9 months ago
Life Insurance Industry Faces Growth Challenges Amid Changes
The life insurance industry in India is growing slower this year because of new rules and changes in taxes.
The growth rate is now between 8-9%, which is lower than the usual 12-15%.
The industry is adjusting to these changes, like the waiver of the Goods and Services Tax (GST) on life insurance policies.
This waiver has created a big financial burden, and companies are working to manage it by being more efficient and working with their partners.
The industry is also trying to grow by opening more branches and partnering with banks.
Even though the growth is slow now, the future looks bright.
People are not buying as much life insurance as health insurance because they are not as aware of the need for protection.
The company, Generali Central Life, is doing better financially and plans to double its business in the next three years.
Life insurance industry growth has slowed to 8-9% due to regulatory changes and GST waiver.
Industry is adjusting to changes, including commission deregulation and surrender value norms.
GST waiver has created a ₹14,700 crore burden, managed through efficiency and distributor partnerships.
Generali Central Life is near break-even, plans to double business in three years with 90+ branches and bancassurance partnerships.
Cultural factors and lack of awareness contribute to slower growth in life insurance compared to health insurance.
- Who
- Life insurance industry, Generali Central Life Insurance Company
- What
- Slowdown in growth due to regulatory changes and GST waiver
- Where
- India
- When
- Current year, with plans extending over three years
- Why
- Regulatory changes, GST waiver, and cultural factors affecting financial planning
Key facts
- Current Growth Rate
- 8-9%
- Projected Growth Rate
- 12-15%
- GST Waiver Impact
- ₹14,700 crore burden
- Company Branches
- 90 branches, 20 more to be added this year
- Bancassurance Reach
- 4,500 branches, 4,200 activated in last 3 months
- Capital Plans
- Three-year capital outlay approved for hyper-growth
- Profitability
- Improving, near break-even
- Growth Target
- Double business in three years
Quotes
Alok Rungta
MD & CEO, Generali Central Life Insurance Company
“There are two–three ways to manage it. One is what we can share with the distributor, whether it is agent or third-party, or in many cases bancassurance. Second is how efficient we can be on the expense side because now all expenses are plus GST. So, we can go back to the drawing board and see what expenses we can be more efficient with. And third is, can we look at some sharing from the customer? Now, the DFS and the regulator have come out clearly that you can’t pass anything on to the customer. So, they have ruled out the third option. So, we all have started working with our distributors. There were some guiding principles that the Life Council CEOs agreed on, and everybody started acting on it. It’s not one-size-fits-all; depending on the distributor, we are looking at managing it differently. But definitely out of the ₹14,700 crore of approximate burden, half is this alone. So, instead of trying to manage many things, if you manage one thing, 50 per cent of the pain can be managed. So, that’s been the effort by the industry since last October. We are in mid-November now. In the last six to seven weeks, we have been discussing with all types of partners and distributors and finding solutions to tide over the impact.”
thehindubusinessline.com
“We had a tough signature of profit in the past few years, but happy to say last year we closed at a ₹6 crore loss. The year before we were at around ₹110–113 crore loss. So, we have been progressively improving our quality of business, scale and efficiency. We are on that trajectory and near break-even if I can say that. But this year, we have a new bank partner. So, we are again in the hyper-growth stage. We have a three-year capital outlay cleared by the board two weeks ago and both shareholders have blessed it. While I am not yet at liberty to quantify and discuss, we are in hyper-growth mode and will double our business in three years. There are 90 branches at present and 20 more will be added this year. And every year, we will add at least 15-20 branches. But that’s only for agency business, which is growing at roughly 20 per cent. We are also present in Central Bank branches, which gives access to 4,500 branches. About 4,200 branches have been activated already in the last three months. So that’s another hyper-growth engine as the bancassurance is a big driver for growth.”
thehindubusinessline.com
