Niva Bupa, the country’s third-largest standalone health insurer, is witnessing strong growth in its retail health insurance portfolio, aided by the recent GST rate cut on health insurance and an expanding distribution network, according to a senior company official.
‘The 18% (GST rate cut) is a sizable reduction which is a very positive step,” Vishwanath Mahendra, Executive Director & Chief Finance Officer, Niva Bupa Health Insurance, said. He added that the tax reduction is encouraging customers to opt for higher coverage. New customers are choosing larger sums insured, while existing policyholders are upgrading their cover at the time of renewal. “90% plus (of retail policies) are Rs 10 lakh and above sum insured,” Mahendra said.
Q1 Retail Momentum
The momentum in the retail business was reflected in the company’s first-quarter performance. Niva Bupa reported a 32% year-on-year increase in Gross Written Premium (GWP) to ₹2,150 crore. Retail health insurance premiums rose 47% to ₹1,607 crore, helping the insurer increase its retail health market share to 11.1% from 10% in the corresponding quarter last year. Mahendra said the company does not have a specific market share target but aims to outpace industry growth by at least 8%.
He also attributed the premium growth to Niva Bupa’s multi-channel distribution strategy. “We added 1,000 headcount last financial year and will add 1,000 more in this financial year. The focus is on all the channels be it agency, bancassurance, direct and third party.”
As of June 30, Niva Bupa had more than 210 branches across India. It also distributes health insurance through a network of 2.5 lakh agents, over 600 brokers and more than 130 bancassurance and other corporate agency partners.
Currently, around 32% of the company’s business comes from the agency channel, nearly 20% from bancassurance, 27% from retail and group brokers, 7% from corporate agents and 13% from the direct-to-consumer channel. Mahendra said the company is comfortable with the current distribution channel mix.
Portfolio Rebalancing
In the business mix, retail health insurance now accounts for 75% of Niva Bupa’s portfolio, while group health insurance contributes the remaining 25%. The retail share has increased from 70% a year ago. Mahendra said the company has consciously moderated growth in the group health segment due to softer pricing in medium and large corporate accounts. “We don’t write any loss making business. So, there we decided to not grow that book,” he said, adding that the insurer is comfortable with the current retail-group portfolio mix.
On the Insurance Regulatory and Development Authority of India’s (Irdai) much-anticipated distribution reforms, Mahendra said the company would wait for the detailed draft before commenting. He said the expectation is that the reforms will continue to incentivise distributors to sell health insurance while also improving affordability for customers. “We strongly feel that whatever distribution reform comes, they will take care of these two things: incentive to distributors to sell health insurance and at the same time making sure that consumers are getting value.”