SBI - Life Integrated Annual Report 2020/21

KEY PERFORMANCE INDICATORS

A demonstration of fundamental strength

FY21 brought about a paradigm shift in the insurance sector. Our consistent and efficient operations backed by a dedicated workforce, technological innovations and strong corporate governance enabled us to ride out the storm and further consolidate our leadership in the Indian private life insurance space.

Income

The primary income for an insurance company is premium which is collected periodically and over a long period of time.

Gross Written Premium (GWP)

Total premium written by the Company before deductions for reinsurance ceded.

New Business Premium (NBP)

Insurance premium that is due in the first policy year of a life insurance contract or a single lump sum payment from the policyholder.

New business Annualised Premium Equivalent (APE)

Sum of annualised first year premium on regular premium policies and 10% of single premium written in a fiscal year.

Renewal Premium

Life insurance premium falling due after the first year of the policy

Individual Rated Premium (IRP)

Premium written under individual products and weighted at 10% for single premium.

Individual Annualised Premium Equivalent (APE)

Sum of annualised first year premium on regular business and 10% of single premium for individual business.

Individual New Business Premium – Channel Mix

Profitability

Profitability of life insurance companies is measured via the value of new business.

Profit and Networth

Value of New Business (VoNB) and VoNB Margin

Present value of expected future earnings from new policies written during a specified period.

Ratio of VoNB to New Business APE for a specified period.

^* VoNB, VoNB Margin are calculated based on actual rate of tax

Value of a life insurance company

The value of a life insurance company is measured using Embedded Value, which computes future profits from existing policies.

Indian Embedded Value

Consolidated value of all life insurance business written by the Company since inception and in-force as on valuation date (including lapsed business which have potential of getting revived).

*Indian Embedded Value is calculated based on actual rate of tax

Quality of business

Persistency ratio*

Ratio of life insurance policies remaining in-force to all policies issued in a fixed period.

^*Based on premium

Customer service

The quality of customer service offered by a life insurance company is measured in the efficiency with which it settles claims. It is also assessed by the sales practices and transparency adopted by a company.

Unfair business practice ratio

Number of grievances with respect to unfair business practices reported to the Company divided by policies issued in same period.

Solvency

The solvency ratio measures how financially sound an insurer is and its ability to pay claims. In India, insurers are required to maintain a minimum ratio of 1.5.