The Members of
SBI Life Insurance Company Limited
The Directors are pleased to present the 20th Annual Report of SBI LifeInsurance Company Limited (SBI Life or the Company) along with theaudited financial statements for the financial year ended March 31 2020.
1. SUMMARY OF FINANCIAL PERFORMANCE
The summary of the financial performance of the Company for FY 2020 ispresented below:
| || ||( Rs billion) |
|Particulars ||FY 2020 ||FY 2019 |
|A. Financial Parameters: || || |
|Gross Written Premium (GWP) ||406.35 ||329.89 |
|- New Business Premium (NBP) ||165.92 ||137.92 |
|- Renewal Premium (RP) ||240.42 ||191.97 |
|Profit / (Loss) before taxation ||17.90 ||16.42 |
|Provision for taxation ||3.68 ||3.15 |
|Profit / (Loss) after taxation ||14.22 ||13.27 |
|Profit at the beginning of the year ||64.60 ||53.74 |
|Total profit available for appropriation ||78.82 ||67.01 |
|Interim/ Final dividend (including dividend distribution tax) ||- ||2.41 |
|Profit carried to the balance sheet ||78.82 ||64.60 |
|Earnings per equity share (EPS) || || |
|- Basic (in Rs) ||14.22 ||13.27 |
|- Diluted (in Rs) ||14.22 ||13.27 |
|Net worth ||87.42 ||75.76 |
|B. Business Parameters: || || |
|Indian Embedded Value (IEV) ||262.91 ||224.02 |
|Annualized Premium Equivalent (APE) ||107.37 ||97.02 |
|Value of New Business (VoNB) ||20.12 ||17.19 |
|New Business Margin (VoNB Margin) ||18.7% ||17.7% |
|Assets under Management (AUM) ||1603.63 ||1410.24 |
|Individual Rated Premium (IRP) ||97.72 ||89.55 |
|Total Protection NBP (Individual + Group) ||20.82 ||16.43 |
|Total Protection NBP Share ||12.5% ||11.9% |
|NBP Product mix (%) (Par/Non Par/ULIP) ||7/44/49 ||13/34/53 |
|NBP Channel mix (%) (Banca/Agency/others) ||60/20/20 ||64/21/15 |
|Operating expense ratio ||5.9% ||6.3% |
|Commission ratio$ ||4.0% ||4.2% |
|Total cost ratio* ||9.9% ||10.5% |
|Solvency ratio ||1.95 ||2.13 |
|Persistency ratio (13th month on premium basis) ||86.14% ||85.07% |
|Number of new policies issued (in 000's) ||1551.86 ||1526.14 |
$ Commission ratio = Commission (including rewards) / Gross WrittenPremium (GWP)
* Total Cost= Operating expenses + Commission + Provision for doubtfuldebt + Bad debts written off
2. HIGHLIGHTS OF FINANCIAL PERFORMANCE AND STATE OFCOMPANY'S AFFAIRS
The Company witnessed a growth and consistent performance in FY 2020.The key financial parameters of the Company are as follows: New Business Premium (NBP) hasincreased by 20% from Rs 137.92 billion in FY 2019 to Rs165.92 billion in FY 2020.Individual rated premium (IRP) has increased by 9% from Rs 89.55 billion in FY 2019 to Rs97.72 billion in FY 2020 with Private market share of 23.2%.
Total protection new business premium has increased by 27% from Rs16.43 billion in FY 2019 to Rs 20.82 billion in FY 2020. The share of total protection NBP(individual and group) has increased from 11.9% in FY 2019 to 12.5% in FY 2020.
Individual protection business has increased by 42% to Rs 5.29 billionin FY 2020 from Rs 3.71 billion in FY 2019.
APE has increased by 11% to Rs 107.37 billion over previous year.
GWP has increased by 23% to Rs 406.35 billion primarily due to increasein renewal premium by 25% from Rs 191.97 billion to Rs 240.42 billion. The Company'sprofit after tax grew by 7% to Rs 14.22 billion in FY 2020 from Rs 13.27 billion in FY2019.
The operating expense ratio (Operating Expense to GWP) stands at 5.9%in FY 2020 as against 6.3% in FY 2019.
AUM has grown by 14% from Rs 1410.24 billion as of March 31 2019 toRs 1603.63 billion as of March 31 2020 with debt-equity mix of 79:21. Solvency ratio ofthe Company stands at 1.95 as against the regulatory requirement of 1.5 indicating thestrong & stable financial health of the Company.
The 13th month persistency ratio (based on premium) improved by 107 bpsto 86.14% in FY 2020 from 85.07% in FY 2019.
Indian Embedded Value of the company stands at Rs 262.91 billion as onMarch 31 2020 as compared to Rs 224.02 billion as on March 31 2019.
Value of New Business grew by 17% from Rs 17.19 billion to Rs 20.12billion in FY 2020 leading to an increase in value of new business margin from 17.7% to18.7% in FY 2020.
The Company with a view to increase the market share and servingunderpenetrated market continues to emphasise on the expansion of its distribution reachthrough opening up of new offices quality recruitments and new business partnerships. Asat March 31 2020 the Company has 937 offices 130418 Insurance Advisors (IAs) and53096 Certified Insurance Facilitators (CIFs) across the country as against 908 offices123613 IAs and 58995 CIFs as on March 31 2019. The Company has obtained necessaryregulatory approvals for opening branch office in Kingdom of Bahrain from IRDAI andCentral Bank of Bahrain (CBB) for carrying out life insurance business. However the Boardof Directors in its meeting held on January 22 2020 have resolved to surrender theCertificate of Commencement issued by the Central Bank of Bahrain (CBB) and to withdrawall the resources of the Company in accordance to the applicable laws.
During the year the Company collected New Business Premium of Rs 165.92billion comprising of Rs 99.97 billion from Bancassurance' which representscompany's largest distribution network Rs 33.08 billion from Retail Agency and
Rs 32.87 billion from other distribution channel which includes directsales sales by non- bancassurance corporate agents brokers micro agents common servicecentres (CSC) insurance marketing firms (IMFs) and Web aggregators.
The Company's direct sales primarily comprise sale of groupproducts as well as standardised individual products sold through online offerings.
3. INDUSTRY AND COMPANY OUTLOOK
It was a challenging year for the Indian economy. India saw a declinein its growth rate from 7% in FY 2019 to 4.5% in FY 2020. The slowdown was attributed toweakened investments slow domestic consumer demand and some turbulence in the non-bankingfinancial institutions. Various international organizations such as World BankInternational Monetary Fund (IMF) and rating agency Moody's have cut down the GDPgrowth forecast for India. Disinvestment of PSUs merger of public sector banksincentivizing start-ups and MSMEs and reduction in corporate tax rate were some of thesteps taken by the government to bring India back to growth track. As the world economystruggles to fight against COVID-19 India is no exception to it. Slowdown in consumptioncurbs on travel and other restrictions would hurt businesses and bring down the growth inthe current year. One of the rating agencies has slashed India's growth to 2.5% in2020.
Having said that the fundamentals of the Indian economy remainsstrong. If India is able to control the spread of the pandemic this seems to be atemporary moderation in the GDP growth rate and the economy will be expected to bounceback in the coming quarters. The government has already taken various measures like ratecuts liquidity infusion loan moratorium for borrower and many more to revive theeconomy. Life insurance business in India is likely to contract in 2020 with growthdeclining 0.9% in 2020 compared to 8.8% growth recorded in 2019 due to the outbreak ofCOVID-19 and the subsequent lockdown. Further India's life insurance market isforecasted to grow at a compound annual growth rate (CAGR) of 5.3% during the forecastperiod 2019-2023. (Source: data and analytics company GlobalData)
Key challenges are listed below:
Low interest rates and persistent barriers to growth: Lowinterest rates stagnant growth and the growing likelihood of a global recession definethe challenging economic reality for insurers around the world. These dynamics place realpressure that insurers feel not only on their bottom lines but also in their strategicplans transformation programs and new product. Low interest rates are the biggestchallenge to growth especially for life insurers. These conditions are the new normalthe latest round of monetary easing is increasing the pressure and negative yields are nowappearing in both government bonds and the corporate market. Weakening GDP growth andtrade tensions further complicate the macro outlook for insurers. The increasinglikelihood of the next financial crisis as investors hunt for yields may push them towardincreasingly riskier asset classes.
All of these forces add up to a major challenge for insurersespecially given that insurers derive majority of their profits from investment income.The erosion of investment returns from low interest rates tightening spreads and invertedyield curves will not only undercut this critical source of profitability but alsopotentially put ratings at risk.
Shifting demographics: Demographic shifts around the worldpresent insurers with both risks and opportunities. Aging populations and low birthratesare a challenge in many markets. In contrast growing middle classes in a number ofdeveloping countries have been a huge boon to insurers.
In many developing market especially Asia are experiencing strongergrowth and a growing middle class. Market dynamics in many of these countries arefavorable to insurers. For instance demand for insurance policies rises where consumersplace a high value on savings and preparing for the future. Similarly the importance ofprivate insurance is elevated when government-sponsored social programs are relativelyweak. Finally as an economy develops small to medium enterprises (SMEs) start lookingfor insurance coverage and larger companies need help in protecting themselves acrosscomplex value chains that often span across multiple countries or regions. Risingcustomer expectations: Customer expectations - largely around digital channels andbespoke experiences - have been rising and will only get higher in the near future.Creating unique and personalized customer experiences has been a priority for many yearsindicating that many companies are still playing catch-up and remain vulnerable tonon-traditional players. Thus better customer experiences have been a priority for years -and will remain one for the foreseeable future.
FY 2019-20 witnessed the notification of several key orders andcirculars by the IRDAI. This includes a circular on guidelines to be followed in thepreparation of financial statements by life insurers. The insurance industry looked poisedto experience growth and innovation with IRDAI inviting applications for RegulatorySandbox and constituting a committee for the scrutinisation of the applications received.
Additionally the regulator has issued various regulations/circular forthe life insurance sector such as IRDAI (Appointed Actuary) (Amendment) Regulations 2019IRDAI (Unit linked insurance products) Regulations 2019 and IRDAI (Non- linked insuranceproducts) Regulations 2019 Master Circular on Point of Sales (POS) Products and Persons- Life Insurance Revised guidelines on Stewardship Code IRDAI circulars in respect ofCOVID-19 etc.
The Company strategy focuses on the following:
1. Leveraging life insurance industry growth through deeperpenetration increasing share of protection business and increasing market share through abalanced portfolio of protection and savings products.
2. Increasing geographical reach by using our expansive distributionnetwork and strengthening our distribution mix by leveraging relationships with newcorporate agents broker partners and web aggregators.
3. Maximising customer satisfaction by offering comprehensive suite ofproducts of transparent nature at competitive prices and improving customer experiencefrom client on-boarding to claims settlement.
4. Digitisation and automation of sales processes to improvedistribution and operational efficiencies.
4. COVID 19
The COVID-19 Pandemic has spread with alarming speed infectingmillions and bringing economic activity to a near-standstill. It has pushed businessesacross sectors to change the way they operate and the insurance industry is no exception.From selling new policies to settling claims the extended lockdown in the wake ofCOVID-19 has pushed companies to depend heavily on their digital architecture throughonline business. The main concern for the Company is the protection of its employees itsdistribution partners' health and safety along with business continuity.
This nation-wide lockdown required the Company to activate its BusinessContinuity Plan (BCP) to enable operations to run with minimal disruptions. The Companyhad made a quick transition to Work from home (WFH) with the use of portable devicesthrough Company's Virtual Private Network (VPN) to the employees ensuring requisitedata security controls. The Company also continued to deliver to its customers byproviding 24x7 availability through our digital platforms. The Company identifiedimmediate significant challenges to alter operations based on advisories issued bygovernment as a part of Business Continuity Plan to ensure compliance as well as effectiveconduct of operations.
Information & Cyber-security
Activating remote working comes with its own set of challengesincluding managing information security infrastructure and vulnerability to phishingattacks. Technology infrastructure has made sure that working from home doesn't meanworking without security. Continuous monitoring is in place to ensure information securityto be of utmost importance along with business continuity. Necessary steps will be takento mitigate any risks relating to information & cyber security. As the processes ofthe Company are mostly system driven there have been no material change in the controlsor processes and all the material controls are found to be operating effectively.
The drive taken by the Company in the recent past to migrate fromphysical forms to digital onboarding of the customers has helped us in a big way to sourcethe proposals based on the insurance needs and requirements of the customers in thispandemic. The pandemic is having a huge psychological impact on the consumers'behavior we believe that in short to medium term the protection products along with longterm investments products will gain momentum and insurance will be more prioritized forfinancial immunity and safeguard of family from uncertainty of life and health.
The Company has assessed various risk scenario like short termoutbreaks to medium term pandemic and to long term pandemic. In such stress scenarios theCompany has reassessed financial risk operational risk and business continuity measures.The Company has re-evaluated mortality and morbidity assumptions persistency growth& projections reinvestment strategies duration & asset liability managementetc. The Company invests in well diversified investment portfolio consisting of GovernmentSecurities bonds & debentures equity shares money market instruments fixeddeposits etc. The Company's major investments are in large cap Nifty 50 Indexstocks sovereign and AAA rated securities with strong group backing which indicate safeand reliable assets quality. The substantial portions of the investments are readilymarketable providing sufficient liquidity. The Company do not have major concentration inany major industry which might have adversely impacted due to COVID-19. The Company hasevaluated the recoverability of all its investments and expects to recover the carryingamount of these assets. The Company has considered internal and external sources ofinformation including credit reports economic forecasts and industry data in assessingand evaluating the impact of this pandemic COVID-19 on the business operations andfinancial results of the Company.
The Company has evaluated its liquidity position and of recoverabilityand carrying value of its currents assets majorly consisting of accrued investment incomeand other receivables. Based on the assessment the Company expects to recover thecarrying amount of all these assets.
Impact of Covid-19 on policy liabilities would be on account of factorslike discount rate and mortality assumptions used for valuation. There is reasonable levelof prudence provided in the valuation interest rate assumption.
It is expected that due to this pandemic there would be increase inmortality claim since the pandemic has been affecting individual lives. The valuationmortality assumption has reasonable prudence to take care of fluctuations in claim. Alsoreinsurance arrangements are in place to reduce the risk exposure.
The customers utilized the grace period in making the renewal paymentsin early months of FY 21. Renewal trends can be expected to gradually pick up andaccordingly persistency should be seen maintained at the current levels.
Based on the Company's current assessment of the businessoperations over the next year it expects the solvency ratio to continue to remain abovethe minimum limit requirement of the IRDAI.
The impact of COVID-19 has already been significant on the globaleconomy. However the future impact of COVID-19 on business operations of the Company andthe additional requisite mitigation measures that will be required by Company will bebased on how long the pandemic lasts and what happens once normality returns. A lotdepends on the availability of an approved vaccine as well. The actual impact of COVID-19may differ from that estimated at present. The Company will continue to closely monitorany future developments relating to COVID-19 which may have any impact on the business andfinancial statements.
5. DIVIDEND AND RESERVES
The Company's profit after tax grew by 7% to Rs14.22 billion in FY2020 from Rs13.27 billion in FY 2019. The Board of Directors of the Company has notdeclared any dividend during the year after taking cognizance of the IRDAI circular no.IRDAI/F&A/CIR/MISC/099/04/2020 dated April 24 2020 on Prudent management offinancial resources of insurers in the context of Covid-19 pandemic. The Company hascarried forward Rs 14.22 billion to its reserves and surplus and had accumulated balanceof Rs78.8 billion as on March 31 2020.
In terms of Regulation 43A of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations) the Dividend Distribution Policy of the Company is disclosed on thewebsite https://www.sbilife.co.in/dividend-distribution-policy The Company has uploadedthe details of unpaid and unclaimed dividend on the Company's website:https://www.sbilife.co.in/en/abou t-us/investor- relations
6. CAPITAL AND SHAREHOLDING
During the year there was no fresh capital infusion by the promoters inthe Company. The authorized share capital and paid up share capital of the Company standsat Rs 20.00 billion and Rs 10.00 billion respectively. The shareholding pattern during theyear under review is in compliance with the statutory requirement. The shareholdingpattern is provided as a part of Form No. MGT-9 which is annexed to this Report and underSchedule 5A which forms part of the Financial Statement.
During the year State Bank of India (Promoter) has sold 4.5% stakei.e. 45000000 equity shares of Rs 10 each at an average price of Rs785.18 per share fora consideration of Rs35.33 billion. BNP Paribas Cardif S.A. (Promoter) has sold 2.5% stakei.e. 25000000 equity shares of Rs 10 each at an average price of Rs 680.77 per share fora consideration of Rs 17.02 billion.
During the year ended March 31 2020 the Company has allotted 26295equity shares of Rs 10 each pursuant to exercise of stock options by the eligibleemployees. This allotment has resulted in increase in paid-up equity share capital by Rs263 thousands and securities premium by Rs 14527 thousands.
7. INCLUSION IN FUTURES & OPTIONS' SEGMENT OF NSE
The National Stock Exchange (NSE) notified on 21 April 2020 thatF&O contracts of SBI Life Insurance Company would be available for trading with effectfrom 4 May 2020.
8. INCLUSION IN MSCI EMERGING MARKETS INDEX
Morgan Stanley Capital International (MSCI) in its semi-annual reviewof Global Standard Indexes on November 7 2019 announced the inclusion of SBI Life in theMSCI Emerging Markets Index from November 26 2019.
During the year under review the Company has not accepted any depositsfrom the public as per Section 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (as amended).
10. AWARDS & RECOGNITIONS
The Company has received various awards during the year acrossfinancial reporting brand management technology etc. Brief highlight of some of themajor awards are mentioned below: Won the Gold Shield' for excellence inFinancial Reporting by The Institute of Chartered Accountants of India (ICAI) for FY2018-19. Won the Life Insurer of the Year 2019 by Federation of Indian Chambers ofCommerce (FICCI) Won the Best Life Insurance Company 2019
- Emerging Asia Insurance Awards by Indian Chamber of Commerce (ICC)Won the Gold in Best Content Marketing Launch award by Afaqs Foxglove Awards 2019 Won theSilver in Best Brand Film BFSI Award by Indian Television Brandvid Awards 2019 Won Goldand Silver in Best Social Media Brand Cause Marketing and Best BFSI (Insurance) Brand onSocial Media respectively at Social Samosa's Sammie2019 Best Social Media brandsawards Won Gold in the Experiential' category at Indian Content MarketingAwards 2019' by Exchange4media Won the Bronze in the Best Campaign forCSR/Social Good' category at the DMA ASIA ECHO Awards 2019' Won the SmartLife Insurance Company at ET Insurance Summit 2019 by The Economic Times Won theBest Use of Integrated Marketing' at the Indian Marketing Awards 2019 WonSilver' for the Best Integrated Marketing Campaign' and BestCampaign- BFSI at the ET Brand Equity DigiPlus Award Won the Financial Services Company ofthe Year Award 2019-20 at VCCircle Awards 2020 Won Gold award - Life Insurance Provider ofthe Year 2019 (Private Sector) at Outlook Money Conclave and Awards 2019 Won theBest Sales Enablement Technology' award at The Customer Fest Awards 2020Received the Company Performance Award 2019 under the category India's LeadingLife Insurance Company - Private' at the BFSI Summit & Awards by Dun &Bradstreet Asweworktodeliverperformancewithpurposeweareproudthatnumerousorganisationshaverecognisedour efforts and achievements. These awardsdemonstrate the Company's commitment to achieve excellence across all spheres of itsactivities and operations.
SBI Life has a wide range of products catering to various customerneeds in the life health pension & micro-insurance segments. These products arecustomer centric simple to understand and have competitive features.
To maintain its competitive edge in the market the Company hasreviewed and modified thirty-three existing products & six riders (individual andgroup) during FY 2020. The products pertaining to various categories such as ProtectionPlans Retirement Solutions Wealth Creation Plans Savings Plans & Child Plans weremodified in line with the IRDAI (Insurance) Product Regulations 2019.
The following two products were already compliant with the IRDAI(Insurance) Product Regulations 2019.
1) SBI Life - Pradhan Mantri Jeevan Jyoti Bima Yojana (UIN:111G102V01)
2) SBI Life - Swarna Jeevan (UIN:111N049V04) In addition to the twoproducts above five Group riders are also compliant with the Regulations. The Company hadalso launched one new product SBI Life- Smart Platina Assure (UIN: 111N126V01) andmodified four existing products prior to the implementation of the IRDAI (Insurance)Product Regulations 2019 in view of the changing interest rate scenario and toaccommodate market demand.
InviewofthechangingmarketdemandandRegulations eight products and threeriders (individual and group) were withdrawn from the market during the year.
12. CUSTOMER AND PARTNER SERVICE ENABLEMENT
During the year under review the Company has been in a position tohandle a total volume of 15.51 lacs Individual NOP's and total Premiums of Rs 165.92billion in New Business resulting in an increase of 20% in total New Business growth.
Apart from this the company has also managed to collect RenewalPremium of Rs 240.42 billion showing an increase of 25% in Renewal Premium CollectionBusiness.
The company is continuously striving to achieve and scale new heightsof performance and raising the bar by improving its processes training and reskillingresources and improving the various digital platforms launched for its stake holders- ItsCustomers Distributors and Business Partners. We strongly believe that in the presentday digital world it is extremely necessary to empower the stakeholders digitally andhave been taking several steps towards the same. While working towards raising the bar inEnd to End digital services the company also understands that customers andpartners come from varied demographics and there is never a single One
Size fits all solution. Entire endeavours towards continuousimprovements is undertaken with this in mind; where aim is to create a balance between theneeds of diverse groups of customers and equally diverse distribution partners.
The snapshot of the various activities undertaken by variousdepartments under the overall Operations Business Unit which are highlighted below: Listof activities that the Company executed which benefitted more than one department in theOperations team.
Entering into an arrangement with IIBI for Information Sharing:
Insurance Information Bureau of India (IIBI) maintains a centralrepository of all* the policies of participating insurance companies. The information ismaintained at individual policy level and includes personal details of lives insured (LA)as well as Underwriting decisions and Claims related information. The participatingcompanies can get the facility to query on this entire database. It is particularly usefulat the time of New Business Underwriting and also during Claims assessment / Settlement asit helps in getting all the information in respect of the insurance policies held by theLife Assured (LA) taken from other insurance companies. Other information such as whetherany of the LA's proposals was ever declined / accepted with extra rating etc. byother companies is also made available. This information proves very vital in detectingvarious Non disclosures / claim frauds. SBI Life entered into an agreement with IIBI andstarted participating in the IIBI data module (Quest) from October 2019. The company isnow in a position to mitigate the risks of non-disclosure / wrong disclosure to a largeextent. (*as agreed upon by the participating companies).
SBI Life was the first company to have an API Integration with IIBIwhere in this information is received by us directly on real time basis as and when weseek the necessary information.
Teams benefited - New Business Underwriting & Claims management.
Making use of WhatsApp for various communications with customers:
Initiated communication through what's app messenger forinformation on various events starting from the on boarding stage. Currently communicationis sent on events like proposal login requirements raised policy issuance PolicyDispatch Downloading of E-Policy document & intimation on return undelivered. Thesecommunications are sent only to those customers who have provided consent for receivingWhatsApp communication. Going ahead the plan is to take the customer's consentduring proposal journey in M-connect app and intimations through What's App for allpre and post issuance related matters will be sent.
Customer can now opt to connect over WhatsApp by a missed call on9029006575. In the year under review we already have over 16 lakh customers who haveopted for WhatsApp services. We have sent renewal premium receipts to over 18 lakhcustomers. Over 10 lakh premium receipts have been sent in 13 Regional languages also.Once registered customers can also chat with our Chabot on WhatsApp and get all keypolicy information and even get a premium quote and payment link.
Teams benefited - New Business Underwriting Policy Servicing &Renewal management.
A. New Business
The New Business Department is pivotal in ensuring a smooth on-boardingexperience to the customers as well as sourcing partners. The initiatives taken throughoutthe year are focussed on improving the customer on-boarding experience through improvingthe processes thereby leading to faster issuance digitization and better communication.
Know Your Customer (KYC) verification through AADHAR on Digitalplatforms:
KYC verification of the customer through AADHAR has been enhanced byadding QR code scanning that is available in the AADHAR card of the customer.
Subsequently in addition to QR code scanning second option to do KYCverification has also been introduced by incorporating offline e-KYC method. Through thismode customer has the benefit of non-submission of any hard copy of AADHAR towards KYC& age proof. Along with it Offline e-KYC takes care of basic KYC of customer and noadditional KYC document is required. This has eased the KYC verification process ofcustomers by enabling them to complete the KYC in one go and made it a seamless journeyfor customer. Offline e-KYC also works as a Risk mitigation tool as customer credentialare authenticated as part of the process and it completely rules out the risk of uploadingany invalid / fraudulent document. Offline e-KYC has also helped to increase our DigitalFTR percentage eventually reducing the overall TAT.
Optical Character Recognition (OCR) Technology in Digital platforms:
The company achieved a penetration of 98% in Digital adoption under theperiod of review. The major issue faced in the on-boarding journey was that of upload ofcorrect and valid Images which has a direct impact on the overall performance parametersof the company. In order to tackle this issue digital applications
(m-Connect / Parivartan) was enhanced to recognize the correct documentthat is submitted against the selected Official Valid Document (OVD). This feature hasbeen introduced for five OVD's viz.; AADHAR card Driving License Voter ID card PANcard & Passport. This has increased the receipt of the correct KYC documents at thesourcing stage itself to a large extent. OCR technology has helped in Risk Reduction bymaking sure that only correct images are uploaded thereby enhancing the Quality index.
Automation of Proposal Deposit Refund:
One of the important parameters of PPI (Protection of Policy HolderInterest) guideline is to refund any Proposal Deposit that could not be accounted forissuance within a stipulated TAT. To avoid any deviation the identification of Proposalsfor refund under various categories of Proposal Deposit Refund has now been automated.This has not only resulted in adherence to PPI guidelines and other Regulatory provisionsbut also ensured reduction of manual intervention in the process.
Automation of Proposal Deposit Unclaimed Movement:
Proposal Deposit amount that could not be adjusted / policy issued orrefunded for any reason within 180 days have to be mandatorily moved to Unclaimedaccount as per IRDAI regulation. Looking at the huge volumes handled manuallyidentifying such cases is a cumbersome activity and further any delay in movement tounclaimed fund not only creates regulatory violation but due to change in NAV of unclaimedfund it may also account financial loss to the company based on the profit / loss as perthe NAV. Thus this entire process from identification of the transaction to transfer thesame to the Unclaimed Account has now been automated.
Policy Document development: Revision in Regulatory Guidelines
Introduction of new product guidelines for all Pension ULIP &Traditional policies necessitated the development of fresh policy documents templates forall newly launched products. Massive exercise of changing the template of all products wassuccessfully undertaken well within prescribed timelines.
Expanding policy dispatch process through private couriers:
The company was looking at addressing the one of the customers'concerns i.e. non-receipt of policy bonds which constitute on an average 0.13% of totalpolicies dispatches. These policies were being returned undelivered. The company now hastied up with local couriers to deliver the policies in Major metros like Mumbai Delhi andtheir surrounding areas like Thane Navi Mumbai and NCR on pilot basis from November2019. Initial results of utilization of local couriers have been very encouraging in termsof delivery percentage including the delivery TAT and also procuring the POD's.Accordingly the Company has drawn out plans to further expand the services to othercities on Pan India basis.
Increased Digital Adoption in RiNn Raksha:
Digital adoption is one of the major tool that is now widely used bythe customer for all modes i.e. for proposal login premium payment servicing requestsetc. For RiNn Raksha proposals (Credit Life plans) it was deeply focused throughout theyear 2019-20. We are happy to inform that the Digital adoption of proposal login for RiNnRaksha proposals has increased from earlier 94.70% as in April 2019 to 99.40 % in March2020.
The percentage of premium received through Electronic Funds Transfer(EFT) has also improved from the earlier 83.31% as in April 2019 to 93.60 % as in March2020. This achievement is a result of various development and initiatives taken by both ITand Operations of the Bank and SBIL e.g. Real time EFT making EFT mandatory for SBIproposals & regular communication of digital adoption to region and Credit LifeManager's via auto-mailers.
RiNn Raksha Certificate of Insurance. (CoI)
On initial dispatch of CoI - initiated an SMS in which bitly link ofSpeed Post and Blue dart website is provided to enable the customer to track the deliverydetails. Copy of CoI is now directly being dispatched to the sourcing Bank branches fortheir records.
Email / SMS Intimation for Proposal Deposit Refund:
Proposal deposit refund happens through electronic mode of payment only(Direct remittance to Bank account). Sometimes it takes time for the physical letter toreach customer and customer is not aware of the reason of this credit into his account. Inorder to bridge this gap department initiated an SMS / Email service to the customer thatgoes on the same day of the crediting of the amount resulting into faster intimation tothe customer regarding the nature of Credit received.
Underwriting is a critically important function that aims at assessingand booking of the correct risk with adequately understanding the same based on theinformation provided. Underwriting guidelines are subject to change with the introductionof new products / processes / systems or revision in legal and regulatory aspects. In linewith the focus on digitalization various initiatives were undertaken in the year underreview to ensure simplified and seamless processing and issuance of proposals.
Digital Moral Hazard Report (e-MHR)
Introduction of e-MHR has eased the process of physical papersubmission of MHR. The digital format of MHR is now authenticated through the digitalcredentials of the person submitting the said MHR. It is validated through an OTP sent onregistered mobile number of sales intermediary. Digital MHR can also be submitted throughSmart Advisor Application developed by the company especially for the sales personnel.
Additional measures for Risk mitigation
Introduction of negative location guidelines in NB Workflow:
This has been introduced with an aim to curtail adverse selection oflives and also adverse claims. Proposals sourced from negative location (locations whereearly claim ratio is high) are identified in Workflow system itself. Differentialunderwriting guidelines are then applied for such proposals for better assessment of therisk.
Use of surrogate documents for underwriting of Term insuranceproposals:
Financial underwriting for term plans is an important function and havebeen extended to offer pure term cover basis surrogate documents for occupations such asBusinessman / Self-employed categories / Housewives and Agriculturists (which was notprovided earlier) provided they meet certain basic criteria's. SBIL has startedoffering Term life plans to Retired Defense personnel also.
Conducting of required Medical through Videography: Video MER
A new process has been launched by the company for compliance ofmandatory medical reports through video MER. In this process certified technicians conductthe required medical through home visit under the supervision of Doctor sitting at centrallocation of TPA. The process eliminates major risk of impersonation and at the same timeensures accuracy in medical examination without customer requiring to visit the medicalcenter.
Important changes in Underwriting guidelines and processes in Creditportfolio (RiNn Raksha):
Increase in Auto Underwriting limits:
Auto Underwriting limits have been revised to ease the processing ofcases. The limit has been revised to Rs 1 crore for SBI Home loan. Revision in financialunderwriting requirements:
The financial underwriting guidelines have been reviewed taking intoconsideration the verification of financial documents by the Bank. The guidelines havebeen eased for various categories of loans offered by SBI.
Revised Medical grid:
Based on our past experience the Medical grids have been revised withprovision of Tele MER for SBI Master Policy
C. POLICY SERVICING AND RENEWALS
Renewal is an important function of the company and this also helps usto understand the quality of sales and also what the customer feels about the product andthe company. This is also an important parameter in assessing the persistency of thepolicies and how long the customer is staying with the company and paying their premiumsregularly.
The company has taken lot of steps to improve the Renewal and in returnthe persistency of the policies thereby creating a good value for the customer companyand shareholders. Major initiatives being given below:
During the period under review a Revival campaign was launched withthe motive of reviving lapsed policies and rebuilding the relationship with ourpolicyholders. A total of over 45K polices were revived leading to a renewal collection ofover Rs 1.70 billion. Strategic inputs generated through Revival Analytics were utilizedto identify likelihood of revival of any policy. The scope of analytics has been broadenedthis year and lapse policies are categorized into four different categories i.e. HighLikely Likely Moderate & Unlikely. This has helped the company to further improvethe persistency.
Renewal Digiconnect Smart Advisor:
In Smart Advisor application comprehensive renewal and persistencyrelated information has now been provided to make it a single platform for policy renewalfollow-up. This is now available on Smart Advisor android application available for Saleshierarchy and also introduced Smart Advisor Desktop for Operations hierarchy.
One of the most unique features added to the Smart Advisor app is -facility to Click to Call/SMS using which sales and operationspersonnel can contact customer directly from application screen by just clicking on theicons. User can capture calling remarks in Smart Advisor and can also access call centreremarks and dispositions. Smart Advisor also provides end-to-end e-Revival facilityincluding online e-DGH submission and online payment facility allowing customer to revivepolicy instantly.
Personalized payment link: -
Personalized bit.ly link that redirects customer directly to paymentgetaway page has been developed for every policy making premium payment processsimplified for customers. The links are sent to the customers before the due period andalso during the grace period of the policy. This functionality was used during RevivalCampaign period directing customers to pay only the outstanding premium dues where therewas no need of revival requirements.
Centralized Surrender Prevention Calling: -
In order to prevent surrender of the existing policies in a proactivemanner centralized Surrender Prevention calling has been activated through the outboundcall centre. The calling is done by a specially trained team having detailed knowledgeabout products processes and the corresponding advantages which help them to convincecustomers to continue the policies till the end of its term. A total of 1589 policieshave been retained in FY 2020 through Centralized Surrender Prevention Calling activity.This activity is over and above the face-to-facecounsellingactivityundertakenin the branches by Operations employees.
Customer Self Service Portal (CSSP):
In view of changing dynamics and increasing digitization of servicesacross platforms all new customers are being registered on our My Policy CustomerSelf Service Portal to enable customers to have one view of all their policies and alsodo various transactions online. In our endeavour to add newer features we had includednew services as frequency change renewal premium direct debit Hit Date change ConvertPhysical policies to Demat policies generation of loan quotation against policiesPartial Withdrawal quotes Alternate mode payment status enquiry. CSS portal is nowintegrated with our core system and lot of requests from customers gets processed onreal-time basis. Keeping customer convenience in mind CSS Registration has beensimplified using mobile and OTP authentication. In the year under review a total of over1.40 lakh new customers were on boarded on the customer self-service portal (CSS Portal).
Mobile application for customers. The Easy Access mobile applicationhas been developed for SBI Life for customers that allows them to pay renewal premiumscheck various insurance plans submission of eCOE by annuity subscribers use the premiumcalculator buy online products check out for useful insurance related links. In the yearunder review over 48K new customers were on boarded on the easy access application.
Premium collection through Partners including other Banks:
In an endeavour to expand our reach to the customer and help them ineasily paying of their renewal premiums the Company has tied up with City UnionBank services for renewal premium collection. Now customers can now pay theirrenewal premium throughout the Bank branches of City Union Bank. Have also applied withNPCI to get on boarded as Biller on the Bharat Bill Pay system. This shallprovide much wider reach on the online payment platform.
Functionality to electronically set auto pay instructions for renewalpremium payments has been made available. This functionality will currently enable settingup of electronic standing instructions on bank accounts online through net banking orDebit Card credentials for more than 20 partners as part of the new business journey aswell as for already issued policies.
E-DGH (Declaration of Good Health on electronic platform) Option forrevival of policies was enabled through E-KYC Aadhaar based authentication process whichwas subsequently modified to Company OTP based process. This has enabled our customers torevive the policies online eliminating the need for a walk-in.
Claims Management is the vital part of the insurance business. This isactually the moment of truth for the life insurance customer.
At SBI Life customer focus at claims stage is ensured by providingefficient services striving to exceed the customer expectations by creating avenues forincreasing self-service facilities through various Digital Initiatives.
In the year under review the claim settlement ratio for individualpolicies stood at 94.52% and for Group policies at 98.89% thereby giving an Overall ClaimsSettlement Ratio for the company at 97.04%. (Note 97.04% is inclusive of 0.11% ofsettled claims but could not be paid due to open title issues).
Customer Centric Process Enhancements:
Electronic Certificate of Existence (e-COE):
For Senior Citizens to reduce the pain of travelling to SBI LifeOffices have launched the e-COE facility through company's mobile based applicationEasy Access App during the year under review.
Customers are enabled to record a small video and upload their photo inthis App from their home. Customers will get an acknowledgement instantly. Excellentresponse has been received for this facility from the customers across India.
This facility is provided for customers of both Individual Policies andGroup Policies.
Various Digital Touch points:
1. Facility to upload documents through Bit.ly link for MaturityClaims Unclaimed Amounts.
2. Enabling the customers to submit the documents of both MaturityClaims and Death Claims on the company Website.
3. Customers can submit the documents to our generic mail-ids as well.
E. GROUP OPERATIONS
Digital journey for SBI staff members covered under Old SwarnagangaScheme for exercising option for cover post retirement:
Online platform developed in Group Customers Portal to facilitate StateBank of India (SBI) staff members covered under Old Swarnaganga Scheme to submit theiroption at the time of retirement.
With this facility SBI staff need to visit SBI Life branch office andcan initiate their option viz.
(a) Tooptforriskcovertill65yearsofage(or) (b) Opt for withdrawing thematurity benefit and discontinue the risk cover (or) (c) Opt for getting the accumulatedfund value with accrued interest earned on the accumulated fund till 65 years of age formaturity.
Automation of Sampoorn Suraksha Reinsurance activity in RENOVA:
Re-insurance activity that was handled manually has been automated inRENOVA since December 2019.
Automation of endorsements of Mid joiner & Mid Leaver andIncreasing Sum Assured:
Under GTI Sampoorn Suraksha the endorsements that were handled manuallyfor Mid-Joiners Mid-Leavers and Increase in Sum Assured was automated in order to enhanceproductivity and quality.
New Enrolments under PMJJBY Scheme
During the period under review a total 51.38 lakhs fresh members wereenrolled against the 14.38 lakhs members enrolled in the corresponding period of the lastfinancial year achieving a growth of 257.30% in new enrolments. As on March 31 2020there were total 106.47 lakhs active members under PMJJBY Scheme.
Settlement of claims under PMJJBY Scheme
During the year under review the company settled 10871 claims andthereby achieved the claim settlement ratio of 99.97%. New Enrolments under SampoornSuraksha (YONO)
During the period under review a total 1.60 lakhs new members wereenrolled thus total lives covered under Master Policy reaching to 2.02 lakhs as on March312020. In this policy group member can avail upto Rs 20 lakhs sum assured risk coveragejust in three clicks a most seamless process enabling issuance of Certificate ofInsurance instantly on completion on-boarding process.
Auto SMS for PMJJBY claim intimations/payments and claim requirements:
The company has initiated auto SMS process for the PMJJBY claimantsthat helps the claimants to get the information regarding the settlement of the claims andpending claim requirements on their mobiles.
F. CLIENT RELATIONSHIP & CUSTOMER ENGAGEMENT
The Client Relationship department is pivotal in ensuring that customerqueries and grievances are resolved swiftly to the full satisfaction of the customerwithin defined timelines. The Client Relationship includes both the reactive (efforts tosolve customer issues) and proactive (measures taken to ensure long term relationship withcustomers) functions performed by the team. Therefore company's initiatives in theyear under review has been to empower its employees to improve the query / grievancehandling mechanisms.
Upgradation of Customer Relationship Management (CRM) Module: -
CRM Next is an automated workflow that has been created for handlingcustomer grievances obtaining sales comments & recommendation from the RegionalLeadership group initiating investigation wherever necessary and seeking necessaryapprovals from the Competent Authority.
Under the Customer 360-degree view the details of all the policiesheld by customer and his service request history is maintained. Additionally real timeinformation on the plan details service history records of the policy life cycle alongwith the policy status is provided that helps in resolution of customer grievances.
With the launch of CRM Next have moved towards a paperless complaintshandling process. The enhanced features of CRM Next module (Gold 5.5) has been implementedto bring more simplicity in functionality and strengthening system controls. This hasbrought in perfectly consistent & coherent workflow with better record maintenance andprocess efficiency. It has also helped in providing comprehensive resolution and reducingthe overall resolution time of complaints.
This is a module designed to empower SBI (Partner Banks) to log in SBILife customer queries / complaints received at their end for better tracking and fasterresolution of queries / complaints. The web based real-time integration of Parivartanmodule with our CRM Next module has also been established. Now this module has provisionfor registration of customer's queries / complaints and to display reverse feeddetails such as TAT status and disposition details of queries / complaints along withdashboard report to users.
Contact Center :
The call center handled around over 18 lac calls during the financialyear 53% of these calls were answered by the call center agents and 47% of the calls wereresponded by IVR. The connectivity issues noticed and were addressed by changing theservice provider and getting in better services. This has help in reducing the complaintsof Toll Free number not getting connected and has also brought down the call drop rate to0.82% which was above 7% in the earlier years.
InitiativetointegratetheCRMnexthasempowered the call center and hasseen improvement in providing final resolution to customer queries. This has helped inclosing 96% of calls at the first instant itself without transferring the call to thebranches for final resolution. The email closure responses from the call center have alsoseen an improvement in providing resolution to the customer queries that was at 84%compared to earlier 51%.
The overall impact of all the above initiatives and improvement couldbe noticed in the Turn Around Time (TAT) of complaints and queries received by thecompany. The overall TAT of complaints of the company had seen an improvement to 4.09 dayswhich got deceased by two days (6.22 days) compared to the previous year. It is alsonoticed the overall TAT of Queries handled has also improved to 0.62 days compared to 1.2days in the previous years Customer Engagement Department has initiated multipleinitiatives by bringing in technology for the benefit of the customers. Some of theCustomer Centric initiatives in the FY 2020 are mentioned below:
Initiatives that improves Services offered by the company
The company has introduced SMS services for Premium Paid Certificate.The customers can call the toll free number and request for Bitly Link to be sent via SMSfor paying Renewal Premium using the mobile phone customer can also request for a Bitlylink to download soft copy of policy document and also request for Bitly link to accessTDS certificate. The call centre also started promoting WhatsApp registration to everycaller on the toll free number and successfully registered a good number of policy holdersthis year.
13. LEVERAGING DATA ANALYTICS:
SBI Life has been leveraging Analytics to help mitigate and controlRisks in various business functions like Underwriting Claims Persistency etc. Theoutcomes of the various models are helping the respective functions to take more informeddecisions and helping in creating more efficient business processes.
New Business & Underwriting
Risk Score Model
We provide our Underwriters with a Risk Score for every prospectiveCustomer. This score measures the likelihood of receiving an Early Claim from thecustomer. This score is utilized by the Underwriters to make prudent decisions. A Proposalthat gets rated as High Risk' by the Risk Scoring Model is paid specialattention to and additional requirements are called for to verify the insurability of theCustomer. Detailed Tele MER along with stringent Underwriting is followed for High Riskproposals. Currently the Model flags certain percentage of incoming proposals in to HighRisk Bucket and certain percentage as Medium Risk Bucket. The rest are tagged as Low Risk.The Risk Score is made available in Real Time in the Work Flow Module. We also monitor thescores on a regular basis to ensure that the Model stays in conformity with the ActualExperience. The Risk Score Model was revised in November 2019 to align it with ourOrganization's recent Early Claim experience.
Net Promoter Score Analytics at on-boarding Stage
NPS is currently measured at three Moments of Truth viz. On-boardingRenewal Payment and Living Benefits. For improving our on-boarding NPS score the companyundertook an NPS Analytics Project. It involved deep dives into the responses receivedfrom customers to help us benchmark the complete customer onboarding journey and gave adirection towards change and improvement.Ithelpedinunderstandingcustomer experiencesacross various demographics and segments and in identifying pockets of concerns along withresolution methodologies eventually improving our processes to ultimately create a bettercustomer experience.
The company also developed Dashboards for the sales personnel to helpthem identify areas of improvement and causes of concern. The Dashboards providecustomized recommendations at the Regional / Zonal Agency Manager / Divisional SalesManager level for improving the NPS Scores.
Persistency Model -
Persistency Models are in place to help predict the likelihood ofrenewal premium payments. Separate models for 13th & non 13th Month persistency foreach of the Channels are in place to cater to the varying payment dynamics. Predictionsare made at the start of every month for policies due in the upcoming 3 months. Everypolicy gets flagged as RED AMBER or GREEN where RED denotes customers from whom we areleast likely to get the renewal premium and GREEN denotes customers most likely to pay therenewals. These models help in channelizing our renewal collection efforts. During thecourse of implementation it was noted that this common approach was not yielding requiredresults for 13th month persistency. Hence a dedicated 13th month persistency model wasfurther developed and made live in the year under review. Later a dedicated model fornon-13th month persistency was also implemented in the year under review.
All these developments and efforts have helped the company in improvingcollection efficiency and 13th Month Persistency and 61st Month persistency. In the yearunder review overall collection efficiency is 85.2% and it has improved by 1.3% over lastyear. Our 13th Month and 61st month persistency also improved to 86.14% & 59.90% fromlast year's 85.07% and 57.23% respectively.
Lapse Revival Model
We have a Lapse Revival Model in place to predict the revivalpropensity for policies in Lapsed status. Given the different behaviour of ULIP andnon-ULIP portfolios with respect to lapsed status separate models are in place for eachset of policies. The Models are run on a monthly basis and the outcome from the modelprovides the likelihood of revival within the next six months from the prediction date.All our Revival Campaigns utilize the data generated by this Model to improve the hitratio.
Post Issuance Profile Verification (PIPV) Analytics -
Even with the best of Risk Score Models in place we must acknowledgethat it's not possible to detectallFraudulentCustomersatinceptionstage.
Hence suspicious policies must be identified immediately post issuancevia Post Issuance Profile Verification (PIPV) to prevent fraudulent claims from arising inthe future. The PIPV Analytics Model was developed with the aim of identifying the rightset of policies that must be sent / selected for PIPV. Identifying the right set for PIPVincreases the likelihood of capturing all fraudulent customers. By targeting a focus groupof the total policy base we were able to capture major events that includes Repudiationsand PIPV Cancelled cases. By utilizing this Model we hope to increase the accuracy of thePIPV investigation process and at the same time reduce the PIPV investigation costs.
14. PROJECTS OPERATIONS
Few initiatives taken in the year under review are enumerated below: a.The vendor dashboard has been integrated with our CRM module and every customer feedbackis getting registered in the module as a Service Request (SR). This has facilitated us toreview all feedbacks in a systematic manner and provide resolutions to the customers b.NPS is now made available for all front line sales through smart advisor App. It is now attheir fingertips and they can view their individual NPS. They can now directly interactwith customer; based on feedback received and act upon c. The NPS on-boarding survey isgetting triggered in 10 vernacular languages to help in making a better connect with thecustomers and act upon their responses. The survey is available in Tamil Telugu KannadaPunjabi Oriya Assamese Marathi Gujarati Hindi and Bengali. d. In On-boarding surveyplatform we have introduced one pager on products and product videos for few products toeducate and empower our customers about the product purchased in an easy manner.
Customer Education Product Videos:
With a view to providing our customers with an in-depth and correctinformation / knowledge of our products product videos for the following four productshave been made and launched. a. SBI Life Smart Wealth Builder b. SBI Life Smart Bachat c.SBI Life Smart Swadhan Plus d. SBI Life Smart Money Back Gold
An SMS is sent to the customers immediately after cashiering of a newproposal with a bit.ly link that redirects to the product video. These videos have alsobeen uploaded on SBI Life Official YouTube channel.
Hyper Personalized Communication campaigns:
These campaigns were aimed at establishing a customer connect by takingup awareness campaigns via SMS/emails/videos etc. This is in compliance with IRDAIcircular dated April 10 2019 where Insurers have been advised to send brief messages forthe purpose of enhancing insurance awareness.
Various activities undertaken are given below:
|Topic ||Media |
|Awareness on importance of registration for Auto deduction of premium ||Email & SMS |
|Awareness on importance of updating contact details ||Email & SMS |
|Diwali Campaign ||Email & SMS |
|Awareness on spurious calls ||Email & SMS |
|Link to update email IDs ||SMS |
|Awareness on the CSS Portal ||Email & SMS |
|Importance of Reviving the Policy (sent to customers whose policy are due for LTR) ||Email & SMS |
15. INFORMATION TECHNOLOGY
FY20 has been a landmark year for SBI Life. We continued our digitaljourney by implementing innovative solutions for business and customer support usingcutting edge technology. The improved digital tools and intuitive customizations haveplayed a significant role in enhancing the experience of both our internal and externalcustomers. We have progressively improved the capacity and capabilities of our technologyinfrastructure that has consistently improved the availability of systems and applicationsfor the business. A true test of the quality of support systems was the movement of allcritical resources to Work From Home (WFH) during the COVID 19pandemic. The teams achieved this in quick time with no disruption in day-to-day working.All business operations and the financial year-end closure activities were completed bythe respective stakeholder seamlessly validating the technology capabilities andversatility of SBI Life yet again.
Some of the improvements implemented during the year are listed below:
Data Centre (DC) Disaster Recovery (DR) and Wide Area Network (WAN)
We have been proactively managing our DC/DR/WAN infrastructure toensure that our Head office CPC and 900+ branches are adequately supported to handle thebusiness volumes and to provide quality service to our customers.
During the year under review the reach of MPLS network increased from836 branches to 913 branches thereby consuming 1687 MPLS links from 6 telecommunicationcompaniesthusprovidingcustomerservices at branches with dual redundant links.
The company has finalized the plans for upgrading our existing emailinfrastructure thereby moving all users to a single email domain. This will increase theuser experience and significantly enhance the security features including data lossprevention (DLP) capabilities. This will move into implementation stage in the FY 2020-21.
During Covid-19 locked down 1800 plus employees were enabled with VPNto work fromhome(WFH)tocontinuecriticalbusiness processes at Regions and Branches.
DDoS (Distributed Denial of Services) Mitigation Services
The company obtained volumetric DDoS attack mitigation services on allcentral corporate Internet links in Data Centre. This will prevent DDoS attacks initiatedglobally across the Internet.
The solution is also configured to prevent legit based (low & slow)DDoS attacks.
Network Access Control (NAC)
The company has implemented NAC security feature of industry leadingOEM on all desktop systems in Corporate Office CPC & branch offices.
This is being effectively utilised to evaluate security policycompliance of desktop systems before permitting access to corporate network.
Security Operation Centre: (SOC)
In the year under review the company has implemented state of art SOCto monitor 24x7 all critical IT devices websites mobile applications and other domainsowned or used by the company.
SOC monitors all production applications & related infrastructuredevices for security alerts. Technology based on machine learning/artificial intelligencedata analytics Threat Intelligence Anticipation and Analytics with Threat Huntingnetwork behavior and user behavior are deployed. It has Capability to quickly identify anddetect cyber threats. Brand protection services for
Internet facing websites mobile application and social media handlesare in operations.
Dark Web are monitored for SBI Life contents with Intelligence Feed andaction based on Incident are taken.
Adoption of Virtualisation environment
Over 900 Virtual servers created on 37 Host Servers resulting in powerand space saving with optimum use of compute and storage. Deployed over 800 Thin Clientsin lieu of Desktop using Virtual Desktop Infrastructure (VDI) technology. Helped in dataloss prevention quick rollout and ease of maintenance.
During Covid-19 lockdown 779 employees were enabled to WFH for HeadOffice and Central Processing Centre (CPC) using VDI technology. This helped the companyin successfully carrying out all year-end activities within defined time-lines whileworking from home while fulfilling the desired security and data protection levels.
B. Process Area
Following are the major process improvements done during the FY 2020:
New Policy Management System (PMS):
Ingenium the new Policy Management system has been fullyimplemented in the year under review and currently services both Individual and Groupproducts. This has resulted in improvement of customer service quality and shorter TAT(Turn Around Time) for new Product Launches.
The older (Closed products) polices are also getting migrated to NewSystem and 76% of data migration has been completed. This migration is a massive exercisethe biggest project in the insurance industry in India and has been carried out in asmooth manner without any adverse impact to the end-customer. Going by the experience ofthe migration exercise that has taken place the company is confident to completed thebalance migration in the first quarter of FY-21.
New Customer Relationship Management (CRM) system:
CRM Next is the core system providing 360-degree view ofthe customer leading to better service across all touch-points. It has recently beenupgraded to the latest version and further enhancements are planned in the upcoming FY21which will further enhance the quality of customer engagement.
Work Flow System:
The New Business Work Flow System caters to the on-boarding andUnderwriting of new proposals. In Work Flow all the new products are getting processed(except 1 product which will get implemented shortly). This has greatly improved theefficiency of New Business and Underwriting Processes.
New product launches:
In the year under review the majority of the existing products had tobe relaunched to comply with the new product guidelines from the Regulator. In a shortspan of time (November 2019 to February 2020) we could launch 20+ individual and groupproducts covering all systems and touch-points (digital & physical) demonstratingthe power of collaboration across all stakeholders.
Continuing the thrust from the previous year to adopt GoDigital' more than 98% of the Individual New Proposals are sourced through ourMobile Application - mConnect. We strengthened our stack of mobility solutions forour sales force internal users and customers. mConnect application is the proposalsourcing application that enables our sales force to procure business anywhere any time. Smartadvisor Plus is extensively used by our sales intermediaries for providing pre andpost-sales support to their customers. This tools provides a bouquet of services to theSales manager and they can get any policy related information on the fly. This toolreduced the burden on our branch offices by enabling the sales executive (Life Mitra CIFin the bank or Business Development Manager or Unit Managers) to provide promptinformation and services to their customers. Smart Advisor Plus is like a miniOffice in the pocket for our sales intermediaries.
We also provide a dedicated application to our customers known as EasyAccess'. Premium due alerts ability to raise queries submission of e-COE(Certificate of Existence) for pension products are some of the key features of thisapplication. In the year under review with the focus continuing on GoDigital many new initiatives were expedited and we are at the forefront in itsadaptation in all areas starting from Customer enrichment Distributor efficiency and / orEmployee empowerment. This journey is here to remain for a long time for us.
Digital bouquet for partner on-boarding:
Your company has developed a ready set of digital platform bouquetincluding mobility and API (application program Interface) and has been madeavailable for quick integration and on-boarding of partners for new business and renewalpremiums.
Under the year under review we have integrated Real time EFT forAllahabad Bank Indian Bank and RinnRakha apart from already running 60 API's whichincludes SBI YONO.
C. Business Intelligence and Reporting
SBI Life has various reporting and analytics platforms for strategicdecision making and actionable to a wide range of users both internal and external. Theseplatforms include reporting tools like AARAM Crystal SAP BO Banca Online Agency Onlineand Analytics & BI platforms like AASAN. This includes users from Sales and MarketingSenior Management Audit Risk Business Strategy Operations as well as Corporate Agentsand Brokers. Further mobile reporting and dashboard application is made available to SBIControllers and other Bank Partners through SAARATHI. This apart various trackersnotifications and operational MIS is made available through automated mailer on periodicbasis to above users.
Equity markets could not deliver any positive returns amidst increasedvolatility and global risk aversion. Nifty gave a negative return of 26% for the year.Uncertainty in equity markets came with global fears after the Covid-19 broke out in lateDecember 2019. US entered a recession officially after 11 years of growth since the GlobalFinancial Crisis. The virus affected Developed Markets initially and then it spread toEmerging Markets as well and that is when India entered a phase of extreme lockdown. Indiais expected to witness a 5% contraction of Real GDP based on estimates of variousinternational agencies. INR weakened by 9.2% to 75.54 owing to a weakening growthenlarged fiscal deficits and safe haven buying of the US dollar during the spread ofCovid-19. Yield on 10-year Government of India Bond fell massively as yields movedmarginally lower by 122 basis points to end the year at 6.13%. Markets reacted positivelywith huge monetary support by RBI cutting policy rates by 185 bps. The central bank alsoprovided monetary support of around 1.3 lac crores through OMO purchases. Despite thecentral governments weakened finances bond yields fell due to lower growth and inflationtrajectory The Assets under Management (AUM) of the Company has increased by 13.7% from Rs1410.24 billion as on March 31 2019 to Rs 1603.63 billion as at March 31 2020. The AUMwas made up of Rs 817.98 billion of traditional funds (including shareholders' andunclaimed funds) and Rs 785.65 billion of Unit Linked Funds. The Unit linked portfoliomajorly comprises of Equity funds Bond funds and NAV guaranteed funds.
Persistency is a critical indicator of business viability and brandsuccess. During the FY 2020 the Company has witnessed 25% growth in Renewal Premiumcollection at Rs 240.42 billion which contributed to 59% of Gross Written Premium. TheCompany has continued to focus on renewals and has undertaken initiatives to improvepersistency of its existing policies. The independent Renewal Vertical is focusing oncollection of renewal premiums and servicing policyholders. We shall continue to accordprime importance to this area.
18. PARTICULARS OF EMPLOYEES
SBI Life one of the most trusted private Life insurance brands is nowmore than 19 years old. SBI Life family has grown from 14961 employees as on March 312019 to 16759 employees as on March 31 2020 which depicts a growth of 12%. While theaverage age of employees is 35 years 8 months and the average tenure is 4 years 7 months.
In terms of Section 136(1) of Companies Act 2013 the Report and theAccounts are sent to the Members excluding the statement containing particulars ofemployees as required under Section 197(12) of the Companies Act 2013 read with Rule 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Thestatement containing aforesaid details may be obtained by the Members by writing to theCompany Secretary at the Registered Office of the Company.
19. EMPLOYEES STOCK OPTION SCHEME
The SBI Life Employee Stock Option Plan 2018 (ESOP 2018')and SBI Life Employees Stock Option Scheme 2018 (the Scheme' or ESOS2018') has been approved by the shareholders of the Company in the Annual GeneralMeeting (AGM) held on September 27 2018 based on the recommendation of the BoardNomination & Remuneration Committee (NRC') and Board of Directors(Board') in their meetings held on August 31 2018.
The maximum number of stock options granted to eligible employees inaccordance with ESOP 2018 shall not exceed 30000000 shares. During any one year noEmployee shall be granted Options equal to or exceeding 1% of the issued share capital ofthe Company at the time of Grant of Options unless an approval from the Shareholders istaken by way of special resolution in a General Meeting. Further the maximum number ofOptions in aggregate granted to an employee under this Plan shall not exceed 10000000Options. The Exercise Price shall be determined by the Board Nomination & RemunerationCommittee in concurrence with the Board of Directors of the Company on the date theOptions are granted and provided in the letter of grant.
During the year the NRC in its meeting held on July 23 2019 hasapproved the grant of the Employee Stock Options (Options') under theprovisions of ESOS 2018. No employee was granted options during one year amounting to fivepercent or more of options granted during that year. Similarly no employee was grantedoptions during any one year equal to or exceeding one percent of the issued capital ofthe company at the time of grant.
During the year FY 2020 the Company has not granted any loan to itsemployees for purchasing shares of the Company.
The Scheme is in compliance with Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 as amended from time to time (SEBISBEB Regulations'). Further there are no changes in the scheme. The belowdisclosures pursuant to the SEBI SBEB Regulations have been placed on website of theCompany at https://www.sbilife.co.in/en/about-us/ investor-relations.
The disclosures pursuant to SEBI SBEB Regulations Guidance Note onaccounting for employee share based payments disclosure of diluted EPS in accordance withAccounting Standard 20 - Earnings Per Share' issued by ICAI or any otherrelevant accounting standard have been disclosed in the Notes to Accounts which form partof financial statements in the Annual Report.
20. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
Your Company has an Internal Committee to investigate and inquire intosexual harassment complaints in line with The Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013. Your Company has in place a policy onAnti-Sexual Harassment which reflects the Company's zero-tolerance towards any formof prejudice gender bias and sexual harassment at the workplace. Your Company has set upan Internal Committee (IC') to receive and redress complaints of sexualharassment. Your Company undertakes ongoing trainings to create awareness on this policy.During FY 2019-20 all employees were mandated to take online training on the subject withhelp of specially designed module Prathishta' so that they understand theanti-sexual harassment policy the complete framework adopted by the Company to report andresolve instances of sexual harassment etc. details of which have been mentioned in theBusiness Responsibility
Report which is hosted on the Company's web-link:https://www.sbilife.co.in/en/abou t-us/investor- relations. Further the Company'sPolicy on Prevention of Sexual Harassment of Women at the Workplace along with the detailsof Internal Committee at each Region is accessible to all employees on the Company'sintranet eBandhan. During the year under review 5 sexual harassment cases were filedexcluding three pending from previous year out of which 6 were resolved as on March 312020 and out of remaining 2 one was resolved during the FY 2020-21 and the other isexpected to be resolved shortly within timelines. During FY 2019-20 classroom trainingwas imparted to all IC members in order to understand the Policy on Prevention of SexualHarassment and framework for reporting and resolving instances of sexual harassment.
21. RISK MANAGEMENT
SBI Life is in the business of covering life health & longevityrisks of its policyholders on the consideration of a premium. The Company as a part of itsbusiness invests the premiums received and provides long term returns to the customers onits savings & investment products. Risk Management therefore becomes an integral partof its business activities. The Company recognises and manages its risks in a proactiveongoing and positive manner. Risk philosophy of the Company is outlined in the RiskManagement Policy. The Risk Management policy specifies the process for identificationmeasurement and analysis of the Company's risk exposures; develop risk managementstrategies and its monitoring. The Risk Management Policy is supported by various otherpolicies pertaining to insurance market compliance outsourcing fraud informationsecurity and business continuity management. Above referred policies are reviewed by theRisk Management Committee of the Board on an annual basis.
The Company has formulated risk appetite statements at the corporate aswell as at the functional level which are reviewed and monitored by the Risk ManagementCommittee of the Board and Internal Risk Management Committee respectively. The Companyalso carries out an ICAAP (Internal Capital Adequacy Assessment Process) activity whichdetails the assessment of material risks estimation of capital requirement and adequacyfor maintaining solvency requirements. The Company has aligned its risk managementpractices to ISO 31000 standard on Risk Management. This implies that the Company hasstrong processes for risk identification management and mitigation. The Company'sBusiness Continuity Management System (BCMS) is ISO 22301 certified and its InformationSecurity Management System (ISMS) is ISO 27001 certified.
More information on the risk practices adopted by the Company isavailable in the Enterprise Risk
Management' section appended to this report and ManagementReport' section of the Annual report.
22. INTERNAL AUDIT AND COMPLIANCE FRAMEWORK
The Company has in place a robust internal audit framework. TheInspection and Audit (I & A) Department undertakes risk based audit approach and itcommensurate with the nature of the business and the size of its operations. The internalaudit plan covers Information System Audit different process audit as well as transactionbased audits at the Head office Regional Offices and across various branches of theCompany.
The audits are carried out by the internal audit team of the Companyand also by the outsourced chartered accountant's firms. The approach of the audit isto verify compliance with the regulatory operational and system related controls. Keyaudit observation and recommendations are reported to the Board Audit Committee of theCompany. Implementation of the recommendations is actively monitored.
In accordance with Insurance Regulatory and Development Authority ofIndia (Investment) Regulations the Company has also engaged professional charteredaccountants firm to carry out concurrent audit of investment operation as per IRDAIinvestment regulations / guidelines and guidance note on Internal / Concurrent Audit ofInvestment functions of Insurance Companies issued by the Institute of CharteredAccountants of India. Any significant findings in the concurrent audit are presented tothe Audit Committee and reviewed by Board Investment Sub Committee and Board InvestmentCommittee.
The Board Audit Committee of the Company has laid down governingprinciples to oversee the compliance framework of the Company. The Committee discusses thelevel of compliance in the Company and any associated risks. The Compliance functionidentifies and communicates regulatory requirements to relevant functions in a timelymanner and monitors critical compliance risks based on suitable monitoring mechanism. TheCompliance function liaisons with theregulatorsandprovidesclarificationstovariousfunctions on applicable laws regulations andcirculars issued by the regulatory authorities. A compliance certificate signed by theManaging Director & CEO is placed at the Board Audit Committee on a quarterly basis.
The Company has also formulated various internal policies andprocedures relating to working of various functions to ensure compliance.
23. INTERNAL FINANCIAL CONTROLS
The Companies Act 2013 requires the Board of Directors to lay downadequate and effective internal financial controls with reference to the Financial
Statements and include it in the Board report. The Company has alignedits internal financial control system with the requirements of the Companies Act2013onlinesofgloballyacceptedriskbasedframework as issued by Committee of SponsoringOrganizations (COSO). The internal control framework is intended to increase transparencyand accountability in an organization's process of designing and implementing asystem of internal control. The framework requires the Company to identify and analyserisks and manage appropriate responses. The key components of the internal financialcontrol framework include:
Entity level controls:
Entity Level Controls (ELCs) operates at an organisation level. TheCompany has defined a set of entity level policies and controls. The ELCs set up by theCompany includes various policies and procedure in place such as Anti Money Laundering andCounter-Financing of Terrorism policy Business Continuity Management policy IT andInformation Security policy Risk Management Policy Whistle blower Policy etc.
Process level controls:
The Company has defined a set of process level controls across itsbusiness and support functions such as premium reinsurance claims management agencymanagement fixed assets etc. The control type covers key operating controls financialreporting controls & IT controls have been done to ensure compliance with COSOframework.
The Company's internal financial control framework is based onthree lines of defence model'. The Company has laid down standard operationprocedures and policies to guide the business operations. The Company has a well-defineddelegation of power with authority limits for approving revenue and capital expenditure.Statutory Concurrent and Internal Auditors undertake rigorous testing of the controlenvironment of the Company.
The Company has a Chief Audit Officer with a dedicated internal auditteam which is commensurate with the size nature & complexity of operations of theCompany.
The Company also undergoes an independent internal/concurrent audit byspecialised third party professional consultants to review function specific regulatorycompliances as well as internal controls. The audit committee reviews reports submitted bythe Management and audit reports submitted by the internal auditors and statutoryauditors. Suggestions for improvements are considered and the Audit Committee follows upon corrective actions. The Audit Committee also meets the Company's statutoryauditors to ascertain their views on the adequacy of internal control systems and keepsthe board of directors informed of its major observations if any periodically.
There were no qualifications reservations adverse remarks ordisclaimers on Internal Financial Controls made by the Statutory Auditors in their reportfor the financial year ended March 31 2020.
24. RELATED PARTY TRANSACTIONS
The Company has Policy on materiality of Related Party Transactions andon dealing with Related Party Transactions to regulate the transactions with its relatedparties. As per the policy all related party transactions require approval of the BoardAudit Committee. As per Rule 6A of the Companies (Meeting of Boards and its Powers) Rules2014 the Audit Committee may grant omnibus approval for related party transactionproposed to be entered into by the Company subject to terms and conditions mentioned inthe said Rule. All the Related Party Transactions entered during the financial year wereon arm's length basis and in ordinary course of business. All related partytransactions are placed before the Audit Committee of the Board for its approval. Duringthe year there were no material contracts or arrangements or transactions with relatedparties that need to be disclosed as per Section 188(1) of the Companies Act 2013.
M/s. S.C. Bapna & Associates Chartered Accountants reviewed therelated party transactions for the year ended March 31 2020 and their certificate isplaced at the meeting of the Board Audit Committee along with details of suchtransactions.
All Related Party Transactions as required under Accounting StandardsAS-18 are reported in Note 39 of Schedule 16(C) Notes to Accounts of the FinancialStatements of the Company.
The policy on materiality of Related Party TransactionsandondealingwithRelatedPartyTransactionshasbeen hosted on the website of the Company canbe viewed at https://www.sbilife.co.in/policy-on-materiality-and-on-dealing-with-related-party-transact
25. IND AS IMPLEMENTATION
The IRDAI (Authority) has issued a circular dated June 282017 deferring the implementation of Ind AS in insurance sector in India for a period oftwo years to be effective from FY 2020-21. The said circular however requires thesubmission of proforma Ind AS financial statements on quarterly basis.
The IRDAI (Authority) subsequently vide its circular datedJanuary 21 2020 has withdrawn its erstwhile circular dated June 28 2017 onimplementation of Ind AS from FY 2020-21 and dispensed with the requirement of quarterlysubmission of Proforma Ind AS financial statements on account of proposed amendments inIFRS 17 by International Accounting Standard Board (IASB). Thus effective date of IND ASimplementation shall be decided by the IRDAI post finalization of IFRS 17 by IASB.
On March 17 2020 the IASB discussed the last amendment to IFRS 17 todefer the effective date of IFRS 17 (incorporating the amendments) to annual reportingperiods beginning on or after 1 January 2023.
26. BOARD OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
Change in Directors and Key Managerial Personnel's (KMPs) duringthe year
|Name of the Director / KMP ||Nature of change ||With effect from |
|Mr. P. K. Gupta ||Ceased as Nominee Director due to superannuation ||March 31 2020 |
|Mr. Gregory M Zeluck ||Ceased as Non-Executive Director due to resignation ||March 20 2020 |
|Mr. Sanjeev Nautiyal ||Re-appointed as Managing Director and Chief Executive Officer ||March 10 2020 |
|Mr. Somasekhar Sundaresan ||Ceased as Independent Director due to resignation ||November 21 2019 |
|Ms. Joji Sekhon Gill ||Re-appointed as Independent Director for second term ||September 7 2019 |
|Mr. Nimesh Maniyar ||Ceased as Company Secretary due to resignation ||July 23 2019 |
|Mr. Vinod Koyande ||Appointed as a Company Secretary by Board ||July 23 2019 |
|Mr. Pierre De Portier De Villeneuve ||Ceased as Nominee Director due to resignation ||June 27 2019 |
|Mr. Julien Hautiere- Rey ||Ceased as Deputy Chief Executive Officer due to resignation ||May 31 2019 |
Key Managerial Personnel
Mr. Sanjeev Nautiyal (Managing Director & CEO) Mr. SangramjitSarangi (President & Chief Financial Officer) and Mr. Vinod Koyande (CompanySecretary) are designated Key Managerial Personnel of the Company under theprovisions of Section 203 of the Companies Act 2013. During the year Mr. Nimesh Maniyar(Company Secretary) has resigned and Mr. Vinod Koyande has been appointed as CompanySecretary w.e.f. July 23 2019.
Further in accordance with Corporate Governance Guidelines (CGGuidelines) issued by IRDAI the Company has fifteen (15) Key Management Personsincluding above mentioned KMPs.
Declaration by directors
All independent Directors have registered themselves in the IndependentDirector Databank and have submitted declarations that they meet the criteria ofindependence as laid down under Section 149 of the Companies Act 2013 along with rulesframed thereunder and Regulation 16 of the Listing Regulations. There has been no changein the circumstances affecting their status as independent directors of the Company.
The Company has also received declarations from all its Directors asper Section 164 of the Companies Act 2013 confirming they are not disqualified frombeing appointed as Directors of the Company. The said declarations were noted by the Boardof Directors at its Meeting held on May 5 2020.
Fit and Proper' criteria
In accordance with Guidelines for Corporate Governance issued by IRDAIthe Directors of insurers have to meet the fit and proper' criteria.Accordingly all the Directors of the Company have confirmed compliance with the fitand proper' criteria prescribed under the Corporate Governance Guidelines issued bythe IRDAI.
Directors & Officers Liability Insurance
Regulation 25 (10) of the SEBI (Listing Obligations & DisclosuresRequirement) Regulations 2015 requires the Companies to take Directors and OfficersLiability Insurance (D&O) for all its Independent Directors.The Company has takenD&O Insurance for all its Board of Directors and Members of the Senior Management Teamfor such quantum and risks as determined by the Board.
Pursuant to Section 48A of the Insurance Act 1938 the Company hasobtained the necessary approval from IRDAI for directors having common directorship withState Bank of India (being corporate agent of the Company).
During the year six Board Meetings were convened and held the detailsof which are given in the Report on Corporate Governance which is forming a part of thisreport. The intervening gap between the said Board Meetings was within the periodprescribed under the Companies Act 2013. The details of the Board and Board Committeemeetings and the attendance of Directors thereat forms part of the Corporate GovernanceReport which is annexed to this Directors' Report.
During the FY 2020 the Company is in compliance with the applicableSecretarial Standards issued by the Institute of Company Secretaries of India with respectto board and general meetings.
Pursuant to the provisions of Section 178 of the Companies Act 2013the Board has approved the remuneration policy as recommended by the Board Nomination& Remuneration Committee. The details of the said policy are annexed as Annexure Ito this Report.
27. CORPORATE GOVERNANCE
The Corporate Governance philosophy of the Company is to comply withnot only the statutory requirements but also to voluntarily formulate and adhere to astrong set of Corporate Governance practices which includes code of business conductcorporate ethics values risk management etc. The Company is committed to achieve thehighest standard of Corporate Governance. The Report on Corporate Governance is annexedand forms part of this Annual Report.
28. CORPORATE SOCIAL RESPONSIBILITY
The Company constituted the Corporate Social Responsibility Committee(CSR) of the Board of Directors in accordance with the provisions of Section 135 of theCompanies Act 2013 read with the Companies (Corporate Social Responsibility) Rules 2014which drives the CSR program of the Company. The CSR Committee of the Board confirms thatthe implementation and monitoring of CSR policy is in compliance with CSR objectives andPolicy of the Company.
The brief outline of CSR Policy including overview of the programproposed to be undertaken the composition of the CSR Committee average net profits ofthe Company for the past three financial years prescribed CSR expenditure and details ofamount spent on CSR activities during the financial year have been disclosed in AnnexureII to this report as mandated under the said Rules. Further the Corporate SocialResponsibility Policy of the Company as approved by the Board has been hosted on theCompany's website
29. PARTICULARS OF LOANS GUARANTEES OR INVESTMENT
In line with the clarification given by the Ministry of CorporateAffairs under the Removal of Difficulty Order dated 13 February 2015 the provisions ofSection 186 of the Companies Act 2013 relating to loans guarantees and investments do notapply to the Company.
30. SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiary Joint Ventures or AssociateCompany.
31. RURAL AND SOCIAL SECTOR OBLIGATIONS
As per the regulatory requirements the Company has met its Rural andSocial Sector obligations for FY 2020. As against the minimum requirement of 20% theCompany has issued 24.61% policies in the rural sector which affirms the Company'sapproach towards life insurance inclusion. Further 313405 new lives covered (5.83% oftotal new lives covered in preceding year) by the Company are from the underprivilegedsocial sector as against the regulatory requirement of at least 5% of total lives coveredin preceding year. Consequently the Company has met the minimum social and ruralregulatory norms.
32. MANAGEMENT REPORT
Pursuant to the provisions of Regulation 3 of the Insurance Regulatoryand Development Authority (Preparation of Financial Statements and Auditor's Reportof Insurance Companies) Regulations 2002 the Management Report is placed separately andforms part of the Annual Report.
33. STATUTORY AUDITORS
In view of the applicability of Section 139 of the Companies Act 2013Comptroller and Auditor General of India (C&AG) appoints Statutory Auditors of theCompany. Accordingly C&AG appointed M/s R. Devendra Kumar & Associates CharteredAccountants and M/s S.C. Bapna & Associates Chartered Accountants as joint statutoryauditors of the Company for FY 2019-20.
Due to the COVID-19 pandemic and the lockdown and other restrictionsimposed by the Government and local administration the audit processes were carried outbased on the remote access to the extent available/ feasible and necessary records madeavailable by the management through digital medium.
Statutory Audit and other Fees paid to Joint Statutory Auditors for FY2020 are given below:
| ||( Rs in 000's) |
|Particulars ||Amount |
|Joint Statutory Audit Fees ||5700 |
|Other Certification Fees ||1653 |
34. STATUTORY AUDITORS' REPORT
The Statutory Auditors' Report (including annexure thereof) to theMembers does not contain any qualification reservation adverse remark or disclaimerhence do not call for any further comments u/s 134 (3) (f) of the Companies Act 2013.There were no reportable frauds identified by the statutory auditors during the FY2020.
35. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA ON THEACCOUNTS OF THE COMPANY
The Comptroller & Auditor General of India (C&AG) haveconducted a supplementary audit u/s 143 (6) (b) of the Companies Act 2013 of the accountsof the Company for the year ended March 31 2020. The C&AG vide their report no. GA/CA-I /Accounts /SBI Life / 2019-20/ 67 dated August 11 2020 have stated that there isnothing significant which would give rise to any comment upon or supplement to StatutoryAuditors' Report. The Report of C&AG is being placed with the report of StatutoryAuditors of the Company.
36. SECRETARIAL AUDITORS' REPORT
Pursuant to Section 204 of the Companies Act 2013 read with Rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed Mehta & Mehta Company Secretaries Mumbai as the SecretarialAuditor of the Company.
The Auditor has not made any qualification reservation or adverseremark or disclaimer in his report for FY 2020. The detailed report on Secretarial Auditof the Company for FY 2020 is enclosed as Annexure III to the Board report.
37. COST RECORDS AND COST AUDIT
Maintenance of cost records and requirement of cost audit as prescribedunder the provisions of section 148(1) of the Companies Act 2013 are not applicable forthe business activities carried out by the Company as the Central Government has notprescribed the maintenance of cost records under Section 148 of the Act for the servicesrendered by the Company.
38. ANNUAL RETURN
Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act2013 (as amended by the Companies (Amendment) Act 2017) read with Rule 12 of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return (inform MGT 9) has beenannexedasAnnexureIVtothisReportandthesame has been hosted onthe website of the Company and can be viewed at https://www.sbilife.co.in/en/about-us/investor-relations
39. MATERIAL EVENTS CHANGES AND COMMITMENT AFFECTING FINANCIALPOSITION OF THE COMPANY
The Outbreak of COVID-19 virus continue to spread across the globeincluding India resulting in significant impact on global and India's economicenvironment including volatility in the capital markets. This outbreak was declared asglobal pandemic by World Health Organisation (WHO) on March 11 2020. The Company hasassessed the overall impact of this pandemic on its business and financials includingvaluation of assets policy liabilities and solvency for the year ended March 31 2020.Based on the evaluation the company has made additional reserve amounting to Rs 0.60billion resulting from COVID-19 pandemic over and above the policy level liabilitiescalculated based on prescribed IRDAI regulations and the same have been provided for as at31/03/2020 in the actuarial liability. The Company will continue to closely monitor anyfuture developments relating to COVID-19 which may have any impact on its business andfinancial position.
40. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND OPERATIONS OF THE COMPANY
During FY 2020 no significant or material orders were passed by theRegulators or Courts or Tribunals which impact the going concern status and Company'soperation in future.
41. OTHER EVENTS
State Bank of India (Promoter) has sold 21000000 equity shares of Rs10 each in aggregate representing 2.10% of the total issued and paid-up Equity Sharecapital of the Company. SBI has sold stake through offer for sale (OFS) on June 12 2020and June 15 2020 to achieve the minimum public shareholding (MPS) norms prescribed by theSEBI. This OFS has resulted in dilution of State Bank of India shareholding from 57.6% ason March 31 2020 to 55.5% as on the date of this report.
42. DIRECTOR'S RESPONSIBILITY STATEMENT
In terms of Section 134(3) (c) read with 134(5) of the Companies Act2013 and the Corporate Governance Guidelines your Directors confirm that; a) in thepreparation of the annual accounts for the year ended March 31 2020 the applicableAccounting Standards have been followed along with proper explanation relating to materialdepartures; b) they have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as on March 31 2020 and of the profit ofthe Company for the year ended on that date; c) they have taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) they have prepared the accounts for thecurrent financial year ended March 31 2020 on a going concern basis; e) they have laiddown internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and were operating effectively; and f) they have devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems were adequate and operating effectively.
43. PARTICULARS OF CONVERSATION OF ENERGY TECHNOLOGY ABSORPTIONFOREIGN EXCHANGE EARNINGS AND OUTGO
A. Conservation of Energy
In view of the nature of business activity of the Company theinformation relating to the conservation of energy as required under Section 134 (3) andRule 8 (3) of Companies (Accounts) Rules 2014 is not applicable to the Company.
|B. Technology Absorption || |
|Particulars ||Remarks |
|Research & Development (R&D) || |
|1. Specific areas in which R & D carried out by the Company ||In the year under review some of the areas where we have experimented in our Digilab includes Optical Character Recognition (OCR) communication through digital medium voice processing and IoT |
|2. Benefits derived as a result of the above R&D ||In the year under review we have been able to roll out a number of initiatives based on the R&D done in Digilab. |
| ||A few noted ones are provided below:- |
| ||Web OCR: Web OCR is in-house developed tool to identify the document type. It also performs Aadhaar masking. |
| ||Offline KYC: Customers are able to perform Offline KYC with the help of our mobile app during the proposal journey. The solution makes it convenient for the customers and sales agent in faster closure of cases Chatbot Integration: Our Chatbot RIA has been integrated in a number of ways with the website on the intranet pages on Whatsapp to answer customer queries assist in premium payment through chat etc to name a few. |
| ||e-Certificate of Existence (eCOE): A digital process has been introduced where the CoE can be submitted using mobile app eliminating the need for a visit to our branch. |
| ||Voice based solutions: These include integration with Amazon Alexa voice based search on our website conversational analytics |
|3. Future plan of action ||We will continue to work with the new technologies available and find ways to improve the experience for our stakeholders in technology area |
|4. Expenditure on R & D: ||In-house development. |
|(a) Capital || |
|(b) Recurring || |
|(c) Total || |
|(d) Total R & D expenditure as a percentage of || |
|total turnover || |
|Technology absorption adaption and innovation || |
|1. Efforts in brief made towards technology absorption adaptation and innovation ||Insta PIVC: PIVC application acts as one solution that is now included in customer proposal form filling journey in all channels where sales intermediary can get the customer verification done digitally by capturing photo / video. A transcript is generated for further processing. |
| ||Travel Kit for Renewal: The Application is a Mobile based Traveller kit (integrated with Smart Advisor) to access Renewal data. |
| ||Let's Huddle: Application for managed conference call through mobile now launched pan-India for various hierarchies. |
|2. Benefits derived as a result of the above efforts e.g. product improvement cost reduction product development import substitution etc. ||Key benefits are faster turnaround for new business completion improvement in the renewal premium collection and faster communication among the teams in corporate office and Regional offices |
|3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) following information may be furnished: ||Nil |
|(a) Technology imported || |
|(b) Year of import || |
|(c) Has technology been fully absorbed? || |
|(d) If not fully absorbed areas where this has not taken place reasons there for and future plans of action. || |
C. Foreign Exchange Earnings and Outgo
Details of foreign exchange earnings and outgo required under aboveRules are as under:
| || ||( Rs in billion) |
|Particulars ||FY 2020 ||FY 2019 |
|Foreign Exchange Earnings ||0.09 ||0.28 |
|Foreign Exchange Outgo ||0.21 ||0.06 |
44. INVESTOR RELATIONS
The Company has always valued its customer relationships and it is theCompany's belief that all stakeholders should have access to complete informationregarding its position to enable them to accurately assess its future potential. TheCompany disseminates information on its operations and initiatives on a regular basis. TheCompany's website (www. sbilife.co.in) serves as a key awareness facility forallitsstakeholdersallowingthemtoaccessinformation at their convenience. It providescomprehensive information on the Company's strategy financial performanceoperational performance and the latest press releases.
The Company publishes financials results on a quarterly basis. Thefinancial results of the Company are prepared and posted on the website of the Company forthe current as well as previous years. Further the quarterly results and earnings updateare also posted on the website of the Company. Every quarter the Managing Director &CEO alongwith the senior management officials of the Company participate on a call withthe analysts / shareholders. The Company's investor relations personnel respond tospecific queries and play a proactive role in disseminating information to both analystsand investors. All information which could have a material bearing on the Company'sshare price is released through as per regulatory requirements.
45. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report as stipulated under Regulation 34 of theListing Regulations form part of the Annual Report and has been hosted on the website ofthe Company https://www.sbilife.co.in/en/about-us/ investor-relations/annual-reports
46. INTEGRATED REPORTING
The Securities Exchange Board of India had recommended top 500 listedentities to voluntarily prepare their Annual Report adopting the principles of IntegratedReporting prescribed by the International Integrated Reporting Council.
In view of the above the Company has voluntarily adopted theprinciples of integrated reporting for preparing this Annual Report.
47. IRDAI LICENSE
The Insurance Regulatory and Development Authority of India (IRDAI)have renewed the annual license of the Company to continue the Life Insurance Business forthe FY 2021.
48. OTHER INFORMATION
A. Economic Capital:
The annual assessment of economic capital of SBI Life was carried outas on March 31 2020. As part of this exercise we have quantified the risk capitalrequirements relating to various risks such as Insurance Risks (Mortality risk LapseRisk Expense Risk etc.) and Non- Insurance Risks (Market Risk Operational Risk DefaultRisk etc.). The cost of guarantee for the products wherever applicable is alsocalculated. A large part of the Company's portfolio is now monitored using astochastic ALM model. The aggregate economic capital requirement for the risks of theCompany including the guarantees is well within the statutory capital requirement. Thecurrent Solvency coverage ratio (Assets / [Liability + Economic Capital Requirement + RiskMargins etc.]) on an economic basis is 115%.
B. Solvency Margin:
The Directors are pleased to report that the assets of the Company arehigher than the liabilities of the Company and the assets are more than sufficient to meetthe minimum solvency margin level of 1.50 times as specified in section 64 VA of theInsurance Act 1938 read with the IRDAI (Assets Liabilities and Solvency Margin of LifeInsurance Business) Regulations 2016. The Company has a strong solvency ratio of 1.95 ason March 31 2020 (Previous year ended March 31 2019: 2.13) as against the Regulatoryrequirement of 1.50.
C. IRDAI Directions
IRDAI has issued directions under Section 34 (1) of the Insurance Act1938 to distribute the administrative charges paid to master policyholders amounting to Rs843174 thousand (previous year ended March 31 2019: Rs 843174 thousands) vide order no.IRDA/Life/ORD/ Misc/228/10/2012 dated October 5 2012. The Company had filed an appealagainst the said order with the Ministry of Finance Government of India which remandedthe case back to IRDAI on November 4 2015. Thereafter IRDAI issued further directionsdated January 11 2017 reiterating the directions issued on October 5 2012. The Companyhas filed an appeal against the said directions/ orders with the Securities AppellateTribunal which is pending final determination. The said amount is disclosed as contingentliability as at March 31 2020 in Schedule 16C (1) of the notes to accounts. IRDAI hasissued directions under section 34 (1) of the Insurance Act 1938 to refund the excesscommission paid to corporate agents to the members or the beneficiaries amounting toRs2752948 thousand (previous year ended
March 31 2019: Rs2752948 thousands) vide order no.IRDA/Life/ORD/Misc/083/03/2014 dated March 11 2014. This has been set aside by orderdated January 29 2020 made by the Securities Appellate Tribunal (SAT). The SAT hasremitted the matter to IRDAI to recalculate the interest earned on advance premiumcollected. The IRDAI recalculation if any has not been received by the Company.
D. Appointed Actuary's Certificate
The certificate of the Appointed Actuary on valuation and actuarialassumptions is enclosed in the financial statements.
E. Certificate from Compliance Officer (under the IRDAI CorporateGovernance Guidelines)
A Compliance Certificate for complying with IRDAI Corporate GovernanceGuidelines issued by the Company Secretary designated as the Compliance officer underthe IRDAI Corporate Governance Guidelines is enclosed and forms part of the CorporateGovernance Report.
The Directors are grateful to the Insurance Regulatory and DevelopmentAuthority of India (IRDAI) Reserve Bank of India (RBI) Comptroller and Auditor Generalof India (C&AG) Securities and Exchange Board of India (SEBI) and Government of India(GOI) for their continued co-operation support and advice. The Directors would also liketo take this opportunity to express their sincere thanks to the valued customers andshareholders' for their trust and patronage. The Directors also express theirgratitude for the advice guidance and support received from time to time from theauditors and statutory authorities. The Directors expresses their deep sense ofappreciation to all the employees insurance advisors corporate agents and brokersdistributors re-insurers bankers and the Registrars who continue to display outstandingprofessionalism and commitment enabling the organization to retain market leadership inits business operations. The Directors also wish to express their gratitude to allstakeholders for their continued support and trust.
| ||For and on behalf of the Board of Directors |
| ||Dinesh Kumar Khara |
| ||Director |
| ||DIN: 06737041 |
| ||Mahesh Kumar Sharma |
|Place: Mumbai ||Managing Director & CEO |
|Date: August 20 2020 ||DIN: 008740737 |