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Shriram Life Insurance experiences margin pressure in its rural business, according to the CEO

Mumbai City, Maharashtra - 22 Aug, 2024

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Shriram Life Insurance, supported by the Sanlam Group and Shriram Group, is facing margin pressure in its rural business due to consistently low levels of policy purchases and renewals, according to CEO and Managing Director Casparus Kromhout.

Kromhout mentioned that 40% of the insurer’s total business comes from rural areas, and despite the margin pressure, the company remains committed to this segment. “We are dedicated to this market and are constantly seeking new solutions and strategies,” he stated.

Other life insurers experienced pressure on their margins during the first quarter of the fiscal year 2025. For instance, ICICI Prudential’s value of new business (VNB) margin fell to 24 percent from 30 percent last year, while HDFC Life’s VNB margin decreased by 120 basis points to 25 percent.

According to Kromhout, one of the new strategies for Shriram Life Insurance to draw in additional business is to implement a speedy disbursement and resolution process. He declared, “We’ll be investing in capacity to keep serving the segment better, even with lower margins.” A 12-hour settlement window for prompt payments had already been implemented by the insurer. When there is no need for an investigation, this option is selected.

The insurer recorded a decrease in net profit on an annual basis from Rs 35 crore to Rs 27 crore in Q1 FY25. Compared to the same quarter the previous year, it sold 127,000 individual insurances, a 131 percent increase.

Despite the inconsistent results, Kromhout stated that the insurer will keep its attention on growing its activities, which will put constant strain on its overall margins.Read More-https://voiceofentrepreneur.life/

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