Private sector insurer Shriram General Insurance will bring down its expenses of management (EoM) to 30% of its of gross written premium within three years as per the regulatory requirement, according to its MD & CEO Anil Kumar Aggarwal. The current expenses of management (EoM) of Shriram General Insurances, promoted by Shriram Capital in partnership with Sanlam of South Africa, stands over 30%. Issuing a notification in March this year, insurance regulator Irdai imposed a limit of 30% of gross written premium as EoM for general insurers.
The new guidelines came into effect from April 1. “Currently, our expenses of management stands at around 33.5% of gross written premium. Irdai has given us three years time to bring down the EoM to 30%. So, definitely we will bring it down to the required level,” Aggarwal told FE in an interview. EoM of an insurance company includes its operating expenses, commission to the insurance agents and intermediaries, and commission & expenses on reinsurance inward, which are charged to the revenue account.”Whoever is exceeding the 30% limit, the regulator has given them the breathing time of three years. There should be a board approved plan on how they should bring down the EoM. It is for the industry as a whole,” Aggarwal informed.
Imposing an overall cap on expenses of management at the company level, Irdai has given flexibility to all insurers to pay commissions to agents and intermediaries in different lines of business. Shriram General Insurance has been strengthening its agency channel to grow business. After recruiting 14,000 new agents last fiscal, the current strength now is around 57,000. For retail segment, agency channel contributes around 70-75% of the company’s total underwritten premium. “Our aim is to create a strength of two lakh agents over a period of four years. Also, the company’s focus is towards recruitment of employees. Last fiscal, we recruited more than 500 employees. Total strength of our employees as on March 31 stood at 3700. This fiscal, we want to recruit 700 more employees,” he said.
The Jaipur-based insurer has 435 branches across India.In FY23, the company’s gross written premium stood at `2,265.78 crore, registering over 29% year-on-year growth, according to data released by the General Insurance Council. At the end of the last fiscal, its market share in the country’s non-life insurance sector stood at 0.88%. “We are not into the race of market share. We are always looking after bottomline,” Aggarwal said. The company’s net profit for FY22 stood at `663 crore as against `592 crore for FY21.
