PWC'S INSURANCE INSIGHTS ANALYSIS OF REGULATORY CHANGES AND IMPACT ASSESSMENT FOR MARCH 2018 - PWC INDIA
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PwC’s Insurance Insights
Analysis of regulatory changes and impact
assessment for March 2018
Click to launch
PwC’s Insurance Insights
Our point of view on recent trends in insurance Other key guidelines issued by the Authority during the month of March 2018 Contacts
Preface
During the month of February 2018, company as the leading life
the insurance sector witnessed an insurance provider in the country.
increase in the amount of premiums In terms of insurance policies issued
collected. Specifically within the life upto February 2018, LIC issued
insurance sector, the Life Insurance a significant amount of policies,
Corporation of India (LIC) continues totalling to more than double those
to dominate the market share. A of private life insurers. However, at
brief outlook at the general and the same time, private life insurers
life insurance sectors, in terms of have held a significant market share
premium collection, market share, in terms of the number of lives
number of policies issued and lives covered under group schemes.
covered, has been presented below.
• Within the general insurance sector,
• The figures clearly depict the there has been growth in revenues
dominance of the public sector in earned by companies. Private
terms of premium collection and and public sector general insurers
market share in both life and both continue to enjoy a large
general insurance. market share in the general
insurance sector.
• In the case of life insurance, the
market share of LIC has increased
by almost 70%,1 cementing the
1
IRDAI
2 PwC PwC’s Insurance Insights
PwC’s Insurance Insights
Our point of view on recent trends in insurance Other key guidelines issued by the Authority during the month of March 2018 Contacts
Preface
General insurance sector Life insurance sector
New business premium (in crore INR) Premium in crore INR
140000.00
Premium in crore INR
140000.00
120000.00 120000.00
100000.00 100000.00
80000.00
80000.00
60000.00
60000.00
40000.00
40000.00
20000.00
20000.00
0.00
0.00
Private and public sector Stand-alone private Specialised PSU
For February For February Up to 28 Up to 28
general insurers health insurers insurers
2017 2018 February 2017 February 2018
General insurers 3944.09 5248.24 41250.19 48891.40
Private life insurers
For February 2017 For February 2018 LIC 6847.59 8476.73 99096.57 115803.52
Up to 28 February 2017 Up to 28 February 2018 Private life insurers LIC
Market share up to February 2018 Market share up to February 2018
5% 6%
Private and public sector general insurers 30%
Stand-alone private health insurers Private life insurers
Specialised PSU insurers LIC
70%
89%
Source: IRDAI Source: IRDAI
3 PwC PwC’s Insurance Insights
PwC’s Insurance Insights
Our point of view on recent trends in insurance Other key guidelines issued by the Authority during the month of March 2018 Contacts
Preface
Number of policies/schemes Number of lives covered under group schemes
18000000.00
16000000.00
120000000.00
14000000.00
12000000.00 100000000.00
10000000.00 80000000.00
8000000.00 60000000.00
6000000.00
40000000.00
4000000.00
2000000.00 20000000.00
0.00 0.00
For February For February Up to 28 Up to 28 For February For February Up to 28 Up to 28
2017 2018 February 2017 February 2018 2017 2018 February 2017 February 2018
Private life insurers 577011.00 593619.00 5191670.00 5753415.00 Private life insurers 7575619.00 12295768.00 110722234.00 106343590.00
LIC 1761155.00 1851386.00 15344205.00 16725281.00 LIC 2478179.00 8251467.00 43305652.00 46893195.00
Private life insurers LIC Private life insurers LIC
Source: IRDAI Source: IRDAI
4 PwC PwC’s Insurance Insights
PwC’s Insurance Insights
Preface Other key guidelines issued by the Authority during the month of March 2018 Contacts
Our point of view on recent trends in insurance
In this edition, we wish to focus upon more than 25% of motor insurance masters accordingly. In order to
the significance of motor insurance. policies written in 2015–16 were that simplify and promote ease of selling
In India, it is mandatory to avail third of new vehicles and more than 70% motor insurance policies:
party motor insurance. Surprisingly, of policies were associated with less
• The Authority has recently issued
motor insurance is one of the largest than 6 year old vehicles. This is an
Guidelines on Motor Service
portfolios for general insurers and indication of the number of uninsured
Providers regularising the role
it has contributed nearly 39% to the vehicles on the roads.2
played by automobile dealers
gross direct premium written by
While there are several initiatives in selling and servicing motor
general insurers in 2016–17.
that are being undertaken by the insurance policies.
The segment assumes significance Government of India through its
• The Authority has also recently
also because of third party insurance, legislative and executive powers and
issued an Exposure Draft on
which is mandated by law. Due to its the Authority through its regulatory
Telematics, which has the potential
controlled pricing mechanism and framework, statistics indicate that
to revolutionise the pricing
high-loss ratios, third party motor much more needs to be done. Further,
mechanism of motor insurance by
insurance has been subject to close several initiatives have been taken by
the use of technology in assessing
regulatory supervision and has the Authority to promote motor third
the risks posed by a particular driver
experienced many ups and downs. party liability insurance awareness,
or a particular vehicle.
for which the Authority personally
Another analysis conducted by
publishes the premium rates each • The Authority has also permitted
the Insurance and Regulatory
year, which every insurer needs to the sale of simple motor insurance
Development Authority of India
comply with and set their premium policies through point of
(IRDAI [the Authority]) shows that
sale persons.
2
IRDAI Journal. (September 2017). Motor insurance in India.
Retrieved from https://www.irdai.gov.in/ADMINCMS/cms/Uploadedfiles/IRDAI%20Journal%20September%202017.pdf
5 PwC PwC’s Insurance Insights
PwC’s Insurance Insights
Preface Our point of view on recent trends in insurance Contacts
Other key guidelines issued by the Authority during the month of March 2018
Directions of High Court of Delhi at New Delhi on Exclusions related to Genetic Disorders3
Ref: IRDAI/HLT/REG/CIR/046/03/2018 Date of issue: 19 March 2018 Applicability: To all Life, General and Health Insurers
Introduction Implications for insurers genetic disorder will get insured.
At the time of underwriting policies,
The Authority recently directed all • No claim in respect of any existing
insurance companies are free
insurance companies to re-look at health insurance policy shall be
to refuse health insurance to
their exclusionary clauses in insurance rejected based on exclusions related
customers they see as unfit.
contracts and ensure that they do not to genetic disorders.
However, once insured, the insurer
reject claims on the basis of exclusions
• Insurers are not allowed to include can’t deny a claim on the grounds of
relating to genetic disorders.
genetic disorders as one of the a genetic disorder.
The basis for this direction was the exclusions in the new health
recent judgment in the case of M/s insurance policies issued in respect
United India Insurance Company of all their existing health insurance
Limited vs Jai Parkash Tayal, wherein products and also in the new
the Hon’ble High Court of Delhi held products launched and/or filed
that the exclusionary clause of genetic under the provisions of Guidelines
disorders in insurance policies is too on product Filing in Health
broad, ambiguous and discriminatory Insurance Business dated
and thus violates Article 14 of the 29 July 2016.
Constitution of India.
• The notification, however, does not
indicate that a person with a known
3
https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo3426&flag=1
6 PwC PwC’s Insurance Insights
PwC’s Insurance Insights
Preface Our point of view on recent trends in insurance Contacts
Other key guidelines issued by the Authority during the month of March 2018
The Prevention of Money-laundering (Maintenance of Records) Second and Seventh Amendment
Rules 20174
Applicability: To all life and general insurers
Ref: IRDA/SDD/CIR/MISC/047/03/2018 Date of issue: 20 March 2018
(Including Standalone Health Insurers)
Introduction Implications for insurers
On 1 June 2017, the Government of • In case of existing insurance policies,
India issued a notification stating that the date for linking Aadhaar has
Aadhaar and PAN/Form 60 would been extended till the verdict is
be made mandatory for availing any announced by the Hon’ble Supreme
financial services, including insurance. Court of India.
Further, it was clarified in circular
• In case of new insurance policies,
IRDAI/SDD/MISC/CIR/248/11/2017
insurers should collect Aadhaar
that an Aadhaar number would
details and PAN/Form 60 from
be required to be linked to an
their clients within six months from
insurance policy.
the starting date of the account-
In light of the recent petition of the based relationship. In cases where
Hon’ble Supreme Court of India dated clients do not have their Aadhaar
13 March 2018, the deadline for details, they can provide any official
linking Aadhaar has been extended valid document, as mentioned
till the matter has been heard and the under the Prevention of Money
judgement has been declared. -Laundering (Maintenance of
Records) Rules, 2005.
4
https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo3427&flag=1
7 PwC PwC’s Insurance InsightsPwC’s Insurance Insights
Preface Our point of view on recent trends in insurance Contacts
Other key guidelines issued by the Authority during the month of March 2018
Premium Rates for Motor TP Liability Insurance Cover for FY 2018-195
Ref: IRDA/NL/NFTN/MOTP/053/03/2018 Date of issue: 28 March 2018
Introduction Implications for insurers
The Authority had released an • Insurers, on an immediate basis, will
exposure draft on 7 March 2018 on have to configure their systems and
the revision of premium rates for amend their premium masters and
motor third party insurance covers, underwriting policies in compliance
inviting comments from all concerned with the said guidelines.
stakeholders. Pursuant to comments
• Insurers are not allowed to cancel
received from the stakeholders and
current insurance policies and
examination by the Authority, the
undertake new policies to avail the
Authority has notified premium rates
new premium rates.
applicable to motor third party liability
insurance covers for the year 2018–19. • This notification as well as the
The detailed rates of premium based schedule of premium rates shall be
on the category of the vehicle are prominently displayed on the notice
mentioned in the circular issued. board of every underwriting office
and on insurers’ websites where it
can be viewed by the public.
5
https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo3434&flag=1
8 PwC PwC’s Insurance InsightsPwC’s Insurance Insights
Preface Our point of view on recent trends in insurance Contacts
Other key guidelines issued by the Authority during the month of March 2018
Exemption of reinsurance schemes, in respect of specified insurance schemes, from the purview of GST6
Ref: IRDA/F&A/CIR/MISC/052/03/2018 Date of issue: 28 March 2018 Applicability: All insurers
Introduction schemes. The captioned order stated that if the benefit of reduction in
above contains a total of 24 such premium is not passed down to the
Based on the meeting held by the
schemes which are exempt from GST, beneficiary/government, suitable
Goods and Services Tax (GST) Council
stated as part of the annexure to the action can be taken against the
on 18 January 2018, it was decided
order. These schemes, inter-alia, insurance company, as per section 171
to exempt reinsurance schemes,
include the Pradhan Mantri Jeevan of the Central Goods and Services Tax
in respect of specified insurance
Jyoti Bima Yojana (PMJJBY) and (CGST) Act, 2017.
schemes, from the purview of the tax
Pradhan Mantri Fasal Bima Yojana
network vide D.O. No. 354/12/2018-
(PMFBY), among others.
TRU dated 24 January 2018 from
the finance secretary. Given the fact Implications for insurers
that no GST is payable on insurance
This exemption is on the basis that any
premium in such schemes but that
benefit derived by insurers on account
GST was applied on reinsurance for
of reduction in premium should be
such schemes led the GST Council
passed on to the beneficiary and also
to accept the proposal to exempt
state and central exchequers.
reinsurance for specific insurance
Thus, insurers should keep in mind
6
https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo3433&flag=1
9 PwC PwC’s Insurance InsightsPwC’s Insurance Insights
Preface Our point of view on recent trends in insurance Other key guidelines issued by the Authority during the month of March 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
10 PwC PwC’s Insurance InsightsAbout PwC At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 2,36,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com In India, PwC has offices in these cities: Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India’s service offerings, visit www.pwc.com/in PwC refers to the PwC International network and/or one or more of its member firms, each of which is a separate, independent and distinct legal entity. Please see www.pwc.com/structure for further details. © 2018 PwC. All rights reserved pwc.in Data Classification: DC0 This document does not constitute professional advice. The information in this document has been obtained or derived from sources believed by PricewaterhouseCoopers Private Limited (PwCPL) to be reliable but PwCPL does not represent that this information is accurate or complete. Any opinions or estimates contained in this document represent the judgment of PwCPL at this time and are subject to change without notice. Readers of this publication are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this publication. PwCPL neither accepts or assumes any responsibility or liability to any reader of this publication in respect of the information contained within it or for any decisions readers may take or decide not to or fail to take. © 2018 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity. VB/April2018-12504
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