Niva Bupa To Meet Irdai's Expense Mandate By FY26, CEO Says After Listing

Niva Bupa Health Insurance Co. is on track to meet the Insurance Regulatory and Development Authority of India’s requirement to limit management expenses to 35% by the next financial year, assured Managing Director and Chief Executive Officer Krishnan Ramachandran.

Last year, the IRDAI had mandated a single management expense limit of 35% of gross premium written in a financial year for standalone health insurers.

Ramachandran told NDTV Profit that this requirement will be met as the company scales its business.

“As of the last financial year, we were at Rs 5,600-plus crores. So we are gaining scale. And as we gain scale, our expense ratios will come down. And we are confident that we will comply with IRDAI’s requirement of being 35% plus allowances for a standalone player by FY26,” he said.

The top executive explained that the company’s expense ratio was higher because it was in an “investment mode”.

“We have grown in employee strength, (and are) close to 9,000 employees. We have increased our number of offices, our distribution partners, launched a number of products, and technology investments,” Ramachandran said.

“So, for all of those reasons, our expense ratio has been heightened. Of course, it shows up in our above-industry-growth number,” he added.

Shares of Niva Bupa Health Insurance Co. made a decent market debut on Thursday, listing at a premium of about 6%. On the NSE, they listed at Rs 78.14, marking a premium of 5.59%. On the BSE, the stock debuted at a premium of 6.08% at Rs 78.50 apiece, over its issue price of Rs 74.

As for the objectives post the market debut, Ramachandran said that the company will look at improving its combined ratio.

The combined ratio is a measure of profitability used by an insurance company to evaluate its daily operations performance.

“Our combined ratio would be lower than most general insurance companies. Last year, our combined ratio was 98% odd. And the objective is clearly to improve on that as we move along,” he said.

The company's retail business encompasses 70% of its product mix. Explaining the reasons for the same, Ramachandran said, “We are focused on retail, because we believe it is a very attractive opportunity. It has lifetime value. It is difficult to execute. It is a talent and execution-intensive business. So, doing retail well means that you have some inherent motes.”

The top executive stated that the company plans to grow its business with sustainable opportunities in the future.

“Moving forward, we want to make sure that we grow our business with opportunities that are sustainable across the board,” he said.

Shares of Niva Bupa Health Insurance Co. were seen trading 3.25% lower from the opening price at Rs 75.60 apiece at 12:25 pm. In comparison, the benchmark Nifty 50 was seen trading 0.09% lower at 23,537.25 at the time.

The stock closed 5.29% lower from its listing price at Rs 75.01 apiece on the NSE against the benchmark Nifty's dip of 0.11%.