• General Insurance Industry Trends – 2014Industry Trends – 2014Impact on 2015 and beyond

General Insurance 20142014

Impact on 2015 and beyond

Contents

� Health Insurance

� Motor Insurance

2

HEALTH INSURANCEHEALTH INSURANCEHEALTH INSURANCEHEALTH INSURANCE

Health Care Scenario - India

� Indian healthcare market estimated at USD 70 billio n � Expected to grow to USD 160 billion*� 70% of healthcare infrastructure confined to top 20 cities� Approx 40,000 hospitals in the country� Health Insurance is growing in India at 15% CAGR

4

� Health Insurance is growing in India at 15% CAGR

� Increase in premium resulting from medical inflatio n and rise in sum insured

*Source: Frost & Sullivan

Health Insurance Premium (Overall)2013

(Crore)

17,178

India

Indian healthcare market estimated at USD 70 billio n Expected to grow to USD 160 billion* by 201770% of healthcare infrastructure confined to top 20 citiesApprox 40,000 hospitals in the countryHealth Insurance is growing in India at 15% CAGRHealth Insurance is growing in India at 15% CAGR

Increase in premium resulting from medical inflatio n and rise in sum

2013-14 (Crore)

2013-14 2014-15 % GrowthQ1 (Crore) Q1 (Crore)

17,178 4,434 5,094 15%

Key Ailments

Top 5 ailments continue to dominate and remain

- Fever, Respiratory, Eye disorders, Gastroenteristis

Controlled spread in diseases / decrease in

- Factor of Health, safety and wellness

2013 Fever and Common

5

37%

19%

19%

14%

11%

2013 Fever and Common infections

Respiratory Tract infections

Other Diseases of Eye (Except Cataract)Acute Gastroenteritis

Heart Ailments

remain the same over the years

Gastroenteristis and Heart Ailments

in injuries and accidents

measures

2014 Fever and Common

ICICI Lombard data

41%

18%

17%

14%

10%

2014 Fever and Common infections

Respiratory Tract infections

Other Diseases of Eye (Except Cataract)Acute Gastroenteritis

Heart Ailments

Key Critical Illness

Top critical illnesses continue to dominate over

- Spurt in Diabetes and Kidney failure

Increased cognizance of health issues / care

2013

6

15%

62%

15%

8%

0%

2013

Kidney Related Ailments

Heart Ailment

Cancer

Brain Stroke or other disorders of Nervous system

over the years

care

2014

ICICI Lombard data

9%

28%

9%

4%

50%

Kidney Related Ailments

Heart Ailment

Cancer

Brain Stroke or other disorders of Nervous system

70,000

Utilization Trend – Cashless v/s Reimbursement

Cashless claims being preferred for high costIncrease in cost (absolute)

- Last 5 years: Cashless: 19%; Reimbursement- Last 3 years: Cashless: 6%; Reimbursement

7

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2010-11 2011-12

CASHLESS

ICICI Lombard data

Cashless v/s Reimbursement

cost treatments

Reimbursement : 28%Reimbursement : 3%

2012-13 2013-14 2014-15 (till Sep14)

CASHLESS REIMBURSEMENT

Medical Inflation - Network

Cashless claims witnessing varied though lowerReduction in costs possible due to efficient network

- Average tariff hike demanded by providers- Average hike negotiated with the providers

8

ICICI Lombard data

3%

7%

4%

11%

15%

10%

16%

18%

Ahmedabad Bangalore Chennai Delhi NCR

Actual

Data used for FY 14-15 (updated till 12th Dec 14)

Network

lower inflation levels across citiesnetwork management

providers : 15%providers : 6%

10%

4% 5%4%

18%

8%

18%16%

Hyderabad Kolkata Mumbai Pune

Actual Demand

Health Costs Trends

Consistent decline in cost of claims acrossDecline more in cashless due to tighter control

Particulars Type_of_Claim 2012

Cashless 8.3%

9

Inflation Overall

Cashless 8.3%

Reimbursement 11.0%

Total 9.4%

across Cashless and Reimbursementcontrol on costs

2012-13 2013-14 2014-15(till

Sep)

8.3% 5.0% 1.4%8.3% 5.0% 1.4%

11.0% 6.5% 3.0%

9.4% 6.1% 1.9%

ICICI Lombard data

62%2013 2014 2015

Increase in Medical cases referred to tertiary hospitals - Retail

Cases referred to Tertiary hospitals increasing

- 49% of individual medical cases referred

10

2% 2% 2%

Primary Secondary

55%49% 49%

Increase in Medical cases referred to tertiary

increasing year on year for Individual policies

referred to tertiary hospitals compared to 43% in 2013

Medical Cases

35%

55%

43%49% 49%

Secondary Tertiary

ICICI Lombard data

65%2013 2014 2015

Consistency in medical cases referred to tertiary hospitals - Corporate

32% of corporate cases referred to tertiary hospitals

11

3% 3% 3%

Primary Secondary

66% 65%

Consistency in medical cases referred to tertiary

hospitals

Medical Cases

32% 31% 32%

Secondary Terciary

ICICI Lombard data

Cashless OPD trend in Corporate

Increase

Lesser

Top 10 Diagnosis

Fever

Abdominal and pelvic pain

Pain in joint

Increasing trend of corporate opting for OPD coverage

Gate keeping concept in India .. Trend to pick up

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Lesser

Low case

Promotes

Pain in joint

Other specified fever

Acute sinusitis

Arenaviral haemorrhagic fever

Acute gingivitis

Acute nasopharyngitis common cold

Atrophic disorders of skin

Dental caries

Cashless OPD trend in Corporate

Increase in OPD usage aiding overall cost reduction

Lesser hospital visits (Secondary and Tertiary care)

coverage - beginning of Managed Care and

up in future ..

Lesser hospital visits (Secondary and Tertiary care)

case severity due to early diagnosis

Promotes preventive care

ICICI Lombard data

Cashless OPD trend in Corporate

73% OPD usage for consultation, 27% for diagnostics

Spurt in incidence rates for OPD policies vis- à

OPD demand drivers: Call doctor at home for consult ation

Employers using employee funding option to offer OP D

13

Diagnostics27%

Consultations

73%

Cashless OPD trend in Corporate

73% OPD usage for consultation, 27% for diagnostics

à-vis IPD policies

OPD demand drivers: Call doctor at home for consult ation

Employers using employee funding option to offer OP D

ICICI Lombard data

E-cashless Module to gain prominence

Benefits :- Fast-track claim processing- Reduction in TAT for processing and data entry - Comprehensive Online end to end solution for hospit als - Real time online tracking - Transparent claim tracking and processing

14

Hospital

E-Cashless Module

Reply

Pre authorisation

request for

claims,

processing

and tracking

- Transparent claim tracking and processing

cashless Module to gain prominence

Reduction in TAT for processing and data entry Comprehensive Online end to end solution for hospit als

ICICI Lombard data

Insurer verification

Doctor

Reject

Approve

Query

Fasttrack Health

Executive

Summary

� Slow growth/ decline in diseases owing to increased awareness

� Medical inflation coming under control

� Insurers with providers to ensure further cost cont rol

� Incidence of medical cases in Tertiary hospitals hi gh for individual cases

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� Driving treatment costs higher

� Cashless OPD for corporate witnessing demand

� Technology influence growing

� Boosts seamless functioning

Slow growth/ decline in diseases owing to increased awareness

Medical inflation coming under control

Insurers with providers to ensure further cost cont rol

Incidence of medical cases in Tertiary hospitals hi gh for individual cases

Cashless OPD for corporate witnessing demand

MOTOR INSURANCEMOTOR INSURANCEMOTOR INSURANCEMOTOR INSURANCE

Automobile Domestic Sales Trends

Two Wheeler segment drove market growth Private Car and Commercial Vehicles sales remained stagnant

12,000,000

Product

17

3%

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

Pvt Car

YTD Nov'13

Automobile Domestic Sales Trends

Wheeler segment drove market growth Private Car and Commercial Vehicles sales remained stagnant

12%

Product-wise Sales

2%

TW CV

YTD Nov'13 YTD Nov'14

Private Car & Two Wheeler Trends

Hatchbacks led growth of cars, rising by 40% Two Wheeler segment growth was boosted by Scooters

40%1,200,000

1,400,000

Private Car: Category-wise Sales

18

-15%

-42%-48%

-69%-

200,000

400,000

600,000

800,000

1,000,000

Hatch Sedan MUV SUV Utility Vehicles

YTD Nov'13 YTD Nov'14

Private Car & Two Wheeler Trends

7,000,000

8,000,000

Two Wheeler: Category-wise Sales

Hatchbacks led growth of cars, rising by 40% Two Wheeler segment growth was boosted by Scooters

-25% 132%

-32%

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Motorcycles Scooter/Scooterette Mopeds

YTD Nov'13 YTD Nov'14

Motor Insurance - Industry Trends

17.13%

16.00%18.00%

Motor insurance segment maintained growth

19

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%16.00%

2013-14 (Nov YTD)

Industry Trends

Motor insurance segment maintained growth pace, though at a lower rate

9.77%

2014-15 (Nov YTD)

Nature of Damage

47%

32%

4% 4% 3%

48%

32%

3% 3% 2%0%

10%

20%

30%

40%

50%

60%

Head On & Rear On Collision

Side Impact Impact with Animal / Human

Glass Damage Vehicle fall in a Ditch / Pot Hole

All Products

2013 2014

20

54%

25%

6% 4% 2%

55%

26%

5% 3% 2%0%

10%

20%

30%

40%

50%

60%

Head On & Rear On Collision

Side Impact Impact with Animal / Human

Vehicle fall in a Ditch / Pot Hole

Toppled

Two Wheeler

2013 2014

Nature of Damage remained consistent across segments

41% 38%

6%2% 2%

41% 40%

6%2%

0%

10%

20%

30%

40%

50%

Head On & Rear On Collision

Side Impact Glass Damage Parking Impact with Animal / Human

Private Car

2013 2014

Vehicle fall in a Ditch / Pot Hole

2%

43%

27%

13%5% 3%

37%

23%

11%4%

0%

10%

20%

30%

40%

50%

Head On & Rear On Collision

Side Impact Glass Damage Toppled Impact with Animal / Human

Commercial Vehicles

2013 2014

Nature of Damage remained consistent across segments

Act of God cases

Significant increase in cases pertaining to Natural Calamities (cyclone)

81%

60%

70%

80%

90%

21

11%

0%

50%

29%

0%

10%

20%

30%

40%

50%

60%

Flood Storm / Tempest / Cyclone / Hurricane

Significant increase in cases pertaining to Natural Calamities (cyclone)

0%4% 3%

13%

5%2%

HailStorm Subsidence / Landslide / Rockslide Others

2013 2014

Road Transport & Safety Bill, 2014M

otor

Veh

icle

Act No centralized regulator

Decentralized SystemDifferent rules for different statesState wise Registration

22

Mot

or V

ehic

le A

ct

State wise RegistrationState wise PermitState wise issue of DL

Road Transport & Safety Bill, 2014

Dra

ft B

ill Centralized regulatorOne point control authorityUniform RulesUnified Registration Unified Registration SystemCentralized Permit Unified Driving License

Other Features

In the interest of Road Safety:� Governance on manufacturers on products� Substantial increase in fees and penalties � Golden Hour treatment� DAIR – Claim settlement that

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� Reduces reporting time for insurers� Waiting time for claimants

Governance on manufacturers on productsSubstantial increase in fees and penalties – deterrents

Reduces reporting time for insurers

Unified Driving License

Centralized issuance of driving license

Holding more then one driving license - Driver disqualifies for DL & includes penalty

Sunset clause in driving license

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• Old license to be replaced within two years• Address change endorsement on driving license• 5 years renewal for transport DL & 3 Yrs

60 days grace period for renewal of driving license

Fake DL to lead to disqualification of driver

Driver disqualifies for DL & includes penalty

Old license to be replaced within two yearsAddress change endorsement on driving license

Yrs for hazard DL

60 days grace period for renewal of driving license

Fake DL to lead to disqualification of driver

Telematics

25

Telematics : Insights from abroad

Usage Based Insurance (UBI) policy penetration has nearly doubled to 8.5% in July’14

Resistance to monitoring on the decline

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65% of those interested in UBI willing to change dr iving habits, reinforcing the potential for driver-coaching

73% of those interested in UBI ready to pay for val uefor insurers to differentiate products

Source: Towers Watson Usage-Based Insurance U.S. Consumer Survey

Telematics : Insights from abroad

Usage Based Insurance (UBI) policy penetration has nearly doubled - 4.5% in Feb’13

Resistance to monitoring on the decline - decreased from 41.6% to 35.2%

65% of those interested in UBI willing to change dr iving habits, reinforcing the

73% of those interested in UBI ready to pay for val ue-added services – opportunity

Based Insurance U.S. Consumer Survey

Summary

� Auto industry on the path to recovery� Motor insurance continues to grow, albeit at slower pace� Motor insurance segment to benefit from enabling po licy changes� Road Transport and Safety Bill

� Better road safety laws and insurance experience fo r customersUsage based insurance, a promising concept for Indi an insurers

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� Usage based insurance, a promising concept for Indi an insurers

Auto industry on the path to recoveryMotor insurance continues to grow, albeit at slower paceMotor insurance segment to benefit from enabling po licy changes

Better road safety laws and insurance experience fo r customersUsage based insurance, a promising concept for Indi an insurersUsage based insurance, a promising concept for Indi an insurers

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Thank You