.kannan@pwc.com
Mobile: +91 9970163293 Mobile: +91 83890640211 Mobile: +91 9840753109

16 PwC PwC’s Insurance Insights

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