Latest news with #InsuranceRegulatoryandDevelopmentAuthorityofIndia
Time of India
2 days ago
- Business
- Time of India
Cap on management expenses leading to recalibration of business: Future Generali CEO
MUMBAI: The Insurance Regulatory and Development Authority of India (IRDAI) capping management expenses at 30% of premium income is prompting insurers to recalibrate their business mix according to Anup Rau, CEO of Future Generali India Insurance. In an interview with TOI, Rau was clear-eyed about the challenges and opportunities presented by regulatory change. 'One of the things that has happened in wholesale health is a softening of rates,' Rau noted. 'That's partly because of the new expenses of management regulation. People want to write more low-commission business to be able to grow their retail book. So they're being more aggressive on pricing in group health to create headroom. ' 'In balance, it's a good regulation. Eventually, it ensures that customers get better value,' said Rau. For Future Generali, the company's focus remains squarely on retail health. 'There's still headroom for growth in retail. We've grown at twice the pace of the industry and will continue to invest in that,' he said. The company has also reined in its exposure to crop insurance, which previously accounted for a quarter of its business. That line is now under 10%. 'We've reduced crop as a precaution. The model does not leave enough room to manage risks effectively,' he explained, referring to the so-called 'cup-and-cap' framework, where profits are clawed back and losses subsidised which distorts pricing incentives. According to Rau, while there is a proposal to allow composite insurance companies, there are strong benefits in being a specialised insurance company. 'My personal view is that if you want to grow your business and be a player of consequence and size, you are better off having two separate companies'. Rau provided the example of standalone health companies that have grown faster than industry. 'Most of the market is dominated by standalone health companies,' Rau said. 'They have the distribution arbitrage. They can tap any life agent without having to license them.' Rau believes Future Generali's differentiated proposition lies in its claims execution and investment in backend systems. 'We are not the cheapest. Our proposition is that we settle claims fairly and quickly,' he said. 'We don't offer the highest commissions or lowest prices. We offer the best claims experience we can.' This operational focus underpins the company's support for Bima Sugam , a digital platform under development by the industry. Rau is optimistic about its potential. 'Bima Sugam has a lot of potential beyond selling,' he said. 'It can make the ecosystem more efficient and the environment more enabling.' In his view, the platform's greatest value lies in shared infrastructure. 'Measures like common enrolments of hospitals and a common provider network can help the council negotiate rates on behalf of the industry. That will deliver better value to the customer.' He pointed to the unregulated nature of private healthcare pricing as a problem. 'Hospitals don't have a regulator. There's still a vast difference in the claimed amount between a person who has insurance and someone who doesn't. A unified platform can solve a lot of these issues.' According to Rau there would still be differentiated products and specialised agents. 'Agents may use the platform, but they'll also pick and choose companies they are comfortable with. They want access to management, confidence in claims processes, and a good understanding of the products.' He argues that the real transformation lies not at the customer interface, but in the infrastructure beneath it. 'The front end gives the customer more options, but customers still want advice and handholding,' he said. 'The real diamond is a solid backend that gets the entire ecosystem to engage better. That's the game changer.' Rau offered a practical vision of how this might work. 'An agent can sell a product on the Bima Sugam portal, register a claim, access the network and bills—all through the same system. It would significantly improve the customer experience. Historically, shared backends have been more successful than front ends—look at mutual fund platforms or Vahan.' Such platforms could include features like real-time updates, hospital networks, procedure tracking, agent locators, and surveyor rankings. 'People talk a lot about the front end, but if we can get the backend right, it can really improve the experience for all stakeholders,' he said. Future Generali is investing accordingly. 'We are changing our core system and building capabilities around it,' Rau said. But he pushed back against the notion that technology brings cost savings. 'People think tech leads to savings—whether manpower or other costs. It doesn't. Technology costs money. It costs even more to keep it running. Skilled people are costly and constantly in flux.' Despite this, he sees value in what digitalisation enables. 'Volumes, complexity, better decision-making—that's all real,' he said. 'But even things like AI-generated suggestions can be annoying. I keep clicking 'no' to co-pilot prompts.' New models in the health ecosystem like managed healthcare being tried by newcomers are welcome, Rau added. 'These experiments are good. The industry needs to test hypotheses and see how they play out. If successful, they could move the needle not just for the company but for the entire sector.' Future Generali is running AI and chatbot pilots across all personal lines. 'This is not just for health, but across the board,' he said. The company's operational metrics back its strategy. With a solvency margin of 196% and one of the best combined ratios in the sector, it has sustained profitability despite limited capital infusions since 2019. 'The combined ratio is one of the best in the industry, despite our smaller scale. We've grown faster than the industry and intend to maintain that pace,' Rau said. The insurer has moved up the league tables too. 'From being ranked between 13 and 17 in 2018, Future Generali is now among the top 10 general insurers,' Rau said. 'We will continue to grow faster than the industry. We may not always know our exact position, but we will grow our market share.' 'Our CAGR over the last five years has been 21%, compared to the industry's 15%,' he noted. 'We've tripled our top line in the last six years, excluding crop insurance.' Future Generali's emphasis is not on scale alone, Rau concluded, but on execution. 'In general insurance, unlike life, the difference in scale between the top player and number ten is not big,' he said. 'We see a clear path to grow our presence and penetrate deeper into retail health.' Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
3 days ago
- Business
- Mint
To curb mis-selling, finance ministry tells lenders to stop incentives on insurance
The rampant mis-selling of unnecessary insurance plans to loan and deposit customers by lenders has already evoked concerns among the two sector regulators. Now, the finance ministry has asked banks and non-banks to stop offering incentives on insurance sales to eliminate this malpractice. As lenders link employee performance and incentives to selling insurance products, the ministry's department of financial services (DFS) has issued specific instructions, asking lenders to immediately review their marketing practices, according to two people aware of the development, speaking on the condition of anonymity. The DFS has told financial institutions that insurance plans should only be sold as per the customer's requirements, and sales targets should not be linked to incentives, the people said. The ministry directed banks that their core banking services should not be forcibly linked to insurance products, advising them to promote financial literacy among customers and employees for the healthy development of India's insurance market, the first person quoted earlier said. Queries emailed to the finance ministry and the financial services secretary remained unanswered till press time. The Insurance Regulatory and Development Authority of India and the Reserve Bank of India (RBI) have flagged concerns about such mis-selling by banks and non-banking financial services companies (NBFCs). Lenders bundle insurance plans with products like housing loans and locker facilities. At times, customers are even unaware of the terms. Also read | Insurance laws bill set for monsoon session, proposes 100% FDI, composite licenses and sweeping reforms Mis-selling can be deliberate by an insurer or its agent or any intermediary, or a result of poor training of the salesperson, according to Hari Radhakrishnan, sector expert at Insurance Brokers Association of India (IBAI). 'As regards deliberate mis-selling, there should be deterrents or disincentives in place, such as regulator action by way of fines or penalties or de-licensing in egregious cases. Incentive structures that promote mis-selling, such as hard pressure-based selling, compulsive selling, etc., must be removed or discouraged," Radhakrishnan said. 'Non-deliberate mis-selling can be addressed to a large extent by proper sales training and channel development." How mis-selling works A large chunk of about 52,500 complaints received by the insurance ombudsman across the country in FY24 pertained to mis-selling and misrepresenting policy terms and conditions, and issuing a policy not conforming to the proposal–under Sections 13(1) d and Sec 13 (1) g of the Insurance Ombudsman Rules. More than 70% of the complaints were against life insurers under the two sections. After life insurance, health cover-related complaints follow the list of grievances. The Irdai separately received 215,569 grievances in FY24 on its Bima Bharosa portal, of which 120,726 were related to life insurance and 94,843 to general Insurance, largely health covers. A majority of the complaints were against public sector entities in the life segment, while most non-life complaints were against private insurers. Insurance-related grievances were among the 296,000 complaints that the Office of RBI Ombudsman received in FY24-25 compared with 293,000 in FY23-24. Irdai, in its communication on such mis-selling to lenders, flagged numerous instances of an insurance policy being forcibly sold or mis-sold by banks and NBFCs by bundling these with housing or other loans. For availing a locker facility, lenders insist on purchasing an insurance policy and, at times, claim that it is mandatory. Insurance plans have also been issued without the consent of customers, and there have been cases where customers claim not to have signed the policy documents or that they were issued policies with incorrect contact details. Read this | Insurers make up add-ons to entice customers into paying more for car insurance The insurance regulator found that single-premium insurance policies have been issued in lieu of fixed deposit receipts, claiming that these will provide better benefits. Senior citizens have been sold long-term life insurance policies having higher premiums, even though they may not require such coverage. And regular-premium policies were issued in place of single-premium ones, and renewal premiums were debited from customers' bank accounts without any intimation, assuring that they would get double the payment after a certain period. In most cases, when a complaint is lodged, issues are resolved, and the premium is returned in a few cases. Still, that has not deterred mis-selling by financial institutions that act as a corporate agent for insurers. Need for better governance 'Curbing mis-selling has become a key priority for banks, insurers and the regulator, with several targeted measures being undertaken. Insurers are simplifying products, strengthening onboarding with video verification, and enhancing disclosures to improve transparency. Sales teams are being equipped with digital tools for suitability checks, while incentive structures are being aligned with long-term customer outcomes," said Shruti Ladwa, partner and insurance leader, EY India. 'Irdai has further reinforced these efforts by extending the free-look period to 30 days and enabling video-based identification. Eliminating mis-selling will require concerted efforts across all stakeholders to build an empowered and informed customer base." And read | Centre ready to exempt health and life insurance from GST. Then why is the industry pitching for 12%? According to Narendra Ganpule, partner and insurance industry leader, Grant Thornton Bharat, it is pertinent for every bank to instil values of integrity and probity in the sales staff and relationship managers so that customer interest is put at the centre, and not the sales or growth targets. 'Governance across three lines of defence, especially awareness at the operating level, needs to be strengthened to reduce the frequency of mis-selling instances."
New Indian Express
4 days ago
- Health
- New Indian Express
Insurance premiums surpass health budget
NEW DELHI: In a stark indicator of India's shifting healthcare landscape, individual health insurance premiums have now exceeded the combined central government allocation for the Department of Health and Family Welfare and the Department of Health Research. An analysis of annual reports from the Insurance Regulatory and Development Authority of India and corresponding Union Budget documents shows that while insurance premium collections briefly dipped in the immediate post-pandemic years (2021–22 and 2022–23), they have since surged past the national health budget. Even when related spending by other ministries—such as Defence and Labour—is taken into account, India's total public health expenditure remains low: just around 2% of the Union Budget and 1.5% of GDP, falling short of the 2.5% target set by the National Health Policy. This trend signals more than a budgetary shift—it reflects a structural transformation in how healthcare is accessed and funded in India. Increasing reliance on private insurance points toward a market-driven model where care is increasingly linked to ability to pay, raising serious equity concerns, particularly for the uninsured and underinsured. Critics argue that insurance-based healthcare, especially when not backed by strong public infrastructure, can exacerbate inequalities. A large share of India's workforce remains in the informal sector and lacks access to comprehensive insurance. Public health facilities, meanwhile, continue to be underfunded and overstretched.
Time of India
29-05-2025
- Business
- Time of India
Irdai urges insurers to expand coverage and address emerging risks
MUMBAI: The Insurance Regulatory and Development Authority of India (IRDAI) urged insurance companies to prioritise expanding the number of people covered under insurance, not just improving insurance penetration metrics. The regulator's call came at a time when the non-life insurance industry committed over Rs 300 crore over three years to an awareness campaign with the tagline "Achha kiya insurance liya" (Did well by buying insurance). IRDAI member Deepak Sood told industry leaders that companies should address new risks. 'The face of risk is changing every day,' said Sood, citing a shift from traditional physical and business risks to emerging threats such as cyber risks that now 'sit in our pocket, in our mobile phones.' 'Premium could be anything,' Sood said. 'If we can keep those premiums low, make it affordable for our people, it doesn't matter what the penetration percentage is, as long as we can reach out.' He identified awareness, affordability, and accessibility as the three pillars necessary to improve insurance coverage. Tapan Singhel, Chairman of the General Insurance Council, warned that India's low insurance penetration was heightening its economic fragility. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like San Jacinto De Yaguachi: Descubre cómo Amazon CFD puede ayudarte a invertir como un pro Empezar ahora Subscríbete Undo 'Every time a catastrophe hits, millions remain uninsured and unprotected,' he said. Singhel cited data to show that general insurance has a lower grievance ratio—0.35 complaints per 10,000 policies—compared to 0.7 for banking and 4 for e-commerce. 'It looks like the industry is just a money-making machine. In reality, it delivers to customers at the time of biggest crisis in the best possible manner,' he said, noting that insurers ran a combined ratio of over 100% for 15 years, meaning no underwriting profits. He also pointed to the macroeconomic impact of underinsurance. 'A 90+% uninsured SME base causes a 1.8% to 2% fall in GDP growth. When a hurricane strikes Florida, the state's economy grows after. In India, it falls. The difference is insurance.' Singhel cited WHO data showing 10 crore Indians fall below the poverty line annually due to healthcare costs. 'Did we do justice by not telling the story that 2.69 crore families benefited last year with Rs 83,000 crore in health claim payouts?' he asked. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
29-05-2025
- Business
- Time of India
Irdai seeks wider insurance coverage to prevent distress
Photo/Agencies Mumbai: The Insurance Regulatory and Development Authority of India (Irdai) urged insurance companies to prioritise expanding the number of people covered under insurance, not just improving insurance penetration metrics. The regulator's call came at a time when the non-life insurance industry committed over Rs 300 crore over three years to an awareness campaign with the tagline 'Achha kiya insurance liya' (Did well by buying insurance). Irdai member Deepak Sood told industry leaders that companies should address new risks. "The face of risk is changing every day," said Sood, citing a shift from traditional physical and business risks to emerging threats such as cyber risks that now "sit in our pocket, in our mobile phones." "Premium could be anything," Sood said. "If we can keep those premiums low, make it affordable for our people, it doesn't matter what penetration percentage is, as long as we can reach out." Tapan Singhel, chairman of General Insurance Council, warned that India's low insurance penetration was heightening its economic fragility. "Every time a catastrophe hits, millions remain unprotected," he said. Singhel cited data to show that general insurance has a lower grievance ratio - 0.35 complaints per 10,000 policies - compared to 0.7 for banking and 4 for e-commerce. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
