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The <keyword id="6358021" type="General" weightage="100" keywordseo="budget" source="Orion">Budget</keyword> has left the life insurance industry a worried lot with the new tax proposal on higher premium annuity products, a move which the industry fears will hit their top-lines by 10-12 per cent. Leading private life insurer <keyword id="472962" type="General" weightage="50" keywordseo="hdfc-life" source="Orion">HDFC Life</keyword>'s chief executive <keyword id="323997" type="General" weightage="50" keywordseo="vibha-padalkar" source="Orion">Vibha Padalkar</keyword> told PTI that she stares at 10-12 per cent hit on the company's top-line with the Budget proposal to tax life products having annual premium of over Rs 5 lakh. She also fears that the increased tax exemption bracket of Rs 7 lakh and the steep reduction in the maximum surcharge on the affluent to 39 per cent from 42.74 per cent earlier may nudge them to spend more and save less. This can have many cascading impacts on the macro sector by way of a spike in the already high inflation, apart from the life insurance sector which has been facing sales issues since the Covid pandemic as people were not investing in long-term savings. And since the opening up of economic activities, many are on a "revenge spending mode" and not investing in financial products even now. Given the overall increase in incomes, the government should have either ignored the new tax levy on insurance products or it should have imposed tax on products with premium of Rs 10 lakh or upwards. At this level, it will definitely hit the industry hard, she added. The industry was expecting a proposal to offer composite lincence for the insurance sector wherein life insurers would be allowed to renter the health business which they were doing till 2015. Besides, the insurance sector players were also expecting some positive moves on the annuity products front. <keyword id="699506" type="General" weightage="50" keywordseo="tarun-chugh" source="Orion">Tarun Chugh</keyword>, chief executive of <keyword id="138574" type="General" weightage="50" keywordseo="bajaj-allianz-life" source="Orion">Bajaj Allianz Life</keyword>, said the tax proposal on higher value non-Ulip or traditional life policies "is bit of a dampener for the insurance industry and for increasing penetration of insurance and household financial savings." "We as a market still have quite low insurance penetration and there is a need to provide measures and incentives to boost that in the coming years. Also, household financial savings have been falling and insurance is a critical component of that. Household financial savings as percentage of GDP has fallen from 8.1 per cent in FY20 to 6.5 per cent in FY23, he said and warned that discontinuing incentives on insurance plans should put further pressure on household financial savings to some extent. Vighnesh Shahane, chief executive of <keyword id="10687373" type="General" weightage="50" keywordseo="ageas-federal-life-insurance" source="Orion">Ageas Federal Life Insurance</keyword>, said the finance minister has announced that from April income from life insurance policies, other than Ulips, with an aggregate premium amount of Rs 5 lakh per annum or more, which was earlier tax-free, will now be taxable. But she said if the insured person dies in between, the death benefit will continue to remain tax-free. The move is similar to the proposal introduced a couple of years ago which imposed tax on the maturity amount of Ulips if the annual aggregate premium exceeded Rs 2.5 lakh, he said. The proposal is likely to dent the sales of non-par products which have been witnessing strong growth over the last few years, especially during the pandemic. As the cap of Rs 5 lakh is applicable for all life policies across insurers, it may deter individuals from purchasing additional policies if they have exhausted their limit with their primary insurer, he explained. <keyword id="14942220" type="General" weightage="50" keywordseo="supriya-rathi" source="Orion">Supriya Rathi</keyword>, a wholetime director at <keyword id="2647323" type="General" weightage="50" keywordseo="anand-rathi-insurance-brokers" source="Orion">Anand Rathi Insurance Brokers</keyword>, opined that the budget has "given bad news for life insurance companies" by limiting the income tax exemption on proceeds of insurance policies.

Life insurers stare at 10-12% hit on top-line as Budget taxes higher premium products

<ul><li>We bring to you a series of columns from industry experts, looking back at the last 10 years.</li><li>The columns will explore how the media, marketing and advertising industry has transformed in the last decade.</li><li>Tarun Chugh, MD and CEO, <keyword id="151079" type="COMPANY" weightage="20" keywordseo="Bajaj-Allianz-Life-Insurance">Bajaj Allianz Life Insurance</keyword> tries to decode evolving consumer behaviour and shares a few ways in which the BFSI sector is reaching out to them in today's digital era.</li></ul>New-age Indians are unlike their previous generations. As a demographic, India’s population is getting younger and with more exposure to the world, the demands of the younger generation are changing. This change is forcing all industries to innovate, and the shift is more visible in the insurance space than anywhere else. For instance, young people are considering life insurance not simply for protection but to achieve their life goals. Ambitions such as entrepreneurship, world travel, preventive healthcare and having a parallel career demand financial planning by young people. According to a recent survey conducted by Kantar IMRB, 2 in 5 Indians have retirement related goals and the number is even higher in the metros with every second person wishing for a comfortable retirement as one of their life goals. In fact, retirement related life goals feature in the list of top 5 life goals for Indian millennials as well. This has led to a paradigm shift in the way financial planning has been so far. Indians are now looking at planning their retirement early on in life to maintain their standard of living and achieve life goals even post retirement. There’s a lot more interest towards long term life insurance products and the appearance of new-age online ULIPs has really helped the takeoff for these products as they offer transparency and convenience. Customers’ expectations from insurance products are rapidly changing as they demand more efficient service which match their lifestyle and needs example, Digital touchpoints, self-service apps and automated payment reminders. Increasingly, the product demand is also shifting towards new-age products which can be bought and redeemed online, have more transparency and don’t tangle the customers in complex terms and conditions. It’s not hard to see that the industry is responding to these shifts comprehensively. And regulatory changes by the Insurance Regulatory Development Authority of India have also helped. For instance, IRDAI’s regular interventions have meant that products in the market are transparent and customer-friendly with more benefits than the terms and conditions attached to them. The intervention has also ensured that new products are innovative in terms of their structures and payouts rather than refurbished old schemes launched with newer names. This has led to renewal premium collections going up recently which has greatly helped affirmed people’s faith in life insurance as a product. Insurance premiums as a percentage of GDP have been steadily climbing up as it reached 3.69% in 2017 from 2.71% in 2001. Gross premiums in India reached Rs 5.53 trillion in FY18, with Rs 4.58 trillion contributed by life insurance and Rs 1.51 trillion coming from non-life insurance. Even though it’s a significant development, the penetration level at 3.69% of the total addressable population remains quite low and provides itself as an opportunity for companies to innovate and reach the last mile. The way to reaching new consumers is largely going to be phygital -- physical + digital. A recent research survey by PwC stated 47% of people research insurance online before making a buying decision as compared to 22% relying on agents. Moreover, 49% of consumers said that they prefer digital mode as their preferred channel for purchasing insurance followed by 32% who still prefer to call an agent. Interestingly, 18% of people want their insurance companies to communicate with them through emails – clearly emphasizing the increasing importance of two-way communication rather than a one-time sale model. The life insurance sector is set for a big boost with the increase in digital proliferation and customer awareness. According to the Kantar IMRB survey, Indians choose life insurance as their preferred investment option for 60% of their life goals. This is a clear signal of the latent demand in the country which the insurance industry is eager to fulfil with innovative products, tech-enabled seamless services and newer distribution channels. Further, with the right pace of technology adoption and customer-centric business processes, India’s life insurance sector is poised to be the fastest growing sector. - By Tarun Chugh, MD and CEO, Bajaj Allianz Life Insurance

How consumer behavior has evolved in the life insurance sector

<ul><li>Life insurance policy premiums are expected to rise in the near future as insurers look to offset the rise in claims due to increasing deaths due to the pandemic.</li><li>Insurance companies say the claims have risen by 2-3 times since pre covid and is hurting their margins.</li><li>“Claims the life insurance industry gets in a full year, we have just got in the first six months of this financial year,” said Manoj Kumar Jain, managing director and chief executive officer at Shriram Life Insurance to Business Insider.</li><li>Check out our <a href="https://www.businessinsider.in/bi-newsletter">weekly explainers</a> on the hottest topics and <a href="https://www.businessinsider.in/newsletters_signup.cms">sign up</a> if you like them.</li></ul>Life insurance companies are planning to increase the premium amount on the life plans including term plans and <keyword id="536191" type="General" weightage="20" keywordseo="endowment-plans" source="Orion">endowment plans</keyword>. At least two Chief Executive Officers of insurance companies confirmed this to Business Insider. One of them, Shriram Life Insurance, plans to increase the premium while Bajaj Allianz has already implemented some of the planned increase in premiums. The rise in premiums comes as the life insurance companies are struggling with the highest claims due to increasing deaths due to covid-19. However, the premium hike will only apply to customers buying new policies. For existing policyholders, premium will remain the same. “Life insurance claims have risen two to three times from pre covid levels especially in the second wave of covid-19. Not only in term plan, even in endowment plan most of the companies are looking to revise premiums. We are also in a process of increasing premiums in endowment plans by 2-5%. In term plans, the premium increase will be higher because it is a pure risk plan,” said Manoj Kumar Jain, managing director and chief executive officer at Shriram Life Insurance to Business Insider. Endowment plan is a life insurance policy which provides you with a combination of both i.e.: an insurance cover, as well as a savings plan. “And this is not the phenomenon just with Shriram Life Insurance but across industry, every second company will increase premiums. This is because whatever claims the life insurance industry gets in a full year, we have just got in the first six months of this financial year. And these are largely Covid-19 claims, which is putting a big pressure on our underwriting margins,” added Jain. <a href="https://www.cnbctv18.com/personal-finance/exclusive-term-policy-premiums-likely-to-rise-by-15-25-across-life-insurance-companies-12109812.htm">Reports </a>also say that the rising claims have made it difficult for the reinsurers to offer coverage at older rates. And, price hike by reinsurers means the companies will need to raise premium costs. “The pandemic has augmented the awareness amongst consumers on the benefits of life insurance, and we have seen that term plans were being purchased more. At the same time, the industry also planned and enhanced its reserves for COVID-related claims. We also observed reinsurers been impacted at the time, and as an outcome of their evaluation processes we have seen an increase in the prices of term plans, which in-turn has brought about a rise in the premium rates for term plans,” said Tarun Chugh, managing director and chief executive officer at Bajaj Allianz Life Insurance. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/zomato-offers-12-lakh-insurance-grant-to-family-of-delivery-executive-killed-in-a-road-accident/articleshow/88874578.cms">Zomato employees will contribute ₹12 lakh to the family of delivery partner who was killed in a road accident</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/swiggy-will-deliver-stuff-on-tvs-motors-electric-scooters-following-footsteps-of-zomato-amazon-and-flipkart/articleshow/88872404.cms">Swiggy will deliver stuff on TVS Motors’ electric scooters</a>

Premiums on new life insurance premiums for both term plans and endowment are rising

The Bharatiya Janata Party (BJP) on Wednesday released a list of 40 star campaigners for the <keyword id="7682147" type="UNKNOWN" weightage="20" keywordseo="delhi-election-2020">Delhi election 2020</keyword>. The top five star campaigners are Narendra Modi, Amit Shah, Jagat Prakash Nadda, Rajnath Singh, and Nitin Gadkari. The list also includes Prakash Javadekar , Smriti Irani, Yogi Aditya Nath, Manoj Tiwari, <keyword id="13839" type="PERSON" weightage="20" keywordseo="Gautam-Gambhir">Gautam Gambhir</keyword> and <keyword id="2733" type="PERSON" weightage="20" keywordseo="Hema-Malini">Hema Malini</keyword>. Here’s the full list of <keyword id="1916577" type="PERSON" weightage="20" keywordseo="BJP-star-campaigners">BJP star campaigners</keyword>: <ol><li>Narendra Modi </li><li>Amit Shah </li><li>Jagat Prakash Nadda </li><li>Rajnath Singh </li><li>Nitin Gadkari </li><li>B.L Santhosh </li><li>Thawarchand Gehlot </li><li>Prakash Javadekar </li><li>Nityanand Rai </li><li>Hardeep Puri </li><li>Smriti Irani </li><li>Yogi Adityanath </li><li>Manoharlal Khattar </li><li>Trivendra Singh Rawat </li><li>Ramesh Pokhriyal Nishank </li><li>Jairam Thakur </li><li>Shivraj Singh Chouhan </li><li>Som Prakash </li><li>Gajendra Singh Shekhawat </li><li>Dharmendra Pradhan </li><li>Arjun Munda </li><li>Mukhtar Abbas Naqvi </li><li>Anurag Thakur </li><li>Shyam Jaju </li><li>Tarun Chugh </li><li>Manoj Tiwari </li><li>Harsh Vardhan </li><li>Vijay Goel </li><li>Ramesh Bidhuri </li><li>Parvesh Sahib Singh </li><li>Meenakshi Lekhi </li><li>Hema Malini </li><li>Hansraj Hans </li><li>Gautam Gambhir </li><li>Anil Jain </li><li>Dushyant Kumar Gautam </li><li>Siddharthan </li><li>Sunny Deol </li><li>Ravindra Shyamnarayan Shukla Urf Ravi Kishan </li><li>Dinesh Lal Yadav “Nirahua” </li></ol>The BJP earlier this week, released the second list of candidates for the upcoming Assembly (Vidhan Sabha) Elections in Delhi. It named 10 new candidates this time. Earlier, it has named only 57 candidates. Kapil Mishra, ex-AAP MLA who was ousted from the party earlier, has been fielded from Model Town. Further, BJP has fielded Ramvir Singh Bidhuri from Badarpur and Ravi Negi is fielded against Deputy CM Manish Sisodia. <a href="https://www.businessinsider.in/politics/elections/news/bjp-candidate-list-for-delhi-election-2020/articleshow/73328155.cms">Check the full BJP candidate list here</a> BJP has not yet declared the name of the candidate who will be fighting against Arvind Kejriwal from New Delhi. AAP has also announced their candidates. It fielded all the 70 candidates. The Kejriwal led party fielded Deputy CM Manish Sisodia from Patparganj while Atishi will contest the assembly elections from Kalkaji seat. Raghav Chadha has also been given the ticket from Rajinder Nagar. Congress also released its first list of candidates where sitting AAP MLA Adarsh Shastri is fielded from Dwarka. <a href="https://www.businessinsider.in/politics/elections/news/congress-rjd-candidate-list-delhi-2020/articleshow/73354792.cms">Congress candidate list for Delhi Election 2020</a> As the 70 member assembly term approaches its end on February 22, the Election Commission of India announced the schedule for Delhi elections. The assembly polls will commence on February 8, 2020.

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Life insurers stare at 10-12% hit on top-line as Budget taxes higher premium products

PTI

How consumer behavior has evolved in the life insurance sector

Guest Author

Premiums on new life insurance premiums for both term plans and endowment are rising

Bhakti Makwana

Delhi Election 2020: BJP releases list of 40 star campaigners including Hema Malini, Nirahua and Gautam Gambhir

BI India Bureau

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