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Time of India
4 days ago
- Business
- Time of India
Niva Bupa eyes 5-10% faster growth than industry through FY29
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. Tired of too many ads? Remove Ads 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? Tired of too many ads? Remove Ads 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? Tired of too many ads? Remove Ads 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 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 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 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 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 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 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 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 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 major impact. Senior citizens make up 15–20% of our customer base, which has remained 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 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 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 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 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.
Time of India
14-05-2025
- Business
- Time of India
Axis Max Life to act on listing after monsoon session, eyes margin stability
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel As Axis Max Life gears up for a potential direct listing following amendments to the insurance law, Managing Director and CEO Prashant Tripathy discusses the company's growth strategy, evolving product mix, distribution performance, and regulatory developments in an interview with Shilpy Sinha. Edited Excerpts:We want to benchmark ourselves against the private industry's growth, with a goal to consistently outperform by 300–400 basis points. I would not read too much into April's numbers, for us or the industry, as it is typically the smallest month, coming right after a heavy March. Distributors tend to be slower in April. We grew at 24%, which I am pleased with, while the private industry grew around 2%. Things should pick up from here. I expect private industry growth to be in the low teens, and we should grow 300–400 basis points ahead of we have consistently outpaced the private industry, you are right that growth has been slower than in previous years. That said, by the end of the fiscal year, both the industry and we delivered strong numbers, the private sector grew 15%, while we grew around 20%. For two consecutive years, Axis Max Life has posted 18% growth, almost double the private industry's average. Our market share has increased to 9.8%, up 37 basis we are very optimistic. It is not just the regulator-our shareholders, promoters, and management are aligned on this. Given our current structure, where our holding company is listed, collapsing the structure to directly list Axis Max Life is the efficient path. We are working towards it and are hopeful that the Insurance Amendment Bill will enable us to proceed. Once that is approved, we will move immediately. That is what we have conveyed to the regulator. I appreciate the regulator's push for more listed insurers, not only to foster competition, but also for greater transparency and investor confidence. We are ready and would be among the first to go for a direct listing. Our current structure is suboptimal, and a direct listing makes strategic philosophy has always been to work within a target margin range while focusing on growth. We are not looking for high margins of 27–28%. Our target range is 24–25%, and we delivered 24% this year. If we achieve higher margins, our VNB (Value of New Business) growth will exceed sales growth. But 24–25% is the corridor we aim to operate proprietary channels performed very well, growing by 30%. Bancassurance grew by around 13%. With Axis Bank , there were some challenges around product mix, which we have been actively and it's not just us, this is a industry trend. Due to liquidity concerns, banks focused more on building deposits, with fee-based income, including insurance, taking a back seat. But this is changing. Deposit growth is picking up, and we expect renewed focus on fee income. For Axis Bank, we are targeting a rise in contribution to around 15%. Besides Axis Bank, which is a key promoter and strong partner, we have longstanding relationships, like the one with Yes Bank and have also added several new banking partners in recent years. Collectively, these will continue to drive products slowed industry-wide due to strong equity market performance and rising yields. As markets stabilize, we expect a renewed focus on non-PAR products from our side. Last year, ULIPs accounted for 46% of our product mix. This year, we expect non-PAR to increase by 3–4%, with par products also gaining. Our ideal product mix would be- ULIP at 35–40%, non-PAR around 30%, par at 15–20%, with the remainder split between annuity and protection products.
