market research report : ict in insurance industry in india 2012

Insert Cover Image using Slide Master ViewDo not distort

ICT Adoption in Insurance Industry IndiaICT Adoption in Insurance Industry ‐ India

February 2012

Executive Summary

Market

The ICT adoption in insurance market was valued at INR xyz bn in 2011 and is anticipated to grow at a CAGR of xxx% to reach INR 230.85 bn by 20‐‐Out of the overall ICT expenditure in 2011, insurers spent about INR aa bn and INR cc bn on IT and telecommunications respectively Hardware Software and Services comprise of 45 4% 19 2% and 33 7% respectively of the

Key

Hardware, Software and Services comprise of 45.4%, 19.2% and 33.7% respectively of the overall IT expenses of insurers

Some of the prevailing key technologies identified within the Indian insurance sector so far comprise of: aaay

Technologies

Technology trends identified in the industry can be summarized as below:

bbb

ccc

ddd

Trends

Technology trends identified in the industry can be summarized as below: xyz – zzz

abc – yyy

def – xxx

Competition

Major Players

IBM Microsoft Red Hat

2ICT ADOPTION IN INSURANCE INDUSTRY INDIA 2012.PPT

Co pet t oWipro CMC TCS

•Insurance Industry – Snapshot

•ICT in Insurance – Overviewh l d dKey Technologies Adopted

Government Initiatives

Drivers and Challenges

•Trends in Insurance IndustrySOA

Cl d C iCloud Computing

Web 2.0

•Key ICT Vendorsy

•IT Landscape – Indian Insurers

•Strategic Recommendations


•Appendix

Indian Insurers ‐ History

25

Numbers231

2222

xxx Insurers ‐ India

222121151513131212105

10

15

20111

161

16114

1141

131

131

111

41 b

a

020102009200820072006200520042003200220012000

31 b

I I di

20

25

Numbers24

622

6

22

61716151515

xxx Insurers ‐ India

9 1015 15 17

8888630

5

10

15

1111

616

1

615

1

6

15

1

6

15

1

614

1

511

1

48

1

4 c

x

a


20102009200820072006200520042003200220012000

Rise in working class population and growing disposable income is driving the insurance sector in India

•The highly dynamic Insurance sector can be primarily segregated into Life and Non‐Life

Insurance Industry – Snapshot (India) xxx Insurers – India (2011)

Numberszyx

Insurance segments • Indian Life insurance business is ranked 9th

amongst 156 countries and contributes to about 2.69% to the global market in 2010 181

0

20

40

6041

0

238

1 6

•On the other hand, the non‐life insurance business was ranked at the 19th position in 2010 and contributes to about 0.58% of the global market

P t lib li ti i I di th t

No. of Insurers taken are as of 30th Sep, 2011

0

zzz

0

xxx

•Post liberalization in India, the sector witnessed a persistent entry of foreign playersAs of now, state owned LIC maintains its l d hi ith i t l 76% i t f

xxx Insurance ‐Market Share

INR tr yyyxxxleadership with approximately 76% in terms of new business premiums while the remaining 25% is split amongst 23 private players

•Favorable economic demography and rising disposable incomes are the primary growth

2.922.65

0.430.351

2

3

5ICT ADOPTION IN INSURANCE INDUSTRY INDIA 2012.PPTICT ADOPTION IN INSURANCE INDUSTRY INDIA 2012.PPT

disposable incomes are the primary growth drivers for the sector

02010‐112009‐10

Insurance Industry Hierarchy – India

PublicState run LIC governs the entire public life insurance domain

Life Insurance

Private

Currently, a stiff competition

il t

Ministry of Finance

IRDA

Private prevails amongst 23 private players

Players have

Non‐life

Public

yprimarily targeted the retail segment and brought in efficient strategies to strengthen their distribution

Insurance

P i t

distribution channel

Private players have carved a niche for th l i t


Private themselves in terms of service quality

Insurance industry relies majorly on technology and has shown a strong IT adoption over the years

•Gradual entry of private players in the sector has resulted in the formation of a stiff competition which in turn has forced insurers to adopt IT so as to gain a competitive edge over other playersh d f l d b d d f

ICT in Insurance ‐ Overview

•The ICT spending of insurers was valued at INR 76.17 bn in 20‐‐ and is expected to attain a CAGR of 13.1% to reach INR xxx bn by 2020

•Primarily, areas of policy administration, claims management, HR solutions, re‐insurance management and business intelligence are automated by insurers With the advent of technology players have also shifted their focus on tools such as portal services and sales IVRWith the advent of technology, players have also shifted their focus on tools such as portal services and sales, IVR and request SMSApart from the above mentioned, insurance vendors also emphasize on touch points for customers, agents and sales managers

IT adoption Phases ‐ InsurersIT adoption Phases Insurers

Phase I Phase II Phase III Phase IV

xxx yyy zzz aaa


SAMPLE ICT spending of insurers in India is expected to witness a significant momentum in the ensuing years

ICT Spending – Indian Insurance Industry

INR bn

Z

Y

lk

ji

TelecomIT

E

h

F

g

G

f

H

e

I

d

J

c

K

b

L

a

Y

X

W

0

ABCD

i

Analysis of ICT Spending – Indian Insurance Industry

0

2020e2019e2018e2017e2016e2015e2014e2013e2012e201120102009

• ICT in Insurance industry was pegged at INR xx bn in 20‐‐ and is expected to witness an impressive CAGR of 13.1%

•Over the years, incorporation of IT has been the top choice amongst insurers in India as compared to telecommunications services

Analysis of ICT Spending Indian Insurance Industry

compared to telecommunications services• IT spending of insurers hovered at around INR AAA bn in 2011, whereas amount spent on telecommunications stood at INR BBB bn during the same year

• An analysis of the overall spending brings forth the fact that insurers in India will shell out more on IT expenses as compared to telecommunication expenditures


IT expenses mainly include the amount invested in hardware, software and services

SAMPLE Insurers exhibit a tendency to shell out more on hardwares as compared to software and services

IT Expenditure Segmentation ‐ Insurance

120%

DCBA

19 9% 19 2% 18 8% 19 0% 18 7% 18 3% 17.0%60%

80%

100%

120%

100%

38.6%42.2%43.1%44.0%45.0%45.4%45.9%46.4%

20.6% 19.9% 19.2% 18.8% 19.0% 18.7% 18.3%

0%

20%

40%

2020e

0.4%

44.0%

2015e

1.0%

38.6%

2014e

1.0%

37.3%

2013e

1.0%

36.0%

2012e

1.3%

34.9%

2011

1.7%

33.7%

2010

2.0%

32.3%

2009

2.2%

30.8%

A B C

•XXX •YYY •ZZZ


SAMPLE BBB Expenditure – Insurance Industry

BBB Expenditure – Segmentation

2009 2010 2011 2012e

24.4%

23 3%52.3%

23.9%

23 8%52.3%

23.4%

24.3%52.3%

22.4%

25.3%52.3%

23.3% 23.8% 24.3% 25.3%

2013e 2014e 2015e 2020e

21.3% 20.7% 19.5% 14.3%

52.3%26.4% 27.0%

52.3% 52.3%28.2% 33.4%

52.3%


GHIDEFABC

SAMPLE XYZ Basic Framework

AAA DDD

Feature Phone

Platform 1

BBB EEETablet PC

Platform 2

CCC

Smartphone

Portable Media Platform 3

End Users

Player

Digital Distribution Platform


Where applicable

SAMPLE Popular Technologies Implemented (X/X)

abc def

Usage of enterprise softwares also has found immense popularity amongst insurers, wherein these customer relationship management and business intelligence tools are most widely used

abc def

•xxx •xxx


SAMPLEGovernment InitiativesSAMPLE •The insurance sector in India is primarily governed by the IRDA (Insurance Regulatory and Development Authority

•It has taken several initiatives which have directly or indirectly or indirectly acted as a driver for the ICT industry

•Some of the major initiatives has been mentioned as under:•Some of the major initiatives has been mentioned as under:

Selling of high value ULIPs via telemarketing f bidd

Setting up Integrated Grievances M S (IGMS)forbidden Management System (IGMS)

•xxx •xxx


Drivers & Challenges – Summary

Drivers

Need for better customer service

Challenges

Cyber threats

Presence of huge volume of data

Rise in internet usage

Lack of technology awareness

Rise in enterprise mobility


Need for better xxx is increasing the demand for xxx oriented ICT tools

Need for better customer service

•At present, there are 49 insurers operating in the nation, thus making the sector very competitive with so many players vying for greater market share

Impact

Insurers are now forced to revamp their services and product quality on a regular basis so as to survive the prevailing competition

•A better and efficient customer service happens to be the top priority of major insurers and thus they have shifted their focus onto IT implementationy p Customer service oriented tools and solutions such as xxx, xxx and other xxx tools are currently experiencing a dynamic demand and hence is boosting the overall ICT usage by manifolds

Insurance Penetration ‐ abc Insurance Penetration ‐ def

55.7

40

60

USD defabc

4.46

% defabc

9.1 8.72.40

20

40

20102001

2.20.70.6

0

2

4

20102001


xxx

xxx with its ability to reach a massive amount of audience happens to be a significant tool for insurers

yyy – Insurance Industry• yyy is another nascent technology which is yet to experience a full fledged take off within the insurance sector in India• A slow but steady popularity about yyy is seen amongst the sector which in turn happens to be a splendid opportunity for ICT Vendorsfor ICT Vendors

• The primary reason supporting the growth of yyy is the mammoth use of social media space all over the world• Social media websites such as Twitter, Facebook and Linkedin are constantly attracting people across all age groups, culture and geographic demographics and hence have become the most effective way to facilitate visibility

• The following illustration will provide better understanding of yyy in insurance sector:

Insurance Player

xxx

xxx


Major Public Companies ‐ Summary

2,500

3,000

Net Profit/Loss

Size of the Bubble represents Market Capitalization in INR bn

1,500

2,000

500

1,000

‐500

0

‐1,000

‐2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000

Total income


Note: All figures are in INR mn and are based on the latest financials available

xxx yyy zzz

Public: Domestic Company – xxx. (x/x)

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

New Delhi

Products and Services

Ticker Symbol

Stock ExchangeHead Office

Key People

Products and Services

Category Products/Services

Logistics

Education & TrainingN D i ti

g

Data Services

Outsourcing

Others

Name Designation

MD & CEO

Chief Financial Officer

Chief Operating Officer


Vice President

Public: Domestic Company – xxx (x/x)

i i l S h K iFinancial Snapshot Key Ratios

Particulars y‐o‐y change (2011‐10)

2011 2010 2009 2008

Profitability RatiosOperating Margin ‐0.18 18.41% 18.59% 12.44% 11.35%

Net Profit/LossTotal IncomeINR mn

4

3

INR mn

4

3

dcba

Net Margin 0.17 16.42% 16.26% 12.02% 8.63%

Profit Before Tax Margin 0.39 19.39% 19.01% 14.88% 11.53%

Return on Equity ‐0.61 27.43% 28.05% 28.52% 29.53%

Return on Capital Employed ‐0.49 30.75% 31.24% 26.40% 35.72%

Return on Working Capital 5.08 40.66% 35.58% 32.79% 59.62%

Return on Assets 0.48 17.95% 17.47% 14.98% 13.36%

0

3

2

1

0

3

2

201120102009

b

2008

Financial Summary

• The company incurred a net profit of INR xxx mn in FY 2011, as compared to net profit of INR xxx mn in FY 2010

• The company reported total income of INR zzz mn in FY 2011, as compared to total income of INR mn in FY 2010

Return on Fixed Assets ‐36.68 88.11% 124.79% 119.76% 108.85%

Cost RatiosOperating costs (% of Sales) 0.20 81.39% 81.19% 87.21% 88.60%

Administration costs (% of Sales)

‐0.97 9.35% 10.32% 10.78% 13.50%

Interest costs (% of Sales) ‐0.36 0.02% 0.38% 0.26% 0.10%compared to total income of INR zzz mn in FY 2010

• The company earned an operating margin of 18.41 per cent in FY 2011, a decrease of 0.18 percentage points over FY 2010

• The company reported debt to equity ratio of 0.53 in FY 2011, a decrease of 12.75 per cent over FY 2010

Interest costs (% of Sales) % % % %

Liquidity RatiosCurrent Ratio ‐3.57% 2.28 2.36 2.11 1.44

Cash Ratio ‐8.10% 0.82 0.89 0.63 0.42

Leverage RatiosDebt to Equity Ratio ‐12.75% 0.53 0.61 0.90 1.21

b i l iKey Financial Performance Indicators

Indicators Value (08/02/2012)Market Capitalization (INR mn)

Total Enterprise Value (INR mn)

EPS (INR)

Debt to Capital Ratio ‐100.00% 0.00 0.03 0.11 0.08

Interest Coverage Ratio 1742.04% 914.14 49.63 49.66 116.68

Efficiency RatiosFixed Asset Turnover ‐30.05% 5.31 7.59 9.69 12.55

Asset Turnover 1.79% 1.08 1.06 1.21 1.54

Current Asset Turnover 10.14% 1.37 1.25 1.39 2.10


EPS (INR)

PE Ratio (Absolute)Working Capital Turnover 13.22% 2.45 2.16 2.65 6.87

Capital Employed Turnover ‐3.10% 1.65 1.71 2.31 3.40

Improved Decline

Public: Domestic Company – xxx (3/3)

Key Business Segments Key Geographic Segments

100%

jklghidefabc

100%

ecba

18% 26% 38% 43%2% 2%1%

50%

100%

3% 2%

51%

3% 2%

57%

4%

69%79%

36% 46%55% 54%

5%5%

50%

100%25%

16%13%

28%

5% 8%

41%

4% 6%

53%

Key Recent Developments

2% 2%0%

2011

3% 2%

2010

3% 2%

2009

4%

2008

5%5%0%

201120102009

5% 8%

2008

4% 6%

Description News

Overview • xxx

Parent Company • xxx

Most Recent Auditor • xxx


SWOT Analysis – xxx

SAMPLEWid d d i f

Strength Weakness

SAMPLE •Wide and dynamic range of products and services

•Capability to serve key industry verticals

•Limited liquidity

SWOT

•Global growth in the IT services market

Opportunity

•Rapid change in technology

Threat

•Growth in domestic ICT adoption in insurance industry

Rapid change in technology•Intense competition


General Insurer‐ yyy

Company Snapshot

Foundation:

Corporate Information Business Highlights•Operates as a subsidiary of yyyy zz• Through its subsidiaries, provides insurance solutions for protection, health, wealth with protection,

Headquarter:

Address:

b

for protection, health, wealth with protection, children, and retirement needs

• The company comprises of …

Website:

Phone:

P d t d S iProducts and Services

a b c d

e f g h

i j


j

SAMPLETechnology Implementation (x/x)SAMPLE ICT Vendor – abc

SolutionRequirements Benefit

• Gain a better understanding of customers across the financial services businesses

• Increased efficiencies in productivity and deployment of its services

• BI and CRM initiative provided valuable insights for all sales, marketing and customerservices businesses

• Provide better, relevant and timely service to its customer base

its services• Currently, customers receive improved, relevant and timely services

marketing and customer service‐related business units within the Financial Services Group

Technology Used


xxx

Sales Intelligence (1/x)

Mr. xxxCFO

Mr. xxxVice President ‐ IT

E‐mail xxx E‐mail xxx

Phone yyy

Professional History:

•xxx

Phone yyy

Professional History:

•xxxy y


Strategic Recommendations

abc

def ghi

• xxx • xxx


Appendix SAMPLE Ratio Calculations

Operating Margin (Operating Income/Revenues)*100

Ratio Calculations

Current RatioCurrent Assets / Current Liabilities

Net Margin (Net Profit / Revenues) *100

Profit Before Tax Margin (Income Before Tax / Revenues *100

(N I / Sh h ld

Cash Ratio{(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

Debt to Equity Total Liabilities / Shareholders E it

Return on Equity (ROE) (Net Income / Shareholders Equity)*100

Return on Capital (ROCE) EBIT / (Total Assets – Current Liabilities)*100

(N I / W ki C i l)

q yEquity

Debt to Capital Ratio{Total Debt / (Shareholders Equity + Total Debt)}

Interest Coverage Ratio EBIT / Interest Expense

Return on Working Capital (Net Income / Working Capital) *100

Return on Assets (Net Income / Total Assets)*100

Return on Fixed Assets (Net Income / Fixed Assets) *100

Fixed Asset Turnover Sales / Fixed Assets

Asset Turnover Sales / Total Assets

Operating Costs (% of Sales) (Operating Expenses / Sales) *100

Administration Costs (% of Sales)

(Administrative Expenses / Sales) *100

Current Asset Turnover Sales / Current Assets

Working Capital Turnover Sales / Working Capital

/


Interest Costs (% of Sales) (Interest Expenses / Sales) *100 Capital Employed Turnover Sales / Shareholders Equity

Thank you for the attentionh d i i d di i f h di ’The ICT Adoption in Insurance Industry – India report is a part of Research on India’s Information Technology Series. For more detailed information or customized research requirements please contact:

Kalyan BangaPhone: +91 33 4064 6215E‐Mail: [email protected]

Research on India is a product of Netscribes (India) Pvt. Ltd. Research on India is dedicated to disseminating information and providing quick insights on “hot” industries in India and other emerging markets. Track our new releases and major updates in these industries on

About NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.

Disclaimer: This report is published for general information only Although high standards have been used the preparation Research on India Netscribes (India) Pvt Ltd


Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India, Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction.

market research report : ict in insurance industry in india 2012

News & Politics

ith i t

t ofservicequality

d ciweb2

portal services

advent of technology

astiff competition private

edcw ih g f

xyz zzz abc yyytrends