We will grow above 28% this fiscal: Shriram Life MD Casparus J H Kromhout

The rural population in India is around 65-70 percent. It is much more difficult to reach rural customers, said Kromhout

Shriram Life Insurance Company, a joint venture between Shriram Group and South Africa-based Sanlam Ltd, is betting big on the rural market, from where it gets about 45 per cent of its business. Casparus J H Kromhout, managing director and chief executive officer, talks to Shine Jacob about its growth road map, rural market penetration, and expansion plans in the lower-income population at the company’s office in Chennai. Edited excerpts:

Overall life insurance penetration in India is hardly 3-4 per cent now. How do you look at this?

There is a lot of focus on it now, with the regulator in the past few years putting emphasis on it. We are seeing some movement, but penetration is still quite low, and the opportunity is big. India is a country of countries in many ways, and each of the states is extremely large. Even though it has grown, there is still a lot that can be done because India is below the world average. In South Africa, from where I come, life insurance penetration is closer to 12 per cent.

The focus in India is still on people in the higher-income segment. There is a bit more awareness now, but life insurance is still seen mostly as a tax-saving alternative. If you look at penetration in the lower-income segment, it is significantly less. As an industry, we have a big job to reach out to more families and get them covered. Whether it is finance or insurance, Shriram focuses on communities that typically do not get covered by the mainstream.

According to reports, Private life-insurance firms are expected to grow 9-12 per cent in FY24. How do you see your growth?

Profits are very good, and we are investing very significantly in capacity for business development. Life insurance is a face-to-face activity, and the tough job for anybody is to sell it to people. We are expected to grow at above 28 per cent this year, higher than the industry. Around 45 per cent of our business comes from rural India. The focus for us is retail business, and that’s where we are seeing growth. Last year, we had 24 per cent growth.

What is the impact of the new norms on taxing the total returns on high-value life insurance policies on your company?

We are in a segment where we cover more families with lower premiums. We are in a segment where only a few customers are able to spend more than Rs 5 lakh on insurance premiums. We are trying to cover the aam aadmi, and the large segments of society. Percentage-wise, such high-end customers will be insignificant for us and will be in decimals, if at all.

The average annual premium for the industry is Rs 60,000-70,000, whereas for us it is around Rs 20,000. Now, we are number seven in terms of the number of policies that we serve, but the premium size is much lower. So, for us, there is no impact of the base effect following the change in norms. We are protected as a company.

You have a 45 per cent share in the rural market, one of the highest in the industry. What will be your strategy?

The rural population in India is 65-70 per cent of the total. It is much more difficult to reach rural customers. We are committed to this market. With Shriram Group, we have a large customer base in the rural market, where cross-selling of the life insurance business can happen. Their life is not protected for additional money for the families, if something happens. We have reached out to them. Our strategy will be to continuously increase the access that we have through Shriram Group. We create business models that are unique and technology-driven in rural areas -- feet-on-street models.

Where do you like to see the rural market after three years?

I want the share of the rural market to cross 50 per cent. We will be growing quite fast. We are seeing over 20 per cent growth year-on-year as a plan towards 2030. At present, closer to 50 per cent claims are coming from the rural market. Our claim settlement ratio was around 97.4 per cent in FY23, up from 95 per cent in FY21. This financial year we are targeting around 98 per cent. We are on a par with the top players and are focusing on a sector in which risk and mortality are higher.