Future Generali life insurance aims to grow upto 18% CAGR by FY26: Rungta

The New Business Premium (NBP) of the company declined by 35.48 per cent in April-November 2023 to Rs 257.75 crore from Rs 399.51 crore in the year ago period

Future Generali India Life Insurance aims to grow at a Compounded Annual Growth Rate (CAGR) of 15-18 per cent to reach the optimal level by financial year 2026, for which the insurer has devised a three-pronged strategy.

“We plan to grow at a CAGR of 15-18% until FY26 to reach the optimal level for the company. We aim to outgrow the industry, which is expected to grow by 12-15%. Our strategy is threefold: First, increase unit volume growth. Second, optimise costs and reallocate resources to enhance productivity. Third, focus on product strategy. So far, we have been on the right track,” said Alok Rungta, Chief Financial Officer (CFO), Future Generali India Life Insurance.

Speaking on business expansion plans, he noted that the future of the insurance business lies in Tier-I and Tier-II cities, beyond the metro cities, with the company planning to expand in these areas. Furthermore, the company is expected to release new products next year.

“We are in the process of developing new products, with some launches expected in the coming months. We are at different stages, with some products being filed with IRDAI and others awaiting internal approvals. We anticipate launching a product in January and possibly another in March,” Rungta added.

The calendar year 2022-23 witnessed several reforms from the regulator and the ministry, including amendments in the Expense of Management (EOM) norms and decoupling of commission. A significant change was the imposition of taxation for policies above Rs 5 lakh effective from April 1, 2023. These norms had a substantial impact on the business of companies.

The New Business Premium (NBP) of the company declined by 35.48 per cent in April-November 2023 to Rs 257.75 crore from Rs 399.51 crore in the same period the previous year.

"Last year's change in taxation norms significantly impacted companies, including ours. We lost a large customer segment, which affected us. The change in EOM norms, however, was a welcome development on several fronts,” Rungta said.

Recently, the Insurance Regulatory and Development Authority of India (IRDAI) proposed increasing the surrender value, likely affecting the industry's profitability and requiring a change in the business model.

An exposure draft released by the regulator proposed a significant increase in the surrender value, mainly for non-participating insurance products, along with a change in the calculation of the surrender charge.

"The regulator's core objective is to protect the consumer's interest. However, the product manufacturer must also recover the cost incurred. We are in a long-term business, and this decision may be counterproductive. It's a significant change affecting the industry. It will lead to changes in profitability and business models. We have communicated our views to the regulator and will also send suggestions through the life insurance council," Rungta commented.