How has been your performance in 2017 in terms of premiums, policies, claim settlement and profitability?
The company has done quite well in the year 2017. We have posted good performance in all areas of operation and stands out as one of the major players in life insurance sectorin the region.
We have underwritten New Business Premium Income of USD 385.5 million in 2017 showing a healthy growth rate of 34%. We have sold 15008 Policies in the year 2017 with growth rate of 8% as compared to 2016.
All the other key performance areas like Profitability, New Bonus Allocation to Policyholder have shown positive improvements.As far as claims performance is concerned, our mortality experience has been very favorable.
What is capital base now and would you require more capital.
The company is incorporated in Bahrain and seen from the perspective of rules applicable in Bahrain, the capital base is satisfactory. The amount available at the corporate level to cover the solvency capital requirements as per Central Bank of Bahrain rules is at a very comfortable level.However, the company has many branches which are operating in different regulatory jurisdictions.
For example, UAE has moved to risk based capital and the Insurance Authority has provided the template for computation of capital required for various risks. These rules are stringent for life companies operating in conventional product segments and hence moredemanding on the capital for our UAE operations.
We have sought some relaxations particularly for the foreign branches of companies incorporated elsewhere.
Do you repatriate your profit to India ?
No, we do not repatriate our profit. LIC International is a Bahrain incorporated Company and we distribute our surplus in the form of bonus among the policyholders and pay dividend to the shareholders.
Do you only focus on Indian customers or other locals in the region?
LIC (International) enjoys a niche market position targeting Indian expatriate community within the GCC countries and subsequently to residents of any nationality. Our main focus is the NRIs in countries where we operate as we have strong Brand connect with them on the strength of our parent company LIC of India.
However, in UAE and Bahrain we do offer our attractive products to other nationalities and locals. We endeavor to reach other nationalities and locals through our Bancassurance partners and Brokers
What kind of competition you face from other local players?.
There is more competition in non- life business in the region than in life. In life business, we do compete with big multinational players and also with local players. The local players are more on grouplife particularly group credit life business.
There is also Takaful Life Insurance Market but don’t compete in that market. Unlike India, it may be mentioned that overall life insurance is a small component of the GCC Insurance Market, due to the generous social welfare schemes bestowed on the nationals by the States.
Additionally low life insurance awareness and cultural reservation in mortality- based insurance products also limit demand.
However, LIC International enjoys niche market position with NRIs and strong brand connect due to its parent LIC of India. Because of this unique position, attractive product propositions it enjoys market leadership position in Bahrain and emerging as a major Life Insurance Player in individual assurance in UAE.
What are your distribution strategies? You prefer to do business through agents or brokersand banks?
We are mainly operating through Chief Agency Model and this has been a very tried and tested model for Life Insurance. Of late, we have started doing good amount of business through our bank partners also.
In UAE, we have Bancassurance partnership with major Banks like RAK Bank, Emirates NBD, FAB, ADCB and Mashreq Bank. We are also talking to a few more Banks. ICIC Bank and BBK in Bahrain also distribute our products.
There are some product segments like Short and Medium term Single Premium products which are very successful with our Bank Partners. We have also started roping in leading brokers in our fold and we expect the business done through these channels to grow in times to come.
Now that another Indian life insurer-SBI Life- has set up operations in Bahrain, do you think, there will be too much competition for you for Indian business?.
With the coming of SBI life into the market in Bahrain, there is certainly going to be competition as we are vying for the same market of NRIs.
I understand that to begin with they would be selling rupee policies which gives us room as we sell dollar policies. Moreover, competition does help in expanding the market and enlarging the size of cake.
Further, the potential is big enough for the life insurance players to thrive.
Do you think like India, life insurance products in ME face competition from other segments of financial sector like- mutual funds, equities, real state and fixed deposits.
Life insurance market in GCC to a large extent comprises of expatriates as nationals have access to society welfare schemes of the states and also due to lower awareness and reservation towards mortality based products. Life insurance products sometimes compared by the customers with FCNR rates.
To some extent various mutual fund schemes, equities, real estate investment back home in India are considered by NRIs and also promoted by NRI department of the local banks and Indian banks having retail operation.
We do face competition with their options. However, as our policies are in USD, we are able to compete well with these options.
How popular life insurance products are in the region?.
Like in India Conventional life insurance products are quite popular with NRIs, especially those catering to their need to provide for higher education and marriage of children, adequate life protection, high cost medical treatment and pension.
Unit liked plans are also sold. Products with guaranteed returns are liked by all especially nationals. Bancassurance partners also sell such products in good number.
LIC (International) has attractive product range catering to different needs of our customers. Our products are quite popular with NRIs.
In addition, our products have special feature of paying future premiums in advance in view of uncertainties of employee so that policy value is protected.
How many countries you are present in the Middle East?.
Life Insurance Corporation (International) B.S.C (C) has its presence in four GCC countries: Bahrain, United Arab Emirates (i.e. in Dubai and Abu Dhabi), Oman & Kuwait. The company has also initiated steps to obtain a Branch License in Qatar.
What kind of products you have. Which kind of products that have seen larger sales?
We have products that cater to customer needs like life risk cover with safe and secure savings and good returns, provision for children education, their marriage and settlement in life, provision for old age in the form of pensions and provision of money in case of critical illness etc.
The most popular life insurance products of the LIC International are:
- Participating Endowment Plan and cash back plans – Most popular and simple savings. Ideal combination of life cover, liquidity and investment.
- Participating Marriage/Education Plan (PME) – Designed to provide for expenses of education and marriage of children along with long cover.
- Jeevan Anand (JA) – Unique combination of endowment and whole life with provision of payment of Sum Assured, twice.
- Professional Education Plan (PEP) – Ideal plan to provide for future expense of education and start in life of children.
- Deferred Annuity Plan with or without life cover- A very unique plan which provides for pension throughout life.
- Silver Anniversary Health Insurance (SAHI) – Unique combination of savings, health insurance and flexibility (Health, Wealth & Happiness).
- Pure Term Assurance – Ideal for those who look for pure life risk at a lower premium.
Even though we have a diversified range of products to cater to various needs, the main product in terms of number of policies sold is Participating Endowment Plan and in terms of amount of premium is Future Secure Guaranteed Return Plan.
In near future we wish to come out with more comprehensive critical illness product and unit linked products.
What are your new targets for 2018?
We have given an excellent performance in the year 2017. Our target for 2018 is to give a reasonable growth over last year in all the parameters be it number of policies or new premium income.
Can you give us some ideas about the ME market in terms of number of players, penetration, density average size of policies and overall growth the market is recording?
All the major global players are present in GCC and market is quite overcrowded particular in non-life side.
Further, GCC Insurance market is quite underpenetrated with average insurance penetration of 1.9 per cent in 2016 which is below 3.2% in the emerging market and 6.3 per cent globally.
Life insurance constitutes merely 12 per cent of the total insurance market. Life Insurance Penetration on an average is merely 0.23 per cent in GCC in 2016.
On an average the insurance density in GCC in 2016 was USD487. The density varies amongst the constituent countries with Kuwait having lowest at USD264 and Qatar with highest at USD1121.
Within the region, the UAE and Bahrain enjoy high insurancepenetration level at 2.9 per cent and 2.3 per cent respectively.
GCC insurance market grew at CAGR of 12.1% from USD14.8 billion in 2011 to USD 26.2 billion in 2016. It is projected that GCC insurance market would grow at a CAGR of 10.9% from USD26.2 billion in 2016 to USD44 billion in 2021. However, life insurance market is projected to grow at an annual average rate of 5.3% to USD4.2 billion by 2021.