Inside life assurance quote by alicejenny


									                                                                     Asia-Pacific | Autumn 2007

Inside                Issue 12 (Apr to Jun 2008)
                      Welcome to the 12th edition of distribution debrief – our quarterly
Market statistics     roundup of news reports around the region.
India                 Growth continues to be the order of the day with the region still showing some
Indonesia             impressive premium figures for the first half of this year (albeit with signs of
Malaysia              deceleration in some counties towards the end of Q2 as a result of equity
Singapore             market conditions). As a whole in 2007 the region’s global share of insurance
South Korea           increased to 4.36% and certainly from the amount of market entry and M&A
Taiwan                enquiries we receive, there is no let up in interest from insurers wanting to
Thailand              expand out here in Asia Pacific.
                      The Chinese insurance market managed particularly strong growth in the first
                      half of this year with premiums increasing more than 50% over the same
Market developments   period in 2007, life insurance being the main contributor and growing over
China                 64%. In other markets such as South Korea, Indonesia and India the growth in
Hong Kong             life insurance (particularly from the private sector in India which grew by over
India                 70%) has also been strong with recent sales well above that of the same period
Indonesia             last year.
Singapore             Merger and acquisition activity continues to make the news with a number of
South Korea           banks already making moves in China to take advantage of the relaxing of the
Taiwan                laws on investing in insurance companies. Insurers are also looking to
Thailand              diversify across the region with regulations, in South Korea for example,
                      being relaxed to allow investment in foreign markets. Stock offerings,
                      especially initial public offerings also appear to be on the rise with a number
                      of companies in Asia gearing up for these.
Regulatory updates
China                 The agency channel continues to grow in China and India, but again,
India                 bancassurance is king, particularly in China, with premiums from this channel
Philippines           growing a massive 260% in the first 6 months of 2008 over the same period
South Korea           last year. Alternative distribution via the postal channel is also growing with
Taiwan                new strategic relationships between insurers and postal services coming in
Thailand              both China and Vietnam. Considering that there are over 20,000 Post Offices
                      in China now selling insurance, this is a channel with a huge retail footprint
                      and the potential to make a significant impact on distribution.

                      As always, we welcome your feedback on distribution debrief.

                      John O'Rorke
                      Managing Director - Distribution Consulting Practice
MARKET STATISTICS                                         last quarter. The number of postal offices that sell
                                                          insurance products grew by 9.2% during the same
Asia Region                                               period to 20,807. The total market share for banks,
                                                          postal offices, travel agencies, auto dealers, and
The region’s share of the global insurance market         railway sales offices was 42.4%.
increased by 0.69% to 4.36% in 2007, according to
Swiss Re. The main contributors to this increase were     Business written by insurance intermediaries (banks,
China, whose global share increased from 1.9% in          postal offices, brokers, agencies, etc.) reached
2006 to 2.28% in 2007 and India, whose global share       RMB21.68 billion (USD3.16 billion) in the first half
rose to 1.34% against 1.11% in 2007.                      of 2008, an increase of 39.6% on the previous year.

China                                                     The number of insurance agents reached 2.22 million
                                                          at the end of June 2008, an increase of 8.38%
China’s insurance industry had a strong start to 2008     compared with the end of last quarter. This includes
generating gross written premiums worth RMB561.8          1.95 million life agents, an increase of 8.48%. Life
billion (USD82 billion) in the first half year, an        insurance agents generated gross premium of
increase of 51.1% compared with the same period in        RMB146.6 billion (USD21.4 billion) in the first half
2007, according to the China Insurance Regulatory         of 2008, up 7.1% compared with the same period last
Commission (CIRC).                                        year. This contributes to 33.95% of total life
                                                          insurance premium income.
This included RMB385.98 billion (USD56 billion) for
life insurance, an increase of 64.2%, and RMB129.93       The Shanghai life insurance industry, realised
billion (USD19 billion) for general insurance, an         premiums of RMB18.45 billion (USD2.69 billion)
increase of 19.9%.                                        from January to April, a 57.79% growth year-on-year,
                                                          and a strong start to 2008. In total, bancassurance
Health insurance generated gross written premiums of      premiums for the city totalled RMB8.56 billion
RMB35.02 billion (USD5.1 billion), an increase of         (USD1.25 billion) against RMB3.21 billion (USD468
85.9%, with accident insurance reaching RMB10.87          million) in the first four months of last year. New
billion (USD1.59 billion), an increase of 13.9%.          China Life produced RMB1.58 billion (USD230
                                                          million) in bancassurance premiums, followed closely
In the first half of 2008 natural disasters such as the   by Taikang Life with RMB1.03 billion (USD150
early snow storm and the Sichuan 5.12 earthquake          million) and China Life with RMB903 million
made a major impact on the Chinese insurance              (USD132 million). A number of other insurers also
market. Chinese insurers suffered losses of more than     achieved more than RMB500 million (USD72.9
RMB5 billion (USD730 million) due to the snow             million) in bancassurance premiums in Shanghai from
storm and RMB520 million (USD75.9 million) due to         January to April.
the 5.12 earthquake. The insurance industry has also
donated RMB460 million (USD67.1 million) to               Assets in the Chinese insurance market surpassed
quake-hit areas.                                          RMB3 trillion (USD438 billion) for the first time in
                                                          April. The last trillion, from 2 to 3, took less than a
The nation’s top three insurers produced strong           year and a half showing the speed at which the market
performance in May, China Life showed an 82.4%            is developing.
increase over May 2007, Ping An 39.7% and China
Pacific 34.1%. Total premium for all insurers, life and   India
non life insurance, was RMB61.16 billion (USD8.93
billion) and RMB19 billion (USD2.77 billion)              For April to May 2008, the Indian life insurance
respectively.                                             market sold INR81.99 billion (USD1.93 billion)
                                                          worth of gross premiums, amounting to a 10.74%
Bancassurance as a whole performed particularly well      increase over the same period the year before.
in the first 6 months of 2008 totalling RMB173.3
billion (USD25.3 billion) in premium income, 260%         The private sector took a significant 48% of the total,
over the same period last year, and 123% of the total     growing over 73% itself on a year-on-year basis. The
2007 premium income.                                      market share of the private insurers is shown below.

The number of bank branches selling bancassurance
products grew by 2.5% to 80,090 from the end of the

                                                                                                                                                                                                 ICICI Prudential

                                              1%                           0%                         0%
                                                                                                                                                                                                 SBI Life
                                                                                                                                                                                                 Bajaj Allianz
                                                                                                                                                                                                                                                                                                                            Annuity                      Individual
                                                                                                                                                                                                 Reliance Life                                                                                                               0%                          non-linked
                                                                                                                                                                                                 Max New York
          3% 3% 3%                                                                                                                        24%                                                    HDFC Standard                                                                                Unit-linked                                                  32%
  5%                                                                                                                                                                                             Birla Sunlife
7%                                                                                                                                                                                               T AT A AIG                                                                                     48%
                                                                                                                                                                                                 Kotak Mahindra Old Mutual
                                                                                                                                                                                                 Met Life
7%                                                                                                                                                                          14%                  Aviva
                                          9%                                                                    12%
                                                                                                                                                                                                 ING Vysya
                                                                                                                                                                                                 Shriram Life
                                                                                                                                                                                                 Bharti Axa Life
                                                                                                                                                                                                 IDBI Fortis
                                                                                                                                                                                                 Sahara Life
                                                                                                                                                                                                 Future Generali
                                                                                                                                                                                                                                                                                     It was reported that a third of Indonesian insurers,
                                                                                                                                                                                                                                                                                     both life and non-life, have yet to meet the minimum
As the chart below shows, every insurer increased                                                                                                                                                                                                                                    capital requirement of IDR40 billion (USD4.36
their gross premiums during April to May 2008                                                                                                                                                                                                                                        million) needed by the end of 2008, set by the
against 2007, with ICICI Prudential, SBI Life and                                                                                                                                                                                                                                    government earlier in the year.
Reliance Life all increasing their premiums by over
INR2 billion (USD46.7 million).                                                                                                                                                                                                                                                      Source: Indonesia Life Insurance Association (AAJI)

(Vertical Axis: INR10 million)                                                                                                                                                                                                                                                       Malaysia

 1,000.00                                                                                                                                                                                                                                                                            Total new business premiums for life insurance
  800.00                                                                                                                                                                                                                                                                             amounted to MYR1.9 billion (USD584 million) for
                                                                                                                                                                                                                                                                                     the period January to March 2008, a fall of 9.3%
                                                                                                                                                                                                                                                                                     against the same period in 2007. The biggest loss
  300.00                                                                                                                                                                                                                                                                             came in the sales of single premium investment linked
                                                                                                                                                                                                                                                                                     products, down 27% in the same period, as shown in
                                                                                                                                                                                                                                                                                     the chart below.
                                                                                                                          TATA AIG
            ICICI Prudential

                               SBI Life

                                                                                                                                                                                                                                   IDBI Fortis
                                                                                                                                                                                                                 Bharti Axa Life
                                                                                                          Birla Sunlife

                                                                                                                                                                                                                                                 Sahara Life
                                                                                                                                                                 Met Life

                                                                                                                                                                                                  Shriram Life
                                                                                                                                                                                     ING Vysya
                                                           Reliance Life

                                                                                                                                     Kotak Mahindra Old Mutual

                                                                                                                                                                                                                                                               Future Generali
                                                                                          HDFC Standard
                                           Bajaj Allianz

                                                                           Max New York

                                                                                                                                                                                                                                                                                                            Investment Linked (MYR billion) (YoY % change)



Source: IRDA                                                                                                                                                                                                                                                                          3,000

Indonesia                                                                                                                                                                                                                                                                             1,000

Premium income for the life industry amounted to                                                                                                                                                                                                                                              Gross Sums           Total               Annualised              Single

IDR13.9 trillion (USD1.52 billion) in quarter one                                                                                                                                                                                                                                               Insured

2008, representing a particularly impressive gain of                                                                                                                                                                                                                                                                                    (-0.98%)             (-26.56%)

61.1% over the same period in 2007.
New business unit-linked premiums were the biggest
contributor to this increase, jumping by 127% to                                                                                                                                                                                                                                     According to the General Insurance Association of
IDR4.8 trillion (USD523 million) over the period.                                                                                                                                                                                                                                    Singapore, general insurance had an encouraging start
The following chart shows the market split of life new                                                                                                                                                                                                                               to 2008 with net earned premiums of SGD443.2
business premiums over the first three months of                                                                                                                                                                                                                                     million (USD325 million) for the first quarter, up 9%
2008.                                                                                                                                                                                                                                                                                on the same period last year. However, motor
                                                                                                                                                                                                                                                                                     underwriting profit fell to only SGD33.8 million
                                                                                                                                                                                                                                                                                     (USD24.8 million) and with claims rising, the loss
                                                                                                                                                                                                                                                                                     ratio was down at 87.5%.

                                                                                                                                                                                                                                                                                     Singapore’s captive industry has been progressing
                                                                                                                                                                                                                                                                                     well with gross premiums amounting to almost

SGD750 million (USD550 million) in 2007,
                                                                                                                       Non-life Jan to Apr 2008
contributing to 22% of Singapore’s offshore
investment fund business. This growth has been
augmented by the increasingly diversified set of
organisations setting up captives.
                                                                                                    Misc subtotal                                    Fire
South Korea                                                                                            22%                                           21%

New business premiums for life insurance (general
                                                                                                   1%                                                       Marine
account) for April and May 2008 totalled KRW62.9
trillion (USD60.5 billion), a year-on-year rise of
20.04%.                                                                                                                Automobile
Samsung remained the leading insurer, but Korea Life
managed to overtake Kyobo to become the second
largest insurer by new business premiums, taking
14.88% against Kyobo’s 12.97%. The chart below                                                   Life premiums for January to April 2008 were
illustrates the market shares of the top ten companies.                                          TWD690 billion (USD22.6 billion) up 18.3% over the
                                                                                                 same period in 2007. The main driver for this growth
                                                                                                 was the significant TWD89.5 billion (USD2.9 billion)
                 Others, 14.45%
                                                      Samsung, 14.95%
                                                                                                 (321%) increase in individual annuity premiums.
          LINA, 3.39%                                                        Korea, 14.88%
                                                                                                                              Life Jan to Apr 2008
   MiraeAsset, 3.99%

Shinhan, 4.40%
                                                                                                                              Group Health
   ING, 5.10%                                                                                                                      0%
                                                                      Kyobo, 12.97%
                                                                                                                        Group Life           Group Accident
           AIG, 5.12%                     Tongyang, 12.88%                                                                  0%                    0%
                                                                                                           Individual Annuity
                       Hungkuk, 7.89%
                                                                                                  Individual Accident
First year collected premiums have decreased by 28%                                                       2%
over April to May 2008 against the same period in                                                  Individual Health
2007. Bancassurance saw its market share drop                                                             8%
                                                                                                                                                        Individual Life
slightly from 47.86% to 46.59% this year, with a                                                                                                             71%
similar size rise in the agency channel.
                                  Others, 0.13%              Direct, 2.66%

Bancassurance, 46.59%                                                                              The poor performance of the local stock market has,
                                                                                                   however, caused an estimated TWD100 billion
                                                                                 Solicitor, 40.28% (USD3.3 billion) fall in equity assets held by the

                                                                                                   insurance companies in the second quarter of this
                                             Agencies, 10.35%

                                                                                                 Source: Taiwan Insurance Institute
Source: Korea Life Assurance Association
                                                                                                 For the first quarter 2008 total life new business
For the first four months of 2008, non-life insurance                                            premiums reached THB51.2 billion (USD1.5 billion),
premiums totalled TWD38.7 billion (USD1.26                                                       up by around 14% the previous year. Contributing to
billion) a slight fall of 2.5% over the same period in                                           this growth was a THB4.4 billion (USD132 million)
2007.                                                                                            increase in renewal premiums and a 47% increase to
                                                                                                 THB4.3 billion (USD129 million) in single premiums.

                                                                                                 The following chart shows the breakdown of market
                                                                                                 share by the top 10 life insurance companies based on

gross premiums in the January to March period of             In April the company signalled its intention         to
2008.                                                        diversify its product portfolio by launching         an
            TLA              Others                          investment linked insurance product, the first by   the
   KTAL      3%               7%                             company which had previously focused only            on
                   2%                             AIA
    4%                                                       traditional products.
   OLIC                                           38%
                                                             PICC Health has seen its gross premium climb to
  BLA                                                        over RMB10 billion (USD1.46 billion), and total
  6%                                                         assets to RMB12.8 billion (USD1.87 billion), making
                                                             it the eighth largest life insurer in mainland China.
  AACP                                                       PICC Health has also made remarkable progress in
   7%      MTL                        TLI
                     SCNYL                                   increasing its market share in health insurance to 30%
           7%                         14%
                       7%                                    from 2.36% in 2006.
Source: Thai Life Assurance Association
                                                             The Chinese banking regulator, China Banking
Vietnam                                                      Regulatory Commission (CBRC), has given the green
                                                             light to four mainland banks to invest in insurance
The Vietnam Insurance Association believes this              companies.
year’s launch of new products, notably Universal Life             Industrial and Commercial Bank of China
and Unit-linked products, will contribute to growth in               (ICBC), China’s largest bank, will enter into a
the industry of between 20-25% for 2008, around                      joint venture with China International
double the 11.9% achieved in 2007.                                   Insurance Holdings (CIIH) and Fortis to buy
                                                                     into Taiping Life, Taiping Insurance, Taiping
MARKET DEVELOPMENTS                                                  Pension and Taiping Asset Management Co.
                                                                     According to reports, ICBC and CIIH will
China                                                                own 43.5% each and Fortis the remaining
PICC Property & Casualty Co. Ltd., saw its net
profit rise 43.8% in 2007 to RMB2.99 billion                      China Construction Bank (CCB) will buy a
(USD436 million), up from RMB2.08 billion                          51% stake in Happy Life Insurance Co.
(USD303 million) in the previous year, however, this
was below expectation due to higher than expected                 Bank of Communications will take a 51%
claims and operating expenses. The company is                      stake in China Life CMG Insurance, by
remaining positive about 2008 despite the recent                   buying out China Life’s equity stake.
catastrophes in China. PICC‘s premium income for
the first four months of the year totalled RMB38.7                Bank of Beijing, 20% owned by ING, will buy
billion (USD5.65 billion) a 19.4% year-on-year rise.               out CPIC’s 50% of Pacific Antai Insurance.

Ping An Insurance Co., ranked second after China             China Merchant Bank (CMB) has proposed taking a
Life, also reported first four months’ life insurance        50% stake in CIGNA-CMC Life. It would become
premium income at RMB27.5 billion (USD4.03                   the fifth bank investing in insurance company if the
billion) up by 27.5% over the year earlier. Non-life         proposal is approved by the banking regulator.
premium income for the company rose 28.9% to
RMB9.9 billion (USD1.44 billion).                            China Post Group has received approval from the
                                                             CIRC to set up a life insurance company, named
China Life Insurance Co., recorded first four                China Post Life Insurance Company. It will mainly
months premium income of RMB128 billion                      target farmers, low-income urban residents and
(USD18.7 billion) up 43.2% on January to April               migrant workers. It was registered in Beijing with
2007. The company recently announced it had no               capital of RMB500 million (USD73 million). China
refinancing plan, but granted the board power to issue       Post Group already has a joint venture with CNP
a certain amount of new shares, both in Chinese Yuan         called Sino-French Life Insurance Company.
and Hong Kong Dollar. The company reported strong
bancassurance sales in the first five months of 2008         Dinghe General Insurance Company was approved
contributing RMB151.5 billion (USD22.1 billion) in           to open for business with registered capital of
premiums, growth of 48.1% over the previous year.            RMB518 million (USD75.6 million). It is sponsored

mainly by Southern Grid as well as six other power               pregnancy health insurance, covering checkups,
grid companies.                                                  parturition, abortion, etc., has been included in group
Hannover Re, the world's fourth largest reinsurer,
was approved to start operations in May in Shanghai              Sunshine Insurance Group, following China Life,
with registered capital of RMB200 million (USD29.2               Ping An, and PICC Property & Casualty, has been
million).                                                        approved by the CIRC to start cross-selling. Sunshine
                                                                 Property and Sunshine Life, the two subsidiaries of
Swiss Re has established a wholly owned medical                  the Group, will be engaged in the business.
insurance third party administrator in Beijing, Prestige
Health.                                                          China Continent Property & Casualty Insurance
                                                                 has introduced a new medical insurance product
BUPA, the largest specialist medical care insurance              targeting the high income population including senior
company in the UK was reported to be in the process              managers and foreign professionals working in China.
of selecting a potential partner for a joint-venture             This product offers benefit up to RMB2 million
health company in Shenzhen.                                      (USD290,000) and involves comprehensive medical
                                                                 services provided by a network of over 700 medical
HSBC announced plans to enter the Chinese life                   institutions.
market with a joint venture to be launched sometime
over the summer. Approval to operate with a local                China Life has launched the country's first disaster
unnamed company out of Beijing is in the final stages,           insurance policy that covers six types of natural
and will allow HSBC to take advantage of its branch              disasters, including earthquakes, floods, tsunamis,
network via a nationwide licence. HSBC would be                  typhoons, mudslides and landslides. Compared with
looking to take a 50% stake in the joint venture.                other accident insurance policies, the premium rate for
                                                                 the new product is much lower. Usually, people pay a
Anxin Agricultural Insurance has been approved by                premium of RMB200 (USD29) for ordinary accident
the CIRC to increase its registered capital from                 insurance with a cover of up to RMB100,000
RMB200 million (USD29.1 million) to RMB500                       (USD14,600), but for this catastrophe accident policy
million (USD73 million). More than half of the                   with the same amount of coverage, policyholders only
capital (RMB170 million, USD24.8 million) came                   need to pay RMB65 (USD9.5). The rate, however,
from Shanghai International Group and Shanghai                   could vary for different regions, according to China
State-owned Asset Operation, resulting in a                      Life.
shareholding of 17.62% and 16.62% respectively.
Anxin is the first special agricultural insurer in               PICC Health has recently launched a new universal
mainland China.                                                  long-term care product, which combines the features
                                                                 of investment and long-term care. Each policyholder
Taiping Insurance received a RMB265 million                      opens two separate accounts – one for insurance and
(USD38.7 million) capital injection from CIIH. CIIH              the other for investment purposes. Policyholders are
now becomes the largest shareholder of Taiping                   free to change the level of premiums in one account,
Insurance with a 50% share, followed by its parent               and are guaranteed minimum returns from the other.
company, China Insurance (Holdings) Company                      The product is open to anyone aged between 28 days
(CIHC) which owns 40%.                                           and 60 years. Long-term care products, proving
                                                                 popular in developed economies, are believed to have
Metlife has applied to the Chinese regulators to merge           great potential in Chinese market as a result of an
its two mainland ventures, Beijing based Sino-US                 aging population. PICC Health, China’s first health
MetLife Insurance Co. Ltd. and Shanghai based                    insurer, is a pioneer in this product field.
United MetLife Insurance Co. Sino-US MetLife. A
listing in China may be on the cards if the merger               Sino-US MetLife has introduced a new unit-linked
goes through.                                                    insurance product that is specially designed to
                                                                 minimise risk exposure in a fluctuating market. The
Allianz China announced its intention to launch a                product will be distributed via Citi Bank.
group insurance channel by promoting group medical
insurance products. The products will provide                    China Reinsurance (Group) Co. has opened a
coverage of outpatient, inpatient, as well as pregnancy          representative office in Hong Kong, following a
health insurance. In particular, it is the first time that       similar move in London earlier in the year. Following

its restructuring last year China Re now has registered       company’s branches to 200.
capital of RMB36.15 billion (USD5.16 billion). The
reinsurer said it will consider listing shares in both        IDBI Fortis Life Insurance Company Ltd. and the
domestic and overseas stock markets in an IPO soon.           Kerala-based non-banking financial intermediary,
The company controls more than 80% of the country's           Manappuram Finance Ltd., announced an alliance to
reinsurance market, and took operating revenue of             provide wealth building and insurance products to
RMB44.47 billion (USD6.49 billion) in 2007 up                 customers in the state of Kerala by signing a
47.8% over 2008.                                              distribution agreement. IDBI Fortis announced that
                                                              the “wealthassurance” foundation plan is the first-of-
Aviva-Cofco, plans to boost its operations in China           a-kind in its combination of comprehensive
by recruiting 1,000 new agents. The company is                investment choices, accompanied by varied insurance
targeting a 5,500 strong agency force by the end of           options, all presented with a reasonable charge
2008 and is looking to gain a 10% market share in 10          structure and making it a one-stop solution to a
major provinces.                                              customer’s wealth building plans. Wealthassurance
                                                              offers investment choices such as Guaranteed Return
Aegon-CNOOC, opened a new branch in the south-                Funds, Equity Funds and Debt Funds.
eastern Chinese province of Guangdong in-line with
its strategy to expand in the coastal regions. Mitsui         Union Bank of India has recorded 109% growth
Sumitomo Insurance Co. Ltd., has also reportedly              under new business premium in life insurance for the
gained a licence to open an office in Guangdong.              fiscal year ending March 2008. The bank saw new
                                                              business premium worth INR1.52 billion (USD35.4
CN Insure and Shandong Xin Guang Yuan Auto                    million) and sold 32,000 policies. For the year 2008-
Club are to set up a new insurance agency, Fanhua-            09, the bank is targeting INR3 billion (USD70
Xin GuangYuan Insurance Agency, in Shandong                   million) of new business insurance premium. Union
Province.                                                     Bank has tied up with HDFC Standard Life for life
                                                              insurance and with SBI Life (as a group insurance
AIA have appointed T.C. Cheng as the new Regional             plan) for its home loan customers. Insurance
President covering the AIG Life companies in China,           distribution would be an important area of focus for
Taiwan and India, with the aim to extend AIA’s                the bank in the semi-urban and rural areas where it
market and distribution presence. For China, Jacky            has a strong network. The bank has more than 200
Chan was named as the country head, reporting into            licensed marketing staff selling insurance products in
T.C. Cheng.                                                   addition to specialised customer relationship officials
                                                              at its branches. Union Bank is also in the process of
Hong Kong                                                     setting up its own life insurance joint venture with
                                                              Dai-ichi Life Insurance of Japan, along with another
The Hong Kong Mortgage Corp (HKMC) and the                    state-owned bank, the Bank of India.
People's Bank of China's Shenzhen branch are to
establish a mortgage insurance joint venture this year.       AEGON Religare Life Insurance Company has
                                                              lined up plans to establish its presence in cities
New York Life International has appointed Anthony             beyond the major centres. According to the CEO,
Mak as president and chief executive of New York              Rajiv Jamkhedkar, the company has plans to start
Life Insurance Worldwide Ltd. (Hong Kong) in                  with a large footprint going well beyond Tier-I cities
charge of their interests in the Asia-Pacific region.         across the county. Religare’s businesses operate
                                                              across three key verticals: retail, institutional and
India                                                         wealth spectrums. Religare boasts a retail network in
                                                              over 1,300 locations across more than 400 cities in the
Kotak Mahindra Old Mutual Life Insurance Ltd.                 country.
announced new operations in several towns in the
                                                              Faced with a sharp slowdown in growth of new
state of Kerala in south India, taking the total number
                                                              business, the country’s largest insurance company the
of branches in the state to 7. The company has also
                                                              Life Insurance Corporation of India (LIC) is
formally launched its branch office in Bhubaneswar,
                                                              looking at recruiting an additional 300,000 agents.
its first branch office in Orissa state. As part of its
                                                              The corporation, which has over one million agents, is
expansion plan, Kotak Life plans to add 50 more
                                                              finding the size of its agency force being
branches across the country by October 2008. The
                                                              overshadowed by the collective agency force of the
new branches will take the total number of the
                                                              private companies. LIC has seen its new business

growth slowing down to less than 6 percent in FY             in Maharashtra such as Ahmednagar, Nashik and
2008 in sharp contrast to the 110 percent growth             Baramati. It has 49 branches in Maharashtra, Gujarat
recorded in the preceding year. Most of LIC’s policies       and Madhya Pradesh, of which 26 are located in
continue to be sold by agents, though the corporation        Maharashtra.
has been making attempts to grow alternate channels
such as bancassurance.                                       ICICI Prudential plans to set up 200 to 300 branches
                                                             in the rural areas during the current fiscal year. Its
To increase the size of the agency force, the                branch network currently stands at close to 2000. The
corporation expects its existing development officers        company will be focussing on increasing the
to recruit new agents. In addition, the corporation          productivity of existing branches and employees. It
plans to add another 4,700 development officers to its       currently has 28,000 employees and 280,000
field force. LIC has also introduced a Chief Life            insurance advisors. In-line with its thrust to establish
Insurance Advisor (CLIA) scheme where senior                 added rural presence, the company will expand its
agents will recruit more agents. These existing senior       presence in interior Kerala state this year. In the fiscal
agents are expected to add several new salespeople           year 2008, the company opened over 1,000 rural
each during the year.                                        branches in 12 states. It had also launched tie-ups with
                                                             key state-governed institutes to increase convenience
Under this model, LIC will offer some of its high-           among rural customers. During the last year, it had
performing agents the opportunity to be CLIA. These          also tied up with the Department of Posts in the states
agents will be given a five-year contract and                of Andhra Pradesh, Uttar Pradesh, Punjab and
remuneration (on a variable basis) for identifying at        Gujarat. I-Pru Life has more than tripled its
least five suitable candidates each for recruitment as       distribution capabilities.
                                                             Mokshayug Access India (MYA), a rural
The new candidates will be trained and placed under          infrastructure and services aggregator has tied-up with
the supervision of the CLIA. About 30,000 agents             ICICI Prudential Life and is taking the franchise route
have responded by identifying suitable candidates. Of        to increase the access of poor rural households to
the 1.19 million LIC agents, around 70,000 would be          primary healthcare. What MYA plans to do is to set
eligible to take over as CLIA.                               up health clinics, which will be co-owned by
                                                             members of their community and run in collaboration
Max New York Life Insurance and a cooperative                with a large hospital. While the clinics will provide
bank in the state of Maharashtra, the Karad Urban Co-        primary healthcare to the local population, it will also
operative Bank, announced a bancassurance tie-up.            provide      entrepreneurship     and      employment
Max New York will utilise the bank's branch network          opportunities to the community. This is part of
to sell its life insurance products. The tie-up with         MYA’s efforts to provide forward linkages in rural
Karad Bank will further strengthen Max New York              markets.
Life’s presence in Maharashtra and extend its reach
through the bank's network of 48 branches and                MYA has tied-up with ICICI Prudential to offer life
500,000 customers. The 91-year old bank has its              insurance products to its 12,500 clients. It also offers
roots in western Maharashtra.                                health insurance in partnership with ICICI Lombard,
                                                             the general insurance company in the group, which
State-owned fuel retailer Indian Oil Corporation             covers in-patient treatment. It is also planning to offer
(IOC) plans to sell insurance products through Kisan         a health savings account to cover out-patient
Seva Kendras (KSKs), its retailing outlets in rural          treatment. Currently, its health insurance covers 2,600
areas. The company is in talks with Max New York             people.
Life to sell the latter’s products through the KSKs.
                                                             Bajaj Allianz Life Insurance has tied-up with a
Aviva Life Insurance is set to open 11 new branches          village bank, the Sarva U.P. Gramin Bank to provide
in major towns and cities such as Pune, Indore,              insurance products across the state of Uttar Pradesh.
Jamnagar, Surat, Rajkot, Gwalior and Jabalpur. The           Sarva U.P. Gramin Bank has 265 branches. The
company, presently ranked eighth in the life insurance       insurance company has also joined hands with the
market in India, plans to double its employee strength       Maharashtra State Co-operative Bank to provide life
in the next two years to generate more business.             insurance solutions across the state through the bank's
Aviva launched two new offices in Pune, with two             265 branches.
more offices in the city by December this year. The
company has presence in a number of Tier-III centres         Travel solutions provider Thomas Cook (India) has

also entered into a corporate agency agreement with             Mr Muqeem’s objective is to develop strategies to
Bajaj Allianz Life Insurance. Thomas Cook (India)               maximise the insurance business to meet the
already has tie-ups with Tata AIG to sell general               company’s business goals.
insurance products and with ICICI Bank for credit
cards.                                                          Shriram Capital Ltd. will no longer be taking an
                                                                equity interest in Tahan Insurance Malaysia Bhd after
Indonesia                                                       the deal fell through.

Prudential Life Assurance has teamed up with                    AXA Asia Pacific earlier this quarter pulled its bid
Citibank to launch a new Smart Future 50:50                     for Malaysian Assurance Alliance Berhad (MAA), not
investment and savings product. For the insurance               citing a reason, but says it remains committed to AXA
half the customers are covered for life insurance,              Affin in Malaysia.
critical illness, accidents and emergencies and
hospital coverage.                                              MAA launched its online insurance policy issuance
                                                                system in May aimed at improving efficiency. The
Aviva has signalled its intention to push on with its           system may end up costing around RM3 million
expansion with bancassurance in Asia, by announcing             (USD922 million), but allows non motor policies to
plans to look for tie-ups in a number of countries in           be issued in under 10 minutes. The initiative allows
the region, including Indonesia. The firm is keen to            the company to focus on expanding its agent base and
migrate its successful European bancassurance model             maintaining market share.
to Asia-Pacific in 2008.
The AAJI announced it has received interest from a
number of European and Asia companies looking for               United Overseas Bank has declared its interest in
a local partner to invest in the Indonesia life insurance       China by applying to take a 25% stake in a fund
market and to take advantage of the current strong              management joint venture with Ping An Insurance
economic potential. Growth in the market last year              Group.
was an impressive 67% and is forecast to be around
30% this year.                                                  BUPA International, with its partner International
                                                                Medical Insurers in Singapore, has launched an
Malaysia                                                        international private medical insurance service
                                                                targeting expatriates in Singapore. BUPA says their
The Malaysian Insurance Brokers and Takaful                     international standards will be enforced to create a
Brokers Association (Mitba) expects to collect RM3              high class product to meet the needs of the large
billion (USD922 million) in premiums and advance                expatriate community in Singapore.
its share in non motor general insurance to 50% in
three years from its 37% share currently.                       Great Eastern Holdings, Singapore’s largest
                                                                insurance group, suffered a 67% drop in net profit
Malaysia National Insurance has changed its name                over the first quarter 2008 in comparison to last year,
to Etiqa Insurance. The firm, based in Brunei, has              recording only SGD45 million (USD33 million),
undergone the rebranding exercise to bring it in-line           despite a turnover rise to SGD2.59 billion (USD1.9
with the merger which created Etiqa Insurance and               billion). The largest drop was the 87% fall in profits
Takaful now the second largest insurance group in               from insurance operations.
                                                                Zurich Financial Services Group recently opened a
Allianz has decided not to invest in Malaysian                  Singapore branch targeting commercial and corporate
Assurance Alliance (MAA), the country’s third                   customers in the country and across the region. The
largest life insurer, and has hired new chief executive         new office replaces the representative office of Zurich
officers for both its life and general insurance units.         Insurance Co. set up in 2007 and aims to boost
Alexander Ankel is the new head of Allianz Life                 Zurich’s profile and profitability across the region.
Insurance and Ng Hang Ming takes over in charge of
Allianz General Insurance Company.                              Royal & Sun Alliance Insurance (RSA) is
                                                                expanding its sales capabilities in Singapore in a bid
HSBC Amanah Takaful (Malaysia) hired a new                      to capitalise on the large number of construction and
chief executive officer, Mohammed Muqeem in June.               manufacturing insurance possibilities in the region

and wants to grow its business 25% this year.                    in the first five months the market grew only 13%.
                                                                 This should, however, continue and this is
South Korea                                                      encouraging given GDP is growing only around half
                                                                 that rate at 5-6%.
Allianz Life Insurance Korea fired 87 branch
managers recently after they failed to return for work           Thai Life Insurance announced a good start to the
after their participation in a strike, viewed by Allianz         year, even though in the first six months premiums
as illegal.      The dispute revolved around the                 were up only 1% on the year before. They mentioned
introduction of a new incentive scheme.                          that they believe the market as a whole is growing
                                                                 now that Thais are becoming less risk averse.
Samsung Life Insurance announced plans to target
China as a main source of growth to achieve a                    Bangkok Life Assurance is soon to be issuing 200
targeted annual premium income of HKD484 billion                 million shares, around 16% of the total paid-up
(USD62 billion) by 2015.                                         shares, in its Initial Public Offering (IPO). Currently
                                                                 the company has a registered capital of THB1.22
Industrial Bank of Korea (IBK) a state invested                  billion (USD37.5 million) and paid-up capital of
bank, has announced its intention to enter the                   THB1 billion (USD30 million), par value at THB1
insurance industry by recently creating a holding                (USD0.03) per share.
company and gaining a broker licence, one of 8
recently granted by the FSC.                                     Bancassurance continues to grow in Thailand with
                                                                 direct premium growth expected to be 20-25% this
Metlife aims to take advantage of the ever increasing            year. Though not as prominent as the 60% last year,
retirement market in South Korea by bolstering its               the channel may total THB 37-39 billion (USD1.1-
variable annuity products. It cites growth of 7 fold in          1.17 billion) and will easily outperform the life
variable annuity products over the last two years and            insurance industry as a whole. Bancassurance is
wants to further capitalise on its status as an expert in        expected to take 17-18% market share up from 15%
the retirement services sector and the awareness of the          last year, gradually replacing the declining agency
increasingly aging population in the country.                    channel and still has potential grow further given the
                                                                 60 million bank depositor accounts against only 11
Taiwan                                                           million active policies.

Shin Kong was given permission to establish a Life               Thai Insurance announced a drop in profit to
Insurance subsidiary in Vietnam (HCMC) and a non-                THB2.01 million (USD60,480) in the first three
life subsidiary in Beijing, a 50:50 joint venture with           months of the year, against THB15.73 million
Hainan Airlines, due to launch in September.                     (USD473 million) in the same period last year.
                                                                 Although premiums did increase, the company
The FSC announced its first approval of a preferred              blamed a decline in underwriting, higher operating
life insurance product, by Nan Shan Life Insurance.              expenses and an increase in corporation tax for the
The allowance of preferred rates, offered to those with          lower profit levels. The company did, however,
low mortality risk, will help with diversification of            unveil a new cancer product to be sold exclusively by
products and protection for consumers as a whole.                TMB bank. The product, TMB Cancer Guard, is the
                                                                 first to be sold by a general insurer as a stand alone
Zurich International Life Ltd has been approved to               policy and not as a rider.
open a new specialist high-net-worth life insurance
branch in Taiwan. The move targets the recent                    Ayudhya Allianz CP Life Co. has been instructed to
interest Zurich has received in the wealth                       terminate its AACP Tax Lite 15/15 product.
management space on the island.                                  Although the product was designed to take full
                                                                 advantage of the new THB100,000 (USD3,000)
Thailand                                                         income tax deduction the government said it wasn’t
                                                                 compatible with the objectives of the tax incentive, to
Muang Thai Life Assurance achieved a 30% growth                  promote savings and provide protection to the public.
in premiums for the first half of the year, with total
premiums reaching THB8.5 billion (USD256                         Krungthai AXA Life Insurance is optimistic it will
million), but warns that the industry as a whole will            be profitable for the second year in a row following its
not grow at the predicted rate of triple GDP given that          successful net profit of THB150 million (USD4.5

million) for the first five months of this year. Their          domestic insurers who feel the new products and
sales from agency were up 124% over last year and               capital being brought in are increasingly difficult to
bancassurance was up 261%, with the latter now                  compete with.
contributing 35% of total premiums and rising.
                                                                REGULATORY UPDATES
AIA Thailand intends to capitalise on the growing
incomes in the rural sector by targeting farmers with           China
specialised life products. A new product, 1 pay life, is
a single premium insurance product allowing farmers             The CIRC has published a new regulation on solvency
to cover themselves with a one-off payment while                requirements on insurance groups and also approved
capital is available.                                           draft regulation on solvency requirements for
                                                                insurance companies. The draft categorizes solvency
New York Life’s local joint venture, Siam                       capability into 3 levels: above 150% - those believed
Commercial New York Life Insurance Plc, wants to                to be well financed; 100% to 150% - those who will
become the number one life insurer in Thailand over             be regularly investigated; and below 100% - those
the next couple of years. Currently the company is              who will be restricted in many aspects, including
the leading seller of new business in the bank channel,         investments, capital injection, dividend policy,
but now intends to employ 2,000 more agents and 72              remuneration of senior management, and even new
extra telemarketers to grow its non-banking business.           business operations. Those with below a 100%
                                                                solvency capability may be forced to improve their
Vietnam                                                         solvency capability via asset disposals.

The Korea Life Insurance Co. Ltd. has secured a                 China could launch a property trust market next year
licence to operate insurance business in Vietnam,               to give its insurers and pension funds an alternative to
becoming the first Korean company to venture into               equities and bonds, according to reports. The new
the country.                                                    market is expected to offer stable returns to match the
                                                                long-term liabilities of insurers and pension funds.
Dai-Ichi Life Vietnam, a joint venture between Dai-             The CIRC is also considering the feasibility of
Ichi Life (Japan) and the Vietnam Postal Savings                insurers to invest in the shares of trust, fund and
Service Company (VSPC), launched a premium                      securities companies, according to the press.
collection service via the latter’s nationwide network.         Insurance companies have already been permitted by
                                                                the CIRC to invest in real-estate, but companies will
Samsung Life Insurance Company showed its                       not be able to start investing until the relevant rules
optimism for the future of Vietnam’s insurance                  and regulations come into force.
industry by opening a representative office in Hanoi
in July.                                                        China is said to be further liberalising its reinsurance
                                                                sector, removing preferential treatment for domestic
Cathay Life Insurance entered the life market by                reinsurers, according to press. The change is to be
investing USD60 million worth of capital in the                 made with proposed amendments to the Insurance
country and plans to operate in Hanoi and Ho Chi                Law.
Minh City.
                                                                The CIRC has released a regulation on telemarketing
Prudential is looking to expand its financial services          of insurance products. Insurers now have to set
offerings in the country, over and above its current            special telephone numbers and telemarketed products
insurance products, in order to further take advantage          need to be separately managed.
of the fast growing economy. In the first quarter of
2008, Prudential overtook Bao Viet by taking 37% of             The CIRC also recently announced plans to assist the
the insurance market.                                           country's small to medium sized insurers float on the
                                                                stock market. The measures will include seminars to
Aon Vietnam, a foreign owned insurance broker will              help the companies prepare for such a move.
now be allowed to provide insurance consulting and
risk management solutions to state-owned enterprises.           An organisation of insurance agents will be founded
Competition in Vietnam, especially since the opening            in mid-July, according to the Secretary of Insurance
of its insurance markets in January to allow full               Association of China. The organisation, once
freedom for foreign companies, is worrying the                  established, will have over 2 million members.

                                                                  Over two dozen recommendations on retail
India                                                              products with the intention of increasing the
                                                                   penetration of general insurance in the
The Insurance Regulatory and Development                           country.
Authority’s (IRDA) Committee on Distribution
Channels released its report – “Report of the                     For general insurance, agency model to be
Committee on Distribution Channels”. Set up in                     bifurcated as Retail Insurance Agents
September 2007, the committee consisted of major                   permitted to sell retail general insurance
industry players. On May 13, the committee                         products, and Insurance Agents permitted to
submitted its report to the regulator. The report, if              sell all types of general insurance products.
accepted, could bring about considerable changes to
the distribution of insurance products.                           Commission limits laid down under Section
                                                                   40 (2) of Insurance Act be liberalised across
Some key recommendations are:                                      all products. Current cap on commission rates
                                                                   by product and channel be removed.
    Encouragement of corporate agents as an
     important medium in the alternate channel               Corporate houses, which promote an insurance
     platform.                                               company, can now foray into insurance broking as
                                                             well without any regulatory hassles. Keeping in view
    Reduction in the capital required for a                 the international experience and practice, the
     corporate agent from INR1.5 million                     Insurance Regulatory and Development Authority
     (USD35,000) to INR100,000 (USD2,330) and                (IRDA) has decided that corporate houses can have
     decentralising the licensing of corporate               both insurance companies and broking activity subject
     agents.                                                 to certain safeguards. According to the safeguards
                                                             listed out by IRDA, the promoter (of both insurance
    Banks with group companies can have                     company and broking firm) should submit an
     different corporate agencies, provided there is         undertaking to the regulator that none of the clients
     a net-worth/capital of INR100 million                   within the promoter group will be compelled to use
     (USD2.3 million).                                       the broker for their insurance requirements.

    Pre-recruitment training to be left to insurers         The insurer within the group should also give an
     keeping in view the general guideline of 50             undertaking that it would not pay higher remuneration
     hours training.                                         to the broker for the same class of insurance or
                                                             insurance product; an audit certificate on compliance
    Flexibility of commission for first five years          with the undertaking should be filed annually along
     within the ceiling of section 40 A (60%).               with the audited accounts of the insurer. Further, it
                                                             should not quote terms to the broker that are more
    No upfront payment, advance sign-on bonus,              favourable than the terms quoted to the other brokers,
     brand access fee, and infrastructure payment            and desist from designing special insurance products
     to be allowed.                                          for sale exclusively through the broker.
    Direct marketing and web based selling to be            The IRDA had also prescribed a number of
     permitted for all products.                             obligations for the broker firm including that it should
                                                             make an explicit disclosure of being a sister company
    Urban cooperative banks, regional rural banks,          of the insurer within the same promoter group.
     microfinance institutions registered with the
     RBI and non-government organisations                    The above prudential requirements were in addition to
     registered as trusts should be permitted to             the requirements stipulated under Regulation 20 of the
     distribute micro insurance policies.                    IRDA (Brokers Regulation). The Regulation 20
                                                             prescribes that the business of the insurance broker
    A customer who buys through the telecalling             shall be carried in such a manner that not more than
     mode should be provided a printed copy of               50 percent of the premium in the first year of the
     the caller's questions and the resultant                business, 40 percent of the premium in the second
     responses. In case of e-mail interactions,              year and 30 percent in the third year of business
     encryption should be used to protect the target         onwards shall emanate from any one client.
     person's privacy.

Philippines                                                    term asset management capabilities the “Regulations
                                                               Governing Investment linked Insurance Investments”
The Philippine Insurers and Reinsurers Association             have been amended requiring application for the
(PIRA) has remarked that the Government’s takeover             conduct of discretionary investment business.
of Compulsory Third Party Liability (CTPL)
insurance for motor vehicles would discourage                  Thailand
foreign investors in the industry.
                                                               The Office of the Insurance Commission (OCI)
A senior official in the Filipino Government has               welcomed the recent government databank of
called for a reduction in tax on life policies from 5%         insurance customers which impose restrictions on the
to 2% to increase affordability especially for the             “cold calling” of insurance products. The regulation
poorest Filipinos. PIRA backed up the views of Sen.            says that any person declining the sales pitch cannot
Loren Legarda by saying it would help long-term                be contacted again for six months.
savings and allow life companies to compete on a
global scale.

South Korea

The FSC is considering relaxing the rules that
separate the sales of insurance, banking and brokerage
products. The move would increase choice for
consumers by allowing each company to sell a larger
range of financial products across different sectors.
South Korea’s financial watchdog is considering
relaxing laws that prevent insurance companies from
handling payments and settlements, currently only
dealt with by banks. The new regulations would bring
the insurance industry in-line with the proposed 2009
laws on the capital market consolidation for brokerage

The Chairman of the FSC, Jun Kwang-woo,
announced measures to allow South Korean insurers
to freely acquire business and subsidiaries in overseas
markets with a view to Korean insurance companies
becoming major players on the world stage. The FSC
is keen to encourage this expansion and disclosed the
intention to allow insurers to hold unlimited stakes in
their foreign subsidiaries.


New insurance anti-fraud measures have been brought
in to combat insurance fraud. Travel accident and
group are now included in the reporting system and
the FSC is encouraging firms to step up their internal
anti-fraud systems.

The FSC recently reissued the regulations on the
conduct of Insurance Trust business and Foreign
Investments of Insurance Enterprises, the latter
allowing for investment in an expanded range of
offshore investments.

To ensure life insurers make full use of their long-

Contact details
The distribution teams of Watson Wyatt are based in Hong Kong, India and Singapore. Please contact any
of the consultants listed below if you need more information about our services.

Hong Kong
John O’Rorke – Managing Director, Distribution Consulting
Steve Kean – Director, Distribution Consulting
Brian Chan – Consultant
Watson Wyatt Insurance Consulting
29F, Sun Hung Kai Centre
30 Harbour Road, Wanchai
Hong Kong
Tel: +852 2827 8833
Fax: +852 2827 7700

R. Krishnamurthy – Managing Director, Distribution Consulting
Carissa Hickling – Principal Consultant
Rajesh Sabhlok – Senior Consultant
Saju Paul – Consultant
Anuraag Sunder – Consultant
Watson Wyatt Insurance Consulting
Solitaire Corporate Park Building No.5
Andheri Kurla Road,
Andheri (E), Mumbai 400 093
Tel: +91 (022) 2838 9900, 2837 9900
Fax: +91(022) 2837 0700

Stephen Cotham – Director, Distribution Consulting
Watson Wyatt Insurance Consulting
135 Cecil Street
Singapore 069536
Tel: +65 6880 5629
Fax: +65 6880 5699

distribution debrief has been prepared by Watson Wyatt for general information purposes only and does not
constitute professional advice. The information, opinions and projections contained in this Newsletter are
derived from various sources and have not been independently verified by Watson Wyatt. If you require
professional advice or require any further information please contact any of the above named individuals.
Errors and omissions excepted. Currency rates as at 30 June, 2008.


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