The average premium per policy of a life insurance policy has decreased by nearly 8% in FY12 over last year, according to a study carried out by Deloitte India. The study, called Life Insurance Channel Management Benchmarking Study 2012, included nine Indian private life insurers as participants.
According to the study, insurers with higher vintage (over eight years of existence) managed to retain the ticket size of regular premium policies at around Rs 32,000 in FY’12, similar to that of last year. The younger insurers observed a decline in average ticket size of regular premium policies by nearly 16% from around Rs 34,500 in FY11 to about Rs 29,000 in FY12.
“Older insurers, along with their more experienced channel partners have been able to respond to changes in regulations, especially related to Ulips, better than the younger insurers by refining their product portfolio more swiftly. Younger players are relatively more reliant on captive channels and customer base, making it difficult to alter focus on customer segments and channelsâ€, says Sachin Sondhi, Senior Director, Deloitte India.
Bancassurance among all channels continues to procure the highest ticket size business followed by broking and direct channels. Whereas ticket size for bancassurance channel decreased by about 7%, policy procured by direct and broker channels, which have lesser reliance on ULIP products, witnessed an increase in ticket size over the last three years. Direct channel witnessed the highest increase of 20% in ticket size at Rs 27,400 in FY’12 as against Rs 22,900 in FY’10.
Geographically, the top five cities (Mumbai, New Delhi, Kolkata, Chennai and Bangalore) contributed to nearly 34% of the total business of the surveyed insurance companies. However, insurance companies with higher vintage had greater penetration beyond larger cities compared to the others. The study shows that while bancassurance channel provides the insurers with the highest penetration in bigger cities, agency channel have a larger play in smaller cities.
As far as bancassurance partnership goes, even though PSU banks have higher branch network, share of bancassurance business for from PSU Banks was almost equal to that of Private Banks, as older players largely have private banks as their Banca partners while new insurance companies have PSU banks as their partners.
“Banks, especially the PSU banks, which have better branch network in smaller cities compared to insurers, are yet to fully leverage their branch network for distributing insurance. Banks have an opportunity to play larger role in increasing insurance penetration in smaller towns†says Sondhi.
The report also said that newer players are better leveraging the internet channel. Nearly, a quarter of the direct business for new players was driven by Internet channel.
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