Understanding Trends in Life Insurance Webinar: Insights and Strategies
This webinar delves into the current landscape of life insurance, focusing on non-par products and key considerations such as risk management, capital allocation, and product designs. Industry expert Philip Jackson explores challenges and opportunities in the sector, offering valuable insights for industry professionals. Topics cover emerging trends, managing risks, diversification, and the evolving nature of life insurance products.
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Presentation Transcript
Adating to Trends in Life Insurance Webinar 1 July 2020 Products focus on non-par Philip Jackson Principal and Consulting Actuary, Milliman
How did we get here? Limited margin from ULIP / par Open architecture? Banca Product designs (duration / annuities) Deposit substitute Increasing IRRs? www.actuariesindia.org
How are we managing? Reduce exposure Risk transfer Manage internally and monitor www.actuariesindia.org
Managing Diversification and scale Surplus assets opportunity cost? BEL cash flow predictability Policyholder behavior (customer and distributor driven) Scenarios are complex enough? Corporate bonds What about the long-end? www.actuariesindia.org
Transfer Technical capacity / internal culture Solvency reporting issues Cost / opportunity cost Sustainable? New risks (credit risk / basis risk) www.actuariesindia.org
Mitigate Tweak designs within existing structure New designs within the non-par umbrella www.actuariesindia.org
Non-par savings final thoughts Commoditising to a riskier place? Have we got a good handle on those risks? Thoughts from Solvency II www.actuariesindia.org
Protection Move to digital (covered later) Rates Aggregators? Product designs (ROP / short-pay / term) Reinsurance www.actuariesindia.org
Issues Lapse support (margin / reserves) Moving into WOL? Capital vs value Scale Cost www.actuariesindia.org
Capital and value Un-locking capital internally Fin Re / sub-debt Mortality swaps / securitisation RBC www.actuariesindia.org
Commoditisation Do we believe protection is a commodity product? www.actuariesindia.org
Adating to Trends in Life Insurance Webinar 1 July 2020 Persistency, Credit Risk & Digital Kshitij Sharma Partner, EY Actuarial Services LLP
Persistency www.actuariesindia.org
Impact of Persistency Impact on Shareholder Value Other Key Dependencies Premium Payment Term Target Market Distribution Channel Payment Mode (Direct Debit) Sales Practices Prevailing Environment Policy Year 1 - 2 6+ 3 - 5 Unit - Linked Savings Protection P&L impact always positive, except possibly Year 1, as Reserves > SV Other Key Considerations Spreading Fixed Costs Generally not considered for estimating impact Customer Satisfaction Branding / Future Sales Dynamic Policyholder Behaviour Intelligent Customer Anti-Selecting www.actuariesindia.org
Emerging Trends Covid19 Impacts www.actuariesindia.org
Emerging Trends Increase in Protection premium rates Covid19 Impacts www.actuariesindia.org
Emerging Trends Increase in Protection premium rates Covid19 Impacts Savvy customers buying higher IRR Non-Par Savings products www.actuariesindia.org
Emerging Trends Increase in Protection premium rates Covid19 Impacts More flexibility for ULIPs Savvy customers buying higher IRR Non-Par Savings products www.actuariesindia.org
Emerging Trends Increase in Protection premium rates Covid19 Impacts More flexibility for ULIPs Savvy customers buying higher IRR Non-Par Savings products Guarantees on DPF www.actuariesindia.org
Credit Risk www.actuariesindia.org
Current Exposure Private Life Insurers Life Fund Credit Rating Sovereign Versus Corporate 0.4% 0.4% 1% 2% AAA AA 32% Corporate 68% A Sovereign B Others 28% LIC has ~ 86% exposure to Sovereign Debt Prevailing trends Increase in Credit and Liquidity Spreads Are moratorium masking defaults? Highly rated corporates failing IL&FS / Yes Bank Falling government bond yields to push insurers to corporate bonds? www.actuariesindia.org
Emerging Trends Are AT1 bonds still viable? www.actuariesindia.org
Emerging Trends Are AT1 bonds still viable? Own risk assessment using internal models www.actuariesindia.org
Emerging Trends Are AT1 bonds still viable? Own risk assessment using internal models Do actuaries consider credit risk enough? www.actuariesindia.org
Digital www.actuariesindia.org
Emerging Trends Is online currently used for lead generation rather than sales medium? www.actuariesindia.org
Emerging Trends Can we really cut the middle man? Is online currently used for lead generation rather than sales medium? www.actuariesindia.org
Emerging Trends Can we really cut the middle man? Is online currently used for lead generation rather than sales medium? Are online products just offline products put online? www.actuariesindia.org
Emerging Trends Can we really cut the middle man? Is online currently used for lead generation rather than sales medium? Online Non-Linked Savings Products Are online products just offline products put online? www.actuariesindia.org
Emerging Trends Can we really cut the middle man? Is online currently used for lead generation rather than sales medium? Online Non-Linked Savings Products Are online products just offline products put online? Digital Underwriting www.actuariesindia.org
