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1INVESTING FOR A BETTER LIFE Copyright © 2013 The Nielsen Company
F E AT U R E D I N S I G H T S
I N V E S T I N G F O R A B E T T E R L I F EA LIFE INSURANCE L ANDSCAPE STUDY IN INDIA
BY: SUBHASH CHANDRA, EXECUTIVE DIRECTOR, NIELSEN
• INTENTION TO INVEST IN LIFE INSURANCE DROPS BY THREE PERCENTAGE POINTS FROM 20% TO 17%
• LIFE INSURANCE PENETRATION IN INDIA UP BY 3% COMPARED TO 2010
• INSTANCES OF WOMEN INVESTING IN LIFE INSURANCE UP BY 6% IN 2013
For a sector that majority of Indians entrust their savings with, life
insurance is easily an important indicator of India’s financial health. And
true to this, the prevailing weak economic landscape has had an impact
on the life insurance industry in India with overall intention to purchase
polices taking a hit. But despite the weak rupee, inflation and general
concern over key financial indicators, Nielsen’s findings showed that life
insurance penetration in India is up by three percent in 2013 to touch 66
percent.
DELIVERING CONSUMER CLARITY
2 INVESTING FOR A BETTER LIFE
The study – ‘LIFE 2013’ by Nielsen analyses this rise as well as the
key drivers, challenges and influencers of the ever-evolving life
insurance sector in India. It also brings to the forefront key insights
and opportunities for insurers in this happening market.
Consumers today are looking to diversify their portfolio and there
have been significant surges in fixed return investments and equity
investments. While life insurance retains the highest penetration among
financial products, the fixed return investments and equity investments
categories showed more impressive growth in the 2013 figures.
2010
LIFEINSURANCE
FIXED RETURNINVESTMENTS
OTHERINVESTMENTS
EQUITYINVESTMENTS
HEALTHINSURANCE
2013
CURRENT FINANCIAL PRODUCT OWNERSHIP
BASE(2013)-6742|BASE(2010)-6492 Source: Nielsen
LIFE INSURANCE PENETRATION IN INDIA INCREASED FROM 63% IN 2010 TO 66% IN 2013
63
4352
34 31
5
1712 15
66
3INVESTING FOR A BETTER LIFE Copyright © 2013 The Nielsen Company
A smaller ticket size and single premium options for insurance covers
can prove to be useful instruments for tapping the young Indian market.
This generation of prospective buyers is likely to appreciate policies
that are flexible in terms of withdrawal and allow them to fulfill their
short-term goals.
INTENTION TO INVEST IN LIFE INSURANCE
The average Indian consumer is getting younger by the day and his
wallet’s getting fatter. More disposable income in the hands of the
youth has directly impacted their policy purchase decisions. The age
group of 22 to 30 showed a higher intent for purchase of life insurance
products (18%) than the 31 to 40 age group (16%). However, barriers
for this category included the long term nature of the investment,
followed by the low rate of returns and the challenge of getting money
back on maturity.
2010
22-30 YEARS 31-40 YEARS 41-50 YEARS
2013
INTENTION TO INVEST IN LIFE INSURANCE
Source: Nielsen
HIGHER INTENTION TO INVEST IN LI AMONG YOUNGER AGE GROUP
2119
16 17 1618
4 INVESTING FOR A BETTER LIFE
PREMIUMS UP, LIFE COVER DOWN
The average SEC B and C Indian prioritizes security, is conservative
and yearns for a better lifestyle. While life insurance covers the first two
aspects, it also promises the third in the long run. Growing awareness
and increasing salaries have resulted in a significant 1.8 times rise
in the average annual premiums paid in 2013 as compared to 2010.
However, the proportion of life cover in comparison to annual income
has come down.
BRIDGING THE GAP
While people are paying more premiums than ever before, the right way
to tap the SEC B and C market for insurers could be a more lucrative
life cover. The Nielsen survey found that the low cover was a very
important gap with half the respondents feeling that their life cover was
not adequate. Going forward, this is likely to emerge as a great window
for the emerging players.
WOMEN AND INSURANCE
There is a far higher awareness of financial products amongst women
today, whether for investment purposes, or for securing their or their
children’s future – and this leads to an active role in the financial
decision-making process within the family. The incidence of women
investing in insurance surged by six percent to touch 59 percent in 2013.
Nearly half (49%) of the female respondents cited their children’s
future as the main reason for investing in life insurance and 44 percent
indicated that life insurance was important in case of untimely death.
This shows how important it is for marketers and advertisers of life
insurance products to actively involve and engage women in their
communication.
WHILE ANNUAL PREMIUM PAID HAS INCREASED, LIFE COVER AS A PROPORTION OF INCOME HAS REDUCED.
1.3
1.07
2010
OVERALL
MEN
WOMEN
2013
LIFE COVER AS A PROPORTION OF ANNUAL INCOME
LIFE INSURANCE PENETRATION - BY GENDER
Source: Nielsen
Source: Nielsen
63
65
53
59
68
66
2010 2013
5INVESTING FOR A BETTER LIFE Copyright © 2013 The Nielsen Company
When it came to awareness of financial products, women were found to
be at par with men, but a significant percentage of the women were still
dependent on their spouses when it came to policy purchase decisions.
The study also found that the intention to purchase insurance was
higher among women in the metros, which makes the metro working
woman a category to look out for.
INFLUENCERS IN DECISION MAKING - WOMEN
INFLUENCERS IN DECISION MAKING - MEN
SELF AGENT SPOUSE OTHER FAMILY MEMBERS
FRIENDS AND COLLEAGUES
REASONS FOR INVESTING IN LIFE INSURANCE MEN WOMEN
To protect my family in case of my untimely death 52 44
To get lump sum money at a future date for my child’s future 47 49
For old age security/retirement 44 38
To save tax 35 29
As an additional investment option 35 30
Because it gives good returns 34 35
Because it’s a safe investment option 32 29
For Disciplined saving 31 27
Get dual benefits of Insurance & Investment 23 16
To meet a life cover which was not covered by the previous policy 8 8
2010RANK
1
3
2
3
6
5
7
4
8
9
BASE(WOMEN)-919|BASE(MEN)-3923
Source: Nielsen
BASE(WOMEN-POLICY OWNERS)-919
Source: Nielsen
38
49
32
13
24
29
5 1
6 2
6 INVESTING FOR A BETTER LIFE
LIFE’S GOOD FOR PRIVATE PLAYERS
A major transformation in the life insurance industry in India is the slow
but steady decentralization of dominance. Although the Life Insurance
Corporation of India (LIC) still dominates the life insurance market,
private insurers are also getting a decent share of the pie. Compared
to a paltry six percent in 2010, 16 percent of the respondents in the
Nielsen study purchased their first policy from private insurers in 2013.
The majority of these buyers belong to the SEC A category, whose
monthly earning is more than Rs 50,000, and the 22 to 30 age group,
who are willing and capable of experimenting. For private insurers, this
is an incredible opportunity to educate prospective buyers about their
products. The internet has facilitated this communication with more
people searching for information and researching financial products
online than ever before.
THE WAY FORWARDWith new entrants and private players in the mix, the insurance
landscape in India is expected to become more dynamic. In order to
attract more women and the youth, the offerings by these players as well
as the older ones will become more diversified and flexible. But since
life insurance already has a strong penetration, the trick to stand out
would be to align marketing strategies to involve these high potential
consumer categories and make them feel involved in the insurance
policy decisions of the household.
METROS
OWNERSHIP
INTENTION
NON METROS
56 7119 14
BASE(WOMEN-METRO)-1303|BASE(WOMEN NON METROS)-330
Source: Nielsen
FIRST POLICY PURCHASED FROM 2010 2013
LIC 94 84
PRIVATE 6 16
FIRST POLICY PURCHASED FROM OVERALL NEWENTRANTS
LIC 84 77
PRIVATE 16 23
Age=22-30 years
Belong mainly to SEC A
Average monthly income>50000
Source: Nielsen
7INVESTING FOR A BETTER LIFE Copyright © 2013 The Nielsen Company
THE NIELSEN QUALITATIVE VIEW
SARBANI SEN, ASSOCIATE DIRECTOR, NIELSEN INDIA
• Today, the consumer is not made aware of the benefits of having
a life cover. Consumers are under insured in this category and we
have seen that once he is aware of loss of life cover, the ‘lapsation’
(intention to not continue paying premium) tends to fall drastically.
• This holds true for customers over 30 years old and married either
with or without children. For those below 30 years, our studies have
shown that short term objectives or milestones are more important
and hence life cover is not a key driver to policy purchase.
• To increase penetration among the uninsured and underinsured,
life insurers need to make a stronger case for the full range of
benefits a policy could provide to meet many financial priorities
beyond offering immediate monetary support for their families
should something happen to the policyholder.
• Typically, an average consumer is unable to differentiate products
& features between brands. In such a scenario, brand positioning
on an emotional platform can become a potential differentiator
• Contrary to popular perception, women have always been natural
savers. However, not many financial services brands have exclusively
targeted this segment.
8 INVESTING FOR A BETTER LIFE
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Copyright © 2013 The Nielsen Company. All rights reserved. Nielsen
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SUBHASH CHANDRA,
EXECUTIVE DIRECTOR,
NIELSEN, INDIA
ABOUT THE AUTHOR
Vikram Budhraja & Poorva Shinde contributed to this issue of Featured
Insights