Niva Bupa eyes 5-10% faster growth than industry through FY29

Time of India

2 days ago

Niva Bupa aims for high single-digit premium hikes to counter medical inflation and portfolio aging, with a 7% increase already implemented on one product in Q1. Despite a rising loss ratio and expense ratio near the regulatory limit, the company targets 5-10% faster retail growth than the industry.
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Q) You grew 11% in Q1 and retail seems to be driving the growth. Will that continue and what is the outlook for the rest of the year?
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Q) Post 1/n accounting change, are you seeing changes in customer behaviour post-regulation?
Q) There is concern about policy count not rising fast enough. What is your take?
Q) Loss ratios have gone up. What is behind that?
Q) Your reported medical inflation is much lower than peers. Why the gap?
Q) Any progress on industry-wide hospital empanelment and standardization?
Q) You raised prices this quarter. What is your premium hike strategy for FY25?
Q) Has the 10% cap on senior citizen hikes affected customer retention?
Q) The share of high-ticket policies seems to be rising. What is driving that?
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Q) Expense ratios are under regulatory pressure. How are you tracking?
Q) By when can we expect a sub-100 combined ratio?
Q) What trends are you seeing in fraud or litigation?
Q) What are your expectations from the new IRDAI chairman?
Mumbai: Niva Bupa is targeting high single-digit annual premium hikes to offset rising medical inflation and the risks from an aging portfolio, said Krishnan Ramachandran, Managing Director and CEO of Niva Bupa Health Insurance in an interview with Shilpy Sinha. In Q1, it raised rates by 7% on one product and plans similar hikes on 2–3 other products.The company reported a Q1 expense ratio of 35.9%, close to the regulatory cap of 35% plus allowances, but remains confident of staying compliant for the full year. Retail health remains a core focus, with plans to grow 5–10 percentage points faster than the industry over the next 3–4 years.Retail remains our focus. Our goal is to grow 5–10 percentage points faster than the industry over the next 3–4 years. That said, regulatory and accounting changes like revised commissions and 1/n accounting—have impacted how long-term policies are priced. Due to the shift to 1/n accounting, the reported number understates actual growth. Adjusted for this, we are growing at 28% overall and 32% in retail. IFRS profit after tax came in at Rs 70 crore, up from Rs 36 crore last year.Yes. Customers are opting for shorter-tenure policies. Long-term plans used to account for the mid-20s percent of our retail portfolio; now it is the low 20s. The behavioural shift seems to have settled, but the accounting impact on Indian GAAP will take 2–3 years to normalize. That is why we will continue publishing IFRS numbers quarterly for better transparency.Of our 32% retail growth, 85% came from volume lives insured not pricing. We have launched a three-year awareness campaign to drive further penetration across the industry.On an IFRS basis, the retail loss ratio has risen to 68%, group to 61%. Overall, our loss ratio rose about 300 bps, largely due to portfolio mix shifting towards group, which has inherently higher loss ratios. In retail, some increase is due to book maturity. There has been no structural change in claim severity or frequency so far.Our internal inflation is 5–6%, versus 12–14% industry-wide. This varies by product and customer mix, and our hospital network negotiations help. But the broader point is valid, we need a standardized medical inflation index. The Insurance Information Bureau (IIB) has claims data that could support such an index, while the government should update the health component of CPI to reflect modern healthcare usage.Yes, it is gathering pace. Thousands of hospitals are in different stages of adopting the common empanelment framework. We expect maturity in the next 12–18 months. There are also efforts underway to standardize treatment protocols, starting with infections, and we hope to scale this further.We aim for high single-digit hikes annually to offset medical inflation and aging portfolio risk. We took a 7% hike on our ReAssure 2.0 product in Q1 and expect hikes on 2–3 more products. The gap between medical inflation and premium increases also reflects portfolio aging and claim severity.No major impact. Senior citizens make up 15–20% of our customer base, which has remained stable.Correct. Policies with sum insured of over Rs 10 lakh rose from 73.7% to 81.7% in retail health. It is a shift toward more adequate coverage, Rs 10 lakh is the minimum required for quality care today.As of Q1, our expense ratio is 35.9%. The regulatory cap is 35% plus allowances. We are confident about staying within limits for the full year.Not immediately. IFRS combined ratio was 103.2 in Q1. Our long-term guidance is to reach 98% over four years. We have brought down the combined ratio from 103.9 to 103.2 in Q1. For FY25, we expect improvement over FY24, but dropping below 100 this year would be ambitious.Post-COVID, fraud and abuse incidents have increased. We are also seeing a rise in health claim litigations . Some third parties now coach customers to litigate claims in exchange for a fee. It is a worrying trend and something the industry must address.Having worked in insurance since 2007, insurance is a critical sector and the private sector is barely 25 years old. Development should be a key focus. One specific area is transitioning to IFRS accounting. IRDAI has already announced this in mission mode, targeting 2027. Making IFRS the statutory standard will improve comparability and reporting quality.