To,
The Members of
SBI Life Insurance Company Limited
The Directors are pleased to present the 23rd Annual Report of SBI Life Insurance Company Limited ("SBI Life" or "the Company") along with the audited financial statements for the financial year ended March 31, 2023.
1. Financial Performance and State of Companys Affairs
The Company witnessed a growth and consistent performance in FY 2023. The key parameters of the Company are as follows:
The Company has maintained its private market leadership in Individual Rated Premium with 22.3% private market share. The Gross Written Premium (GWP) has increased by 15% to Rs 673.16 billion due to increase in New Business Premium (NBP) by 16% to Rs 295.89 billion and Renewal Premium by 13% to Rs 377.27 billion.
Individual Rated premium (IRP) has increased by 18% to Rs 152.19 billion and APE has increased by 18% to Rs 168.15 billion. The Protection New Business Premium has increased by 19% to Rs 36.36 billion due to increase in credit life business by 23%.
• Assets under Management grew by 15% Rs 3.1 trillion with debt-equity mix of 71:29.
• The Company's profit after tax has increased by 14% to Rs 17.21 billion
• Indian Embedded Value stands at Rs 460.44 billion with growth of 16%
• Value of New Business grew by 37% to Rs 50.67 billion leading to an increase in value of new business margin from 25.9% to 30.1%.
^Commission ratio = Commission (including rewards)/Gross Written Premium (GWP)
*Total Cost = Operating expenses + Commission + Provision for doubtful debt + Bad debts written off "Persistency ratio based on regular premium/limited premium payment under Individual category
• The operating expense ratio (Operating Expense to GWP) stands at 5.1%.
• The commission ratio has increased from 3.7% to 4.5% mainly due to increase in commission on first year premium and single premium.
• Individual death claim settlement ratio stands at 97.05%
• Solvency ratio of the Company stands at 2.15 as against the regulatory requirement of 1.50 indicating the strong and stable financial health of the Company.
• 13th month persistency ratio stands at 85.52%. Further, the 37th month and 61st month persistency (based on premium considering Regular Premium/ Limited Premium payment under individual category) has shown strong growth by 236 bps and 612 bps respectively due to our focus on improving the quality of business and customer retention.
• Return on equity has increased from 13.7% to 14.0%.
• Distribution reach
The robust distribution network is key to success of the Company which ensures that products and services provided by the Company reaches target customers in the cost-efficient manner. The Company aims at targeting underpenetrated market through expansion of its distribution reach by opening up of new offices, quality recruitments and new business partnerships.
As at March 31, 2023, the Company has 992 offices, 2,08,774 Insurance Advisors (IAs) and 58,723 Certified Insurance Facilitators (CIFs) across the country.
• Distribution Mix
During the year, the Company has collected New Business Premium of Rs 295.89 billion, comprising of Rs 178.30 billion from 'Bancassurance' which represents company's largest distribution network, Rs 54.89 billion from Retail Agency and Rs 62.69 billion from other distribution channel which includes direct sales, sales by corporate agents, brokers, micro agents, common service centres (CSC), insurance marketing firms (IMFs) and Web aggregators.
The Company's direct sales primarily comprise sale of group products, as well as standardised individual products sold through online offerings.
2. Industry and Company Outlook
The world outlook has changed significantly since 2021.
After navigating the COVID-19 pandemic, the global economy faces several challenges including continuing supply chain bottlenecks, the Ukraine-Russia conflict, anenergy crisis and high inflation.
As per Swiss Re report, India is one of the fastest growing insurance markets in the world, and it is estimated to be the sixth largest by 2032. Further, it is estimated that total insurance premiums will grow on average by 14% annually in nominal local currency terms (9% per annum in real terms) over the next decade.
The recent regulatory developments and digitalisation should support insurance market sector growth. A series of regulations are being introduced to improve insurance penetration, increase capital inflow, improve valuation, and facilitate the entry of small, specialised and niche players.
Reinvention will be a central strategic driver for insurers and there will be growing opportunities to expand portfolio across health and wealth protection products, leading to further industry convergence. Prevention- oriented products and services will become increasingly popular for insurers.
The key areas on which insurers need focus as they prepare for the future:
• Grow and innovate by reimagining the role of insurance in customers' lives, as well as the technology needed to serve them wherever they are.
• Modernise technology to streamline legacy systems and transform claims and underwriting.
• Invest in the future workforce by optimising talent, planning for new ways of working and using human and machine capabilities for the best result.
• Imagine the metaverse and how that can transform the way insurance companies run their internal processes and engage with their clients.
• Promote sustainability across every aspect of the business.
In coming years, the insurance industry will be poised for strong growth owing to the positive changes in the macroeconomy and competitive dynamics. The most crucial change may be changes in customer behaviours and technological landscape. The Company is well positioned to capitalise on the emerging opportunities, backed by a favourable regulatory environment and government policy support in order to increase the insurance penetration with the help of its expansive and robust distribution network.
Regulatory update:
IRDAI (Payment of Commission) Regulations, 2023
Commission includes remuneration, reward by whatever name called paid by an Insurer to an Insurance Agent, Intermediary, Insurance Intermediary as applicable.
IRDAI removed the maximum commission limits specified in the erstwhile regulations.
The Regulations prescribed that the total amount of commission payable shall not exceed the EoM limits specified under IRDAI (Expense of Management of Insurers transacting Life Insurance Business) Regulation, 2023.
IRDAI (Expenses of Management of Insurers transacting Life Insurance Business) Regulations,2023
"Expenses of Management" includes (i) all expenses in the nature of operating expenses of life insurance business, (ii) commission to insurance agents, and intermediaries' /insurance intermediaries, and (iii) commission and expenses on inward reinsurance (which are charged to Revenue Account). The definition excludes any charges, such as GST.
The EOM Regulations provides that the expenses of management (EOM) should not exceed the limits specified in respect of various segments of business during a financial year. IRDAI has allowed an Insurer to incur "Additional Allowable Expenses" over and above the EOM limit towards:
• Expenses incurred towards Rural sector, PMJJBY and other schemes notified, up to 15% of the incremental premium over the previous year
• Insurance Awareness and Insure-tech expenses
• Head office expenses for Indian insurers having branch outside India or having International Financial Service Centre Insurance (IFSC) or Insurance Office (IIO).
The Company is required to monitor expenses of management of the Participating policies on an overall or aggregate basis. Where the Company has exceeded the overall limits of expenses of management, excess of such expenses shall be borne by the Shareholders.
Further, the Company is required to monitor expenses of management of Non-participating and Linked policies on overall or aggregated basis, the excess of such expenses shall be borne by the shareholders.
Board approved business plan to be put in place specifying projected capital requirement, solvency margin and expenditure projections.
Use & file (U&F) procedure for life insurance products & riders IRDAI expanded the scope of Use & File procedure for Life Insurance product allowing launch of new products from allowing certain specified modifications previously.
Board approved Product Management Committee (PMC) to be constituted which shall review and approve the products/rider in line with Board Approved Products Management & Pricing Policy, under Use & File procedure.
IRDAI has specified category wise conditions for filling new products/riders under Use & File along with procedures for modifying existing products and riders
This amendment will facilitate industry in responding faster to the emerging needs, in terms of designing and pricing of Insurance Products.
Revision of premium rates of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Revised enrolment and claim forms for PMJJBY and PMSBY
Department of Financial Services, Ministry of Finance has revised the premium rates of PMJJ BY scheme from Rs 330 per annum to Rs 436 per annum.
3. COVID 19
The Company conducts experience analysis (including death due to Covid) on regular basis to monitor the emerging experience and undertakes various measures in order to mitigate any potential risks arising out of the experience.
4. Dividend & Dividend Distribution Policy
The Board of Directors of the Company at its meeting held on March 8, 2023 has declared an interim dividend of Rs 2.50 per equity share with face value of Rs 10 each (previous year ended March 31, 2022, interim dividend of Rs 2.00 per equity share with face value of Rs 10 each). The total interim dividend pay-out amounts to Rs 2.50 billion. No final dividend is recommended for the year ended March 31, 2023 and the said interim dividend declared is to be confirmed as final dividend.
In terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") the Dividend Distribution Policy of the Company is disclosed on the website https://www.sbilife.co.in/en/ about-us/investor-relations
The Company has uploaded the details of unpaid and unclaimed dividend on the Company's website: https:// www.sbilife.co.in/en/about-us/investor-relations
5. Capital and Shareholding
During the year there was no fresh capital infusion by the promoter in the Company. The authorised share capital and paid up share capital of the Company stands at Rs 20.00 billion and Rs 10.01 billion respectively. The shareholding pattern during the year under review is in compliance with the statutory requirement. The shareholding pattern is provided as a part of Form No. MGT-9 which is annexed to this Report and under Schedule - 5A which forms part of the Financial Statement.
During the year, the Company has allotted 5,24,197 Equity shares on exercise of certain stock options granted under SBI Life Employees Stock Option Scheme 2018 ('the Scheme' or 'ESOS 2018').
6. Deposits
During the year under review, the Company has not accepted any deposits from the public as per Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (as amended).
7. Awards & Recognitions
The Company has received various awards during the year across brand management, technology, CSR initiatives etc. Brief highlight of some of the major awards are mentioned below:
• Gold Award in Environment Protection Initiative of the Year at Integrated Health & Wellness (IHW) Annual Awards
• Golden Peacock Awards for Risk Management
• Silver Honour for Multichannel Marketing Category for 'Papa Hai Na: Sumit ke Papa campaign' at Adgully DIGIXX Awards 2022
• Silver Honour for Financial Immunity Survey 2.0 at Adgully DATAMATIX Awards 2022
• Most Innovative Risk Management Strategy of the Year and Risk Management Team of the Year (Runner-up) at 4th CRO Leadership Summit and Awards 2022
• Most Trusted Private Life Insurance Company of the Year at 2nd edition of Navabharat BFSI Conclave and Awards 2022
• Overall Achievement (Life Insurance) and Highest Growth (Life Insurance) by ASSOCHAM 14th Global Insurance Summit and Awards 2022
• Gold Medal- Team of the Year and Silver Medal- Best Induction Training Program at TISS LEAPVAULT CLO Awards 2022
• Amiable Insurer in Life Insurance-Large Category at The Economic Times Insurance Summit
• Best Life Insurance Company of the Year' (1st Runner Up) and Best Strategies for Insurance Spreading (2nd Runner Up) at 3rd Emerging Asia Conclave & Awards 2021
As we work to deliver performance with purpose, we are proud that numerous organisations have recognised our efforts and achievements. These awards demonstrate the Company's commitment to achieve excellence, across all spheres of its activities and operations.
8. Products
SBI Life has a wide range of products catering to various customer needs in the life, health, pension & microinsurance segments. These products are customer centric, simple to understand and have competitive features.
To maintain its competitive edge in the market, the Company has reviewed and modified following existing products (individual and group) during the financial year 2022-23:
1. SBI Life - Smart Swadhan Plus
2. SBI Life - New Smart Samriddhi
3. SBI Life - Smart Annuity Plus
4. SBI Life - Swarna Jeevan Plus
5. SBI Life - Saral Jeevan Bima
6. SBI Life - Smart Platina Plus
7. SBI Life - Saral Pension
The product SBI Life - Smart Swadhan Plus and SBI Life - Saral Jeevan Bima were modified to add new distribution channel.
The product SBI Life - New Smart Samriddhi was modified to increase the range of sum assured offered, reduce the minimum entry age and to pass on the benefit of current economic scenario to customers by enhancing the benefits under the product.
The products, SBI Life - Smart Annuity Plus, SBI Life - Swarna Jeevan Plus, the standard Individual Immediate annuity product SBI Life -Saral Pension and SBI Life - Smart Platina Plus were mainly modified in view of the changing interest rate scenario.
The Company also launched five new products considering the business requirement
The following new products were launched during the financial year 2022-23:
1. SBI Life - Smart Annuity Plus
2. SBI Life - Retire Smart Plus
3. SBI Life - Smart Lifetime Saver
4. SBI Life - Group Micro Shield - SP
5. SBI Life - Group Micro Shield
SBI Life Smart Annuity Plus is an Individual, Non-linked, Non-Participating general annuity product, offers immediate/deferred annuities to individual(s), who wish to purchase annuity through product conversion or who wish to get regular income throughout their lifetime.
SBI Life Retire Smart Plus is an Individual, Unit Linked, Non-Participating pension savings product, offers range of fund options.
SBI Life - Smart Lifetime Saver is an individual, Non- Linked, Participating (PAR) Whole of Life Insurance savings product, offers guaranteed and non-guaranteed benefits throughout the term of the policy.
SBI Life - Group Micro Shield - SP and SBI Life - Group Micro Shield are Non-linked, Non-participating, long term and one-year renewable Group term micro life insurance products respectively.
9. Customer and Partner Service Enablement for business growth
The Company strives continuously to achieve and reach new heights of performance by bringing new ideas with an intention to improve, customise and stay relevant. Therefore, in the present digital world, it is very essential to empower both, the company and its stakeholders digitally.
Focus on building robust work systems, continual process improvements and thrust on digitisation and automation
continues with an aim to enhancing customer experience, improving efficiencies, reducing costs and maximise value creation to all stakeholders.
The technologies like Artificial Intelligence (AI) and Machine Learning (ML) have helped in the implementation of automation of tasks which have large amount of data and are repetitive in nature. This has helped reduce the time in processing of activities and helped in reducing manual work.
The Company has also played its part in preservation of the environment by sourcing 99% of its Individual applications and processing ~ 49% of its servicing requests digitally thereby reducing paper use and our overall carbon footprint.
These process improvements and efficiencies developed have been benchmarked and have stood tall against the industry best practices. Our winning of some of the most reputed performance excellence awards including the Indian Merchant Chamber's Ramkrishna Bajaj National Quality Award 2022, the recognition of 5 of our processes as best practices in the IMC MQH Best Practices competition 2022 and winning of the Golden Peacock innovative service trophy for the surrender prevention tool are an acknowledgement of the progress made. Further, all of our Central and branch operations are ISO 9001:2015 certified.
The details of major activities undertaken by various departments are highlighted below:
• Growing Capacity and Process Efficiency
We are happy to report that, in the year under review, your company has been able to handle significant transaction volumes with utmost efficiency.
During the year, 21.97 Lakhs Individual Policies were issued with an increase of 14%
Lives covered under Group Insurance Products as below:
• During the year, 1.84 crores lives covered under Group insurance policies with an increase of 35%.
• As on March 31, 2023, the total active lives for servicing under all Group products has reached 4.36 crores with an increase of ~ 26% in active lives over FY 22.
• Under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), we ended FY 2023 by covering over 1.53 crore new lives and increasing the total active lives covered to more than 3.42 crore.
Renewal Premium of Rs 37,727 Cr has been collected in FY 2023 registering a growth of 13% over FY 2022. Individual renewal business contributes 96.5% of the total renewal business.
Benefits net of reinsurance is Rs 30,090 Cr in FY 2023.
13.58 Lakh incoming telephonic interactions and
19.59 Lakh customer queries were handled.
• Customer Engagement, Retention & Persistency management
The financial strength and stability of an Insurance Company lies in the strength of its renewals. Improvement in collection reflects our customers' trust on our Brand. Higher Customer retention leads to continued growth & profitability.
It gives an insight into what the customer feels about the product, the company and its services rendered. This is also an important parameter in assessing the persistency. This also gives the company a view of how long the customer might stay with the company and keep on paying their premiums regularly.
All three key facets which help improve customer stickiness, loyalty and persistency are focused upon
• Customer Engagement
• Renewal collections and persistency
• Controlling exits through surrender and lapse control
Customer Engagement
We have taken various measures to ensure a longterm relationship with customers and mechanisms devised to enhance the Customers' overall experience and engagement such as personalised product videos, ongoing engagement calls, enhanced customer communication through various communication system, awareness campaign etc.
Customer Retention
Retention of policies needs to be tracked continuously and very closely with an aim to prevent exits at all stages. Policies which are not getting paid on the due date or within the grace period and policies which are moving into lapsed status on account of non-payment of premium are very important from a customer retention perspective. The customer retention is ensured by implementing lapsation control and surrender prevention measures through revival campaign, customer awareness campaign.
Customer Support & Service Delivery
The customer support and service delivery is ensured via optimised touchpoints such as customer contact care, self-service channels, smart care customer portal, WhatsApp service, Chabot, intermediaries assisted services etc.
Claims settlement
In an era with little differentiation in terms of product offerings, we have been able to use our efficiency and simplified claims processes to effectively differentiate our services from the competitors.
Owing to the continual process improvements, we have been able to register a total claim settlement ratio of 98.39% (against 97.20% in FY 22). Individual claim settlement ratio stands at 97.05%.
During the year, we have launched the Bima Sahayak program, an initiative aimed at assisting our claimants in getting their claims settled in the minimum possible time without requiring to submit multiple requirements. This initiative has been recognized as a best practice by the Indian Merchant Chamber under their MQH Best Practices competition 2022.
• Process Quality Excellence & Risk Mitigation
Robust Quality assurance framework has been put in place to monitor the quality of data and processes across the spectrum of functions and transactional systems to ensure accuracy and mitigate operational risks.
Process Quality
• Monitor key financial transactions to ensure correctness of payments and prevent financial loss due to data errors and/or application logic gaps
• Monitor other key operational processes for quality and consistency of execution and generate proactive alerts about gaps found
• Monitor accuracy of automated processes in the Policy Management System (PMS)
• Develop automated and tech tools to improve the efficiency, effectiveness and scalability of the quality monitoring processes
Data Quality
• Monitoring Framework to continuously monitor the correctness, integrity and consistency of data and records generated by the core policy management system and the peripheral transactional systems.
• G rieva nce Redressal
Improvement of the effectiveness and efficiency of the grievance redressal mechanism has been a constant focus of the Company along with an endeavour to ensure approachability and quick, fair, equitable & satisfactory resolution of customer queries and complaints.
Despite a significant increase of over 14.26% in the number of new policies issued in FY 2023, the ratio of customer grievances to issuance has been maintained at levels which are amongst the best in the industry. For FY 2023 it stood at 0.20%, a marginal increase of 0.01% over FY 2022.
Many steps to empower the employees and improve the Query/Complaint handling skills thus enabling
them to provide efficient and effective resolutions have been taken in the year. The key initiatives are:
• Constantly upgrading our Portals and Digital Tools for Customer Relationship Management (CRM) such as CRM Next to improve our processes
• A web-based, real-time integration of Parivartan Module with our CRM Next Module has also been established.
• Integration of CRM Module with the SBI CRM
• Integration of CRM with Bima Bharosa Portal
• Onboarding Revamping of Insta PIV
Insta PIV has been enhanced to include a new user interface incorporating multiple features such as audio - voice over, face detection and Liveliness check, Proximity to camera, Product Benefit & customer's Personal description, option to enter dis-agreement comments on important screens, consent of the customer is recorded in every screen, Interactive PDFs are available in 14 languages etc.
Increased adoption of e Insurance Accounts (eIA)
Dematerialisation of policies is beneficial to both the customer and organisation. The customer is able to get quick access to their policy document on their fingertips without having to wait for the actual physical delivery of their document. The Company has popularised this digital initiative and has increased eIA adoption from12.96% in FY 2022 to 60.93% in FY 2023.
• Payout Processing Integration of Payout Modules
Several policy payouts were integrated into the systems to ensure smooth and faster settlements with efficiency and accuracy. This has helped us to manage increased volumes. Also, enhancements were done in the existing payout systems to ensure better risk mitigation.
10. Information Technology
As per the recent trends, FY23 has seen major enhancements in the digital footprints and improved agility in the IT landscape. Some of the highlights include the Voice BOT for renewal calling, Robotic Process Automation (RPA), end point posture checks for Virtual Desktop Infrastructure (VDI) & Virtual Private Network (VPN) and augmented capacity of compute, storage and bandwidth to support ever growing business volumes.
The improved digital tools and intuitive popularised have played a significant role in enhancing the experience of, both, our internal and external customers. We have progressively enhanced the capacity and capabilities of our technology infrastructure that has consistently
improved the availability of systems and applications for the business.
Some of the improvements implemented during the year under review are listed below:
A. Infrastructure
• Wide Area Network (WAN)
SD-WAN technology implementation has been started to replace tradition WAN connectivity with software defined WAN technology to reap benefit of new WAN technology to extend best application performance to branch users. This will also help in adoption of cloud in future.
• Security Initiatives
a. Secu rity Operation Centre (SOC):
During the year the company have further strengthened the existing, state of art, SOC to monitor 24x7 all critical IT devices, websites, mobile applications and other domains, owned or used by the company.
SOC monitors all applications and related infrastructure devices for security alerts - technology based on machine learning/ artificial intelligence, data analytics, threat intelligence, anticipation and analytics with threat hunting, network behaviour and user behaviour. SOC has the capability to quickly identify and detect cyber threats.
Brand protection services for Internet facing websites, mobile application and social media handles are in operation. Dark Web is monitored for SBI Life contents with Intelligence Feed and action based on Incident.
Deception & decoy technology is providing a layer of protection to stop attackers who have penetrated the network level up to traps (decoy) IT asset
b. Database Activity Monitoring (DAM):
DAM is implemented in all the databases to monitor the access and the queries that executed by the users/applications.
c. Source Code Review:
Source code review tool is implemented and integration with development team end systems carried out to ensure the codes moved to production are without any code level vulnerabilities.
d. Mobile Device Management (MDM):
Upgraded Unified Access Gateway environment for enhanced protection for
Mobile devices and application hosted over MDM
e. Data Classification Tool:
Data Classification tool is implemented to classify the files with appropriate label as per data governance policy.
f. Endpoint Protection and Remediation:
Antivirus, extended detection and response, website whitelist and device control policies are configured to safe guard company information asset.
g. Cert-in compliance:
Integrated all IT systems clock with Cert-in NTP clock server for having uniform time synchronism as per Cert-in guidelines.
h. Email
The company built strong and dedicated- email infrastructure with multi-mode of access such as webmail, client and mobile app. upgradation of the email system to the newest version has improved the security posture, speed of operations and provide improved features to end users.
B. Process Area
• Customer Relationship Management (CRM) system: "CRM Next" is the core system providing 360-degree view of the customer, leading to better service across all touch- points. The application is upgraded to the latest version to take advantage of the additional features and led to improved customer service.
• Aadhaar Masking Integration with all applications as per UIDAI and IRDAI regulations: In order to ensure the compliance with IRDA regulations, an 'AI' based Aadhaar number masking solution has been implemented and integrated with all the applications through which KYC documents are being collected.
• Services for Digital Assignment - IRDAI Sandbox: The Company participated in a digital assignment project for loan offerings from other financial institutes against the company policies in partnering with CAMS.
• Outbound Voice BOT for renewal calling:
An AI based voice BOT has been introduced in FY23 for calling customers for renewal premium payment due reminders and the calling dispositions are updated in CRM for further follow-ups. The BOT also enables the customers to get a call back from the Contact Centre, in case the customers need any further assistance in paying their premium.
• Account Aggregator Services: Financial data aggregation is crucial to providing the best customer experience and service possible. Financial data aggregators provide the ability to provide more personalised services to the customers, fostering a more comprehensive and convenient system. The Company has successfully gone live in utilizing financial information from other financial institutes as FIU (Financial Information User) and providing financial information to other entities as FIP (Financial Information Provider)
• WhatsApp BOT: In l ine with journey of increased offerings on WhatsApp, a WhatsApp BOT for intermediaries has been introduced in this financial year to get real time updates on on-boarding statuses, pending requirements, etc.
The existing functionalities such as campaign for policy servicing and customer engagement has been further enhanced.
• Bank Account Verification of customers:
Using penny drop service, the bank account details of the customer are verified during on- boarding and while doing payout. This is to ensure that the correct details are available for policy payouts.
• Surrender Retention tool: To help the frontline staff deal with queries on the policy fund growth and prevent surrender of the policy, a tool has been implemented. The tool provides the illustration with benefits that customer will gain by continuing the policy.
• Online Integration of eIA Account:
e-Insurance Account number generation is provided on a real-time basis thus improving the TAT of processes linked to it.
• QR code reader for death certificate: This functionality is to scan the QR code available on the death certificates to verify the details that are mentioned on the death certificate. The functionality is made available in the image viewer application for the users to view the details that are fetched using the QR code scanner on real-time basis.
• TPA Integration: Real time intimation to TPA for various medicals to be conducted for respective clients through API based integration with TPA This helps in reducing the medical TAT.
• Integration of early death claim model:
Improved Risk score version implemented in the New Business work flow for better risk management.
• Robotic Process Automation, (RPA):
Utilisation of latest technology and solutions is an ongoing process to improve efficiency and efficacy. 380 tasks have been automated. We will continue to automate more processes in the coming years.
• Mobile Solutions:
Continuing the thrust from the previous year to adopt 'Go Digital', more than 99% of the Individual New Proposals are sourced through our Mobile Application - mConnect. Additional feature 'Account Aggregator' has been integrated with mConnect App to get account statement from respective banks during the proposal sourcing journey
• Digital offering for our partners/distributors
We have a ready set of digital platform bouquet including mobility and API (Application Program Interface) and it has been made available for quick integration and on- boarding of partners for new business and renewal premiums.
C. Business Intelligence and Reporting
The Company has various reporting and analytics platforms for strategic decision making and actionable for a wide range of users for real time activity tracking, repository and dashboard viewing etc. During the year following are the key implementations.
Analytics & Machine learning
• Re-trained Cross sell/Up sell Propensity model
• Re-trained Surrender & persistency models
• Real-time customer risk scoring based on industry benchmarks
• Real-time processing of fraudulent claim investigation model
D. Resilient Operations
To bring resilience to the company, especially after Covid, initiatives were taken to support the applications and to ensure continuity
• Upgraded Application Programme Interface (API) platform to latest technology for robust security, performance boost and scalability.
• Space management automated in all databases were ensured a minimum of 20% additional space to make them more resilient.
• Centralised application monitoring system along with dashboards has been setup to provide high visibility of any untoward incident that may lead to disruption of services. This has provided in-depth analysis and helped resolve before incidents take place.
Initiated automation projects for quality assurance/ testing of the applications to help reduce the TAT in testing.
11. Investments
Equity markets gave good returns for the year amidst increased volatility across both domestic and international markets. Nifty was flat in FY 23 and gave a mild negative return of 0.6% for the year. Uncertainty in equity markets came with Federal Reserve rate hikes, massive inflation in developed markets, banking sector crises in US and Eurozone and some declining growth fundamentals as well. Higher imports as a result global crude oil, and commodity prices that shot up due to the Russia-Ukraine War and weaker exports growth amidst slowing growth in the DM regions widened the current account deficit. INR weakened by 8% to 82.18 owing to a stronger dollar as the Federal Reserve continued on its path of monetary tightening hiking by 500 bps.
Yield on 10-year Government of India Bond rose by 48 bps in the year from 6.83% to 7.31%. Markets reacted to the monetary policy tightening by RBI of around 250 bps amidst rising inflation and steady growth. The 10 Y bond yield touched 7.6% in the first half of FY 23, but yields later eased with policy tightening coming to an end, and oil price eased from $115//bbl in May 2022 to $80/bbl by December 2022.
The Assets under Management (AuM) of the Company has increased by 15% from Rs 2,674.09 billion as on March 31, 2022 to Rs 3,073.39 billion as at March 31, 2023. The debt equity mix of the AuM as on March 31, 2023 is 71:29.
The AuM was made up of Rs 1440.83 billion of traditional funds (including shareholders') and Rs 1,632.56 billion of unit linked funds. The unit linked portfolio majorly comprises of equity funds, bond funds and NAV guaranteed funds.
12. Persistency
Persistency is a critical indicator of business viability and brand success. During the FY 2023, the Company has witnessed 13% growth in Renewal Premium collection at Rs 377.27 billion, which contributed to 56% of Gross Written Premium. The Company has continued to focus on renewals and has undertaken initiatives to improve persistency of its existing policies. The collection efficiency has helped improve the 13th month regular premium persistency to 85.52% and the 61st month regular premium persistency to 55.60% for Individual policies thus establishing the efficacy of our customer engagement and retention interventions. The independent Renewal Vertical is focusing on collection of renewal premiums and servicing policyholders. We shall continue to accord prime importance to this area.
13. Particulars of Employees
SBI Life is one of the most trusted private Life insurance brand with more than 22 years of operations. SBI Life family has grown from 18,515 employees as on March 31, 2022 to 20,787 employees as on March 31, 2023 which depicts a growth of 12%. While the average age of employees is 36 years 6 months, the average tenure is 5 years 2 months.
In terms of Section 136(1) of Companies Act, 2013 the Report and the Accounts are sent to the Members excluding the statement containing particulars of employees 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. The statement containing aforesaid details may be obtained by the Members by writing to the Company Secretary at the Registered Office of the Company.
14. 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 'ESOS 2018') has been approved by the shareholders of the Company in the Annual General Meeting (AGM) held on September 27, 2018 based on the recommendation of the Board Nomination & 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 in accordance with ESOP 2018 shall not exceed 30,000,000 shares. During any one year, no Employee shall be granted Options equal to or exceeding 1% of the issued share capital of the Company at the time of Grant of Options unless an approval from the Shareholders is taken by way of special resolution in a General Meeting. Further, the maximum number of Options in aggregate granted to an employee under this Plan shall not exceed 1,00,00,000 Options. The Exercise Price shall be determined by the Board Nomination & Remuneration Committee in concurrence with the Board of Directors of the Company on the date the Options are granted and provided in the letter of grant.
During the year ended March 31, 2023 the NRC in its meeting held on July 27, 2022 has approved the grant of 7,80,140 Employee Stock Options ('Options') to the eligible employees under ESOS 2018.
No employee was granted options during one year amounting to five percent or more of options granted during that year. Similarly, no employee was granted options during any one year, equal to or exceeding one percent of the issued capital of the Company at the time of grant.
During the year ended March 31, 2023, the Company has not granted any loan to its employees for purchasing shares of the Company.
The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. Further, there are no changes in the scheme. The disclosures pursuant to the SEBI SBEB Regulations have been placed on website of the Company at https://www.sbilife.co.in/en/about-us/investor- relations.
The disclosures pursuant to SEBI SBEB Regulations, Guidance Note on accounting for employee share based payments, disclosure of diluted EPS in accordance with 'Accounting Standard 20 - Earnings Per Share' issued by ICAI or any other relevant accounting standard have been disclosed in the Notes to Accounts which form part of financial statements in the Annual Report.
15. Prevention of Sexual Harassment of Women at the Workplace
The Company has an Internal Complaints Committee (ICC) to investigate and inquire into sexual harassment complaints in line with The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Company has in place a policy for Prevention of Sexual Harassment, which purports the Company's zero- tolerance towards any form of prejudice, gender bias and sexual harassment at the workplace.
During the FY 2022-23, the Company had undertaken training on e-Shiksha empowered, our digital platform, on awareness and sensitisation with respect to sexual harassment at workplace. The Company organised workshop and awareness program for the members of ICC to equip them for effectively dealing with investigation, inquiry and disciplinary proceedings in connection with sexual harassment complaints as per policy and also to develop skills necessary for enquiries and documentation procedures while dealing with such cases. Further, the Company's Policy on Prevention of Sexual Harassment of Women at Workplace along with the details of Internal Complaints Committee at each Region is accessible to all employees on the Company's intranet, e-bandhan.
During the year FY 2022-23, 8 sexual harassment cases were filed. All 8 cases were disposed-off during the year and appropriate actions were taken within timelines in FY 2022-23. Having an adept POSH policy has enabled us in employer branding by creating employee value proposition, permeating a sense of safety amongst employees, retaining vital talent and promoting inclusively.
The details are mentioned in the Business Responsibility and Sustainability Report, which is hosted on the Company's web-link: https://www.sbilife.co.in/en/about- us/investor-relations.
16. Risk Management
SBI Life has implemented Corporate Governance and risk culture by which the company is directed and controlled in the interest of shareholders and other stakeholders to sustain and enhance the value. Risk management at SBI Life is an integral part of the responsibilities
of management and covers all aspects, including strategic planning. Risk Strategy and Risk Vision of the Company is outlined in the Risk Management Policy. The Risk Management policy specifies the process for identification, assessment, and analysis of the Company's risk exposures; develop risk management strategies and its monitoring.
Risk appetite statements at the corporate level are reviewed and monitored by the Risk Management Committee of the Board. Further assessment of Key Risks of the Company is conducted annually and submitted to the Risk Management Committee of the Board for review.
SBI Life has robust risk management framework which includes Operational Risk Management, Fraud Monitoring, Data Governance, Information Security, Business Continuity and Regional Risk Unit to drive the enhanced risk culture across the organisation.
The Company also carries out an ICAAP (Internal Capital Adequacy Assessment Process) activity, which details the assessment of material risks, estimation of capital requirement and adequacy for maintaining solvency requirements.
Risk Management at SBI Life is certified/aligned with the following ISO Standards:
1. Enterprise Risk Management - ISO 31000:2018 (Statement of Compliance)
2. Business Continuity Management System (BCMS) - ISO 22301:2019 (Certified)
3. Information Security Management System (ISMS) - ISO 27001:2013 (Certified)
Sound risk management practices and business continuity management practises followed by the Company enables it to continue core business operations at an acceptable level in case of any crisis scenario.
SBI Life Risk Management has won the following accolades and awards:
1. 'Golden Peacock Award for Risk Management for the year 2021.' This is the third time that the Company has won this prestigious award.
2. 'Most Innovative Risk Management Strategy of the Year" award at 4th CRO Leadership Summit and Awards, 2022.
3. "CRO of the Year" award at 4th CRO Leadership Summit and Awards, 2022.
4. 'Recognition' under the category of "Risk Management Team of the Year" at 4th CRO Leadership Summit and Awards, 2022.
More information on the risk management practices adopted by the Company is available in the 'Enterprise Risk Management' section appended to this report and 'Management Report' section of the Annual report.
17. Internal Audit and Compliance Framework Internal Audit:
The Company has in place a robust internal audit framework. The Inspection and Audit (I & A) Department undertakes risk based audit approach and it commensurate with the nature of the business and the size of its operations. The internal audit plan covers Information System Audit, different process audit as well as transaction based audits at the Head office, Regional Offices and across various branches of the Company.
The audits are carried out by the internal audit team of the Company and also by the outsourced audit firms. The approach of the audit is to verify compliance with the regulatory, operational and system related controls. Key audit observation and recommendations are reported to the Board Audit Committee of the Company. Implementation of the recommendations is actively monitored.
I & A has designed Offsite Monitoring System (OMS) with an objective to identify deviations at an early stage and sharing the same with concerned process owners for immediate corrective action. Exception reports are developed and operational for around 90 scenarios. The frequency to extract and analyse a particular set of data through these exception reports is based on the criticality of the process. Frequency is defined as Quarterly, half yearly and yearly. The OMS review enables the process owners to identify gaps, if any, at an early stage, ensuring timely resolution of the issues. The utility is also shared with the users for a proactive and real time assessment at user level, itself.
The branch inspection checklist was rationalised to match with the scope of current roles of Branches. The policy transactions with critical functions such as New Business Quality is reviewed at quarterly frequency, underwriting process and policy service transactions are reviewed at half yearly frequency, through offsite data analytics.
Concurrent Audit:
In accordance with Insurance Regulatory and Development Authority of India (Investment) Regulations, the Company has also engaged professional chartered accountants firm to carry out concurrent audit of investment operation as per IRDAI investment regulations/guidelines and guidance note on Internal/ Concurrent Audit of Investment functions of Insurance Companies, issued by the Institute of Chartered Accountants of India. Any significant findings in the concurrent audit are presented to the Audit Committee and reviewed by Board Investment Sub-Committee and Board Investment Committee.
Compliance:
The Board Audit Committee of the Company has laid down governing principles to oversee the compliance framework of the Company. The Committee discusses the level of compliance in the Company and any associated
risks and reports the same to the Board. The Company has also formulated various internal policies and procedures to define framework for the working of various functions to ensure compliance. The Compliance function identifies and communicates regulatory requirements to relevant functions in a timely manner and monitors critical compliance risks based on suitable monitoring mechanism. The Compliance function works in liaison with the regulators and provides clarifications to various functions on applicable laws, regulations and circulars issued by the regulatory authorities. A compliance certificate signed by the Managing Director & CEO is placed at the Board Audit Committee on a quarterly basis.
The Company has also formulated various internal policies and procedures relating to working of various functions to ensure compliance.
18. Internal Financial Controls
The Companies Act, 2013 requires the Board of Directors, to lay down adequate and effective internal financial controls with reference to the Financial Statements and include it in the Board report. The Company has aligned its internal financial control system with the requirements of the Companies Act 2013, on lines of globally accepted risk based framework as issued by Committee of Sponsoring Organizations (COSO). The internal control framework is intended to increase transparency and accountability in an organization's process of designing and implementing a system of internal control. The framework requires the Company to identify and analyse risks and manage appropriate responses. The key components of the internal financial control framework include:
Entity level controls:
Entity Level Controls (ELCs) operates at an organisation level. The Company has defined a set of entity level policies and controls. The ELCs set up by the Company includes various policies and procedure in place such as Anti Money Laundering and Counter-Financing of Terrorism policy, Business Continuity Management policy, IT and Information Security policy, Risk Management Policy, Whistle blower Policy etc.
Process level controls:
The Company has defined a set of process level controls across its business and support functions such as premium, reinsurance, claims management, agency management, fixed assets etc. The control type covers key operating controls, financial reporting controls & IT controls have been done to ensure compliance with COSO framework.
Review controls:
The Company's internal financial control framework is based on 'three lines of defence model'. The Company has laid down standard operation procedures and policies to guide the business operations. The Company has a well- defined delegation of power with authority limits for approving revenue and capital expenditure. Statutory, Concurrent and Internal Auditors including internal audit department of the Company undertake rigorous testing of the control environment of the Company.
The Company has a Chief Audit Officer with a dedicated internal audit team which is commensurate with the size, nature & complexity of operations of the Company.
The Company also undergoes an independent internal / concurrent audit by specialised third party professional consultants to review function specific regulatory compliances as well as internal controls.
The Audit Committee reviews reports submitted by the Management and audit reports submitted by the internal auditors and statutory auditors. Suggestions for improvements are considered and the Audit Committee follows up on corrective actions. The Audit Committee also meets the Company's Statutory Auditors to ascertain their views on the adequacy of internal control systems and keeps the Board of Directors informed of its major observations, if any periodically.
Auditor's Report
There were no qualifications, reservations, adverse, remarks or disclaimers on Internal Financial Controls made by the Statutory Auditors in their report for the financial year ended March 31, 2023.
19. Related Party Transactions
The Company has Policy on materiality of Related Party Transactions and on dealing with Related Party Transactions to regulate the transactions with its related parties. As per the policy, all related party transactions require approval of the Board Audit Committee. Further, as per Rule 6A of the Companies (Meeting of Boards and its Powers) Rules 2014, the Audit Committee may grant omnibus approval for related party transaction proposed to be entered into by the Company subject to terms and conditions mentioned in the said Rule.
All the Related Party Transactions entered during the financial year were on arm's length basis and in ordinary course of business. All related party transactions are placed before the Audit Committee of the Board for its approval. During the year, there were no material contracts or arrangements or transactions with related parties that need to be disclosed as per Section 188(1) of the Companies Act, 2013.
M/s. S.K. Patodia & Associates, Chartered Accountants, reviewed the related party transactions for the year ended March 31, 2023 and their certificate is placed at the meeting of the Board Audit Committee, along with details of such transactions.
All Related Party Transactions as required under Accounting Standards AS-18 are reported in Note 43 of Schedule 16(C) - Notes to Accounts of the Financial Statements of the Company.
The policy on materiality of Related Party Transactions and on dealing with Related Party Transactions, has been hosted on the website of the Company can be viewed at https://www.sbilife.co.in/en/about-us/investor-relations
20. Ind AS Implementation
IRDAI ("Authority") vide its circular dated January 21, 2020 has withdrawn its erstwhile circular dated June 28, 2017 on implementation of Ind AS from FY 2020-21 and dispensed with the requirement of quarterly submission of Proforma Ind AS financial statements on account of proposed amendments in IFRS 17 by International Accounting Standard Board (IASB).
IASB has notified the amended IFRS 17, with global date of implementation starting from January 1, 2023. The Institute of Chartered Accountants of India ('ICAI') has issued exposure draft of amendments in Ind AS 117 on February 8, 2022. The amended Ind AS 117 is under process of notification. The IRDAI (the Authority) vide its communication dated July 14, 2022 on Ind AS implementation in Insurance Sector has conveyed its broad approach on Ind AS implementation and necessary steps to be initiated by the insurers. The authority advised insurers to set up steering committee for Ind AS implementation.
Ind AS implementation (specifically Ind AS 117) will have major change in current accounting and reporting practice. The Ind AS implementation will also impact the business, operational, regulatory and IT systems. The roadmap/strategy for Ind AS implementation involves initial Gap and impact assessment to identify financial and other impacts, building the initial work plan and implementation roadmap, formulating accounting policies, system and process requirements and execution of implementation plan and monitoring.
As per the directions of Authority, the Company has constituted Steering Committee headed by President & CFO and members from cross-functional areas such as actuarial, investment, information technology. The Company has engaged knowledge partner for Ind AS GAP and impact assessment. The process of Ind AS GAP and impact assessment is in progress. The Knowledge partner has conducted various training session on different aspects of IFRS 17/Ind AS 117. Further, the concerned team members have also attended the IFRS 17 training session organised by Institute of Chartered Accountant of India (ICAI) and Institute of Actuaries of India (IAI). The final dates for Ind AS implementation are yet to be announced by the Authority.
21. Board of Directors and Key Management Person
Change in Directors and Key Managerial Person (KMPs) during the year:
*Key Management Persons as per Corporate Governance Guidelines for Insurers in India, 2016
Key Managerial Personnel
Mr. Mahesh Kumar Sharma, Managing Director & Chief Executive Officer; Mr. Sangramjit Sarangi, President & Chief Financial Officer and Mr. Vinod Koyande, Company Secretary are designated as "Key Managerial Personnel" of the Company, under the provisions of Section 203 of the Companies Act, 2013.
Further, in accordance with Corporate Governance Guidelines ("CG Guidelines") issued by IRDAI the Company has sixteen (16) Key Management Persons including above mentioned Key Managerial Personnel.
Declaration by Directors
All Independent Directors have registered themselves in the Independent Director Databank and have submitted declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 along with Rules framed thereunder and Regulation 16 of the Listing Regulations. The Company has also received declarations from all its Directors as per Section 164 of the Companies Act, 2013, confirming they are not disqualified from being appointed as Directors of the Company. There has been no change in the circumstances affecting their status as Independent Directors of the Company.
The Independent Directors have confirmed that their names have been added in the data bank maintained by the Indian Institute of Corporate Affairs for Independent Directors, in accordance with rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014. Pursuant to Rule 6 of the said Rules, every Independent Director whose name is included in the data bank shall pass an online proficiency self-assessment test. However, the Director who has fulfilled the criteria prescribed in Rule 6(4) of the said Rules, is exempted from passing the online proficiency self-assessment test. In view of the same, none of the Independent Directors were required to take the proficiency self-assessment test.
The said declarations along with annual disclosures were noted by the Board of Directors at its Meeting held on April 26, 2023. Further, based on these disclosures and confirmations, the Board is of the opinion that the Directors of the Company are distinguished persons with integrity and have necessary expertise and experience to continue to discharge their responsibilities as the Director of the Company.
'Fit and Proper' criteria
In accordance with Guidelines for Corporate Governance issued by IRDAI, the Directors of insurers have to meet the 'Fit and Proper' criteria. Accordingly, all the Directors of the Company have confirmed compliance with the 'Fit and Proper' criteria, prescribed under the Corporate Governance Guidelines issued by the IRDAI.
Directors & Officers Liability Insurance
Regulation 25 (10) of the SEBI (Listing Obligations & Disclosures Requirement) Regulations 2015 requires the Companies to take Directors & Officers Liability Insurance (D & O Insurance) for all its Independent Directors. The Company has taken D & O Insurance for all its Board of Directors and Members of the Senior Management for such quantum and risks as determined by the Board.
Common Directorships
Pursuant to Section 48A of the Insurance Act, 1938, the Company has obtained the necessary approval from IRDAI for Directors having common directorship with State Bank of India (being corporate agent of the Company).
Meetings
During the year, ten Board Meetings were convened and held, the details of which are given in the report on Corporate Governance, which is forming a part of this Board Report. The intervening gap between the said Board Meetings was within the period prescribed under the Companies Act, 2013. The details of the Board and Committee Meetings, and the attendance of Directors thereat, forms part of the Corporate Governance Report, which is annexed to this Directors' Report.
Secretarial Standards
During the FY 2023, the Company complies with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Remuneration Policy
The Company has adopted a Remuneration Policy for the Directors, KMPs and employees in Senior Management, pursuant to the provisions of Section 178 of the Companies Act, 2013 and the Listing Regulations, the Remuneration Policy was approved by the Board of Directors on the recommendations of the Board Nomination & Remuneration Committee. The detail of
the said policy is annexed as Annexure I which forms part of this Report.
22. Corporate Governance
The Corporate Governance philosophy of the Company is to comply with not only the statutory requirements but also to voluntarily formulate and adhere to a strong set of Corporate Governance practices which includes code of business conduct, corporate ethics, values, risk management, etc.
Through governance mechanism, the Board along with its Committee discharge its fiduciary responsibilities towards all its stakeholders by ensuring transparency, accountability, fairness and independence in its decision making.
The Report on Corporate Governance is annexed and forms part of this Annual Report.
23. 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 the Companies Act 2013 read with the Companies (Corporate Social Responsibility) Rules 2014, which drives the CSR program of the Company.
The CSR Committee of the Board confirms that, the implementation and monitoring of CSR policy, is in compliance with CSR objectives and Policy of the Company.
The brief outline of CSR Policy, including overview of the program proposed to be undertaken, the composition of the CSR Committee, average net profits of the Company for the past three financial years, prescribed CSR expenditure and details of amount spent on CSR activities during the financial year have been disclosed in Annexure II to this report, as mandated under the said Rules. Further, the Corporate Social Responsibility Policy of the Company as approved by the Board has been hosted on the website of the Company at https://www.sbilife.co.in/ en/about-us/corporate-social-responsibility
24. Particulars of Loans, Guarantees or Investment
In line with the clarification given by the Ministry of Corporate Affairs under the Removal of Difficulty Order dated 13 February 2015, the provisions of Section 186 of the Companies Act 2013 relating to loans, guarantees and investments do not apply to the Company.
25. Subsidiary, Joint Ventures and Associate Companies
The Company does not have any Subsidiary, Joint Ventures or Associate Company.
26. Rural and Social Sector Obligations
As per the regulatory requirements, the Company has met its Rural and Social Sector obligations for FY 2023. As against the minimum requirement of 20%, the Company has issued 31.87% policies in the rural sector which affirms the Company's approach towards life insurance inclusion. Further, 10,99,727 new lives covered (7.04% of total new lives covered in preceding year) by the Company are from the underprivileged social sector as against the regulatory requirement of at least 5% of total lives covered in preceding year. Consequently, the Company has met the minimum social and rural regulatory norms.
27. Management Report
Pursuant to the provisions of Regulation 3 of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations 2002, the Management Report is placed separately and forms part of the Annual Report.
28. Statutory Auditors
In view of the applicability of Section 139 of the Companies Act 2013, Comptroller and Auditor General of India (C&AG) appoints Statutory Auditors of the Company. Accordingly, C&AG appointed M/s S.K. Patodia & Associates, Chartered Accountants and M/s S.C. Bapna & Associates, Chartered Accountants, as joint statutory auditors of the Company for FY 2023.
Statutory Audit and other fees paid to Joint Statutory Auditors for FY 2023 as below:
29. Statutory Auditors' Report
The Statutory Auditors' Report (including annexure thereof) to the Members does not contain any qualification, reservation, adverse remark, or disclaimer hence 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 FY2023.
30. Comments of the Comptroller and Auditor General of India on the accounts of the Company
The Comptroller & Auditor General of India (C&AG) have conducted a supplementary audit u/s 143(6)(b) of the Companies Act, 2013 of the accounts of the Company for the year ended March 31, 2023. The C&AG vide their report no. GA/CA-I /Accounts /SB I Life/2022-23/ DIS-94163 dated July 17, 2023 have stated that there is nothing significant which would give rise to any comment upon or supplement to Statutory Auditors' Report.
The Report of C&AG is being placed with the report of Statutory Auditors of the Company.
31. Secretarial Auditors' Report
In terms of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has with the recommendations of Audit Committee and approval of Board of Directors appointed M/s N. L. Bhatia & Associates, Practicing Company Secretaries as the Secretarial Auditor of the Company for the FY 2023.
The Auditor has not made any qualification, reservation or adverse remark or disclaimer in his report for FY 2023. The Report of the Secretarial Auditor for the FY 2023 is enclosed as Annexure III to the Board Report.
32. Cost records and cost audit
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company as the Central Government has not prescribed the maintenance of cost records under Section 148 of the Act for the services rendered by the Company.
33. Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act 2013 (as amended by the Companies (Amendment) Act, 2017), read with Rule 12 of the Companies (Management and Administration) Rules, 2014 an extract of the Annual Return (in form MGT 9) (Annexure IV) is hosted on the website of the Company and can be viewed at https://www.sbilife.co.in/en/about- us/investor-relations with the information available up to the date of this report, and shall be further updated as soon as possible but no later than sixty days from the date of the Annual General Meeting.
34. Material Events, Changes and Commitment affecting Financial Position of the Company
No material events, changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which the financial statements relate and the date of this report.
35. Other Events
IRDAI vide its order no. IRDAI/F&I/ORD/ MISC/119/6/2023 dated June 2, 2023 passed in terms of section 52B (2) of the Insurance Act, 1938 has ordered to transfer the life insurance business of Sahara India Life Insurance Company Limited ('SILIC') involving policy liabilities and policyholders' investment/assets to SBI Life
Insurance Company Limited ('SBI Life' or 'the Company'). On appeal filed by SILIC against the said IRDAI order, the Securities Appellate Tribunal (SAT or Tribunal) vide its order dated June 13, 2023 has granted stay on the effect and operation of the said IRDAI order. Subsequently, the IRDAI filed an appeal with Hon'ble Supreme Court against the stay order passed by SAT. The Hon'ble Supreme Court has heard this matter on July 17, 2023. The Company is awaiting further directions from the Authority in this regard.
36. Significant and Material Orders Passed by Regulators or Courts or Tribunals impacting the Going Concern Status and Operations of the Company
In FY 2023, no significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operation in future.
37. Director's Responsibility Statement
In terms of Section 134(3) (c) read with 134(5) of the Companies Act, 2013 and the Corporate Governance Guidelines, your Directors confirm that;
a) in the preparation of the annual accounts for the year ended March 31, 2023, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
b) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2023 and of the profit of the Company for the year ended on that date;
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) they have prepared the accounts for the current financial year ended March 31, 2023 on a going concern basis;
e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
38. Particulars of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
A. Conservation of Energy
In view of the nature of business activity of the Company, the information relating to the conservation of energy, as required under Section 134 (3) and Rule 8 (3) of Companies (Accounts) Rules, 2014, is not applicable to the Company.
B. Technology Absorption
C. Foreign Exchange Earnings and Outgo
Details of foreign exchange earnings and outgo required under above Rules are as under:
39. Investor relations
The Company has always valued its customer relationships and it is the Company's belief that all stakeholders should have access to complete information regarding its position to enable them to accurately assess its future potential. The Company disseminates information on its operations and initiatives on a regular basis. The Company's website (www.sbilife.co.in) serves as a key awareness facility for all its stakeholders, allowing them to access information at their convenience. It provides comprehensive information on the Company's strategy, financial performance, operational performance and the latest press releases.
The Company publishes financials results on a quarterly basis. The financial results of the Company are prepared and posted on the website of the Company for the current as well as previous years. Further, the quarterly results and earnings update are 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 with the analysts/shareholders. The Company's investor relations personnel respond to specific queries and play a proactive role in disseminating information to both analysts and investors. All information which could have a material bearing on the Company's share price is released through as per regulatory requirements.
40. Business Responsibility and Sustainability Report
Business Responsibility & Sustainability Report as stipulated under Regulation 34 of the Listing Regulations form part of the Annual Report and has been hosted on the website of the Company https://www.sbilife.co.in/en/ about-us/investor-relations/annual-reports
41. Integrated Reporting
The Securities Exchange Board of India had recommended top 500 listed entities to voluntarily prepare their Annual Report adopting the principles of Integrated Reporting prescribed by the International Integrated Reporting Council.
In view of the above, The Company has voluntarily adopted the principles and has prepared its 5th Integrated Report for FY 2023 which forms part of this Annual Report.
42. 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. The license is in force as on March 31, 2023.
43. Other Information
A. Economic Capital:
The annual assessment of Economic Capital of SBI Life was carried out as on March 31, 2023. As part of this exercise, we have quantified the capital requirements relating to various risks such as Insurance Risks (Mortality risk, Morbidity
Risk, Longevity Risk, Persistency Risk, Expense Risk, Catastrophe Risk) and Non- Insurance Risks (Market Risk, Operational Risk, Default Risk). As at March 31, 2023, Solvency ratio on Economic Basis is 3.12. The Solvency Ratio on Economic Basis has been estimated as, the ratio of excess of economic assets over economic liability to Total Economic Capital Requirement.
B. Solvency Margin:
The Directors are pleased to report that the assets of the Company are higher than the liabilities of the Company and the assets are more than sufficient to meet the minimum solvency margin level of 1.50 times, as specified in section 64 VA of the Insurance Act, 1938 read with the IRDAI (Assets, Liabilities, and Solvency Margin of Life Insurance Business) Regulations, 2016. The Company has a strong solvency ratio of 2.15 as on March 31, 2023 (Previous year ended March 31, 2022: 2.05) as against the Regulatory requirement of 1.50.
C. IRDAI Directions
a) IRDAI has issued directions under section 34 (1) of the Insurance Act, 1938 to refund the excess commission paid to corporate agents amounting to Rs 2,752,948 thousand (previous year ended March 31, 2021: Rs 2,752,948 thousands) vide order no. IRDA/Life/ORD/ Misc/083/03/2014 dated March 11, 2014, to the members or the beneficiaries. The said IRDAI order has been set aside by the Securities Appellate Tribunal (SAT) vide its order dated January 29, 2020. The SAT has remitted the matter to IRDAI with a direction to recalculate the interest earned on advance premium collected. Subsequently, on March 3, 2021 the Company has received notice of institution of civil appeals filed by IRDAI in Supreme Court against the SAT order dated January 29, 2020. The Company on the basis of legal opinion and good case on merits has challenged the order of January 29, 2020 with Hon'ble Supreme Court of India vide a Civil Appeal instituted on June 22, 2021. At hearing held on July 26, 2021 by the Hon'ble Supreme Court notice has been issued to IRDAI. The Counter Affidavit was filed by IRDAI on September 9, 2022 and the Company has filed its response with registry of Hon'ble Supreme Court on October 27, 2022. The matter is due for listing before the appropriate bench.
b) IRDAI has issued directions under section 34(1) of the Insurance Act, 1938 to distribute the administrative charges paid to master policyholders amounting to Rs 843,174 thousands vide its order no. I RDA/Life/ORD/ MISC/228/10/2012 dated October 5, 2012 and subsequent order no. IRDA/Life/ORD/
MISC/009/01/2017 dated January 11, 2017. The Securities Appellate Tribunal (SAT) vide its order dated April 7, 2021 has dismissed the appeal filed by the Company against the IRDAI order. Subsequently, the Hon'ble Supreme Court vide its order dated September 22, 2021 has dismissed petition filed by the Company against the SAT order. Accordingly, in FY 2022, the Company has made provision in the Profit and Loss Account (Shareholders' Account) for refund of administrative charges paid to group master policy holders amounting to Rs 843,174 thousands plus applicable interest as per IRDAI order dated January 11, 2017. As at March 31, 2023, out of the total provision amount, the Company has refunded administrative fees of Rs 524,227 thousands along with interest of Rs 205,792 thousands to the members of group insurance policy.
D. Appointed Actuary's Certificate
The certificate of the Appointed Actuary on valuation and actuarial assumptions is enclosed in the financial statements.
E. Certificate from Compliance Officer (under the IRDAI Corporate Governance Guidelines)
A Compliance Certificate, for complying with IRDAI Corporate Governance Guidelines, issued by the
Company Secretary, designated as the Compliance Officer under the IRDAI Corporate Governance Guidelines, is enclosed and forms part of the Corporate Governance Report.
44. Acknowledgements
The Directors are grateful to the Insurance Regulatory and Development Authority of India (IRDAI), Reserve Bank of India (RBI), Comptroller and Auditor General of 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 like to take this opportunity to express their sincere thanks all the policyholders, shareholders, customers, employees, re-insurers, bankers and distributors for reposing their trust and confidence in the Company. The Directors also express their gratitude for the advice, guidance and support received from time to time, from the auditors, and statutory authorities.