Cap on management expenses leading to recalibration of business: Future Generali CEO

MUMBAI: The Insurance Regulatory and Development Authority of India (IRDAI) capping management expenses at 30% of premium income is prompting insurers to recalibrate their business mix according to Anup Rau, CEO of Future Generali India Insurance.In an interview with TOI, Rau was clear-eyed about the challenges and opportunities presented by regulatory change. “One of the things that has happened in wholesale health is a softening of rates,” Rau noted. “That’s partly because of the new expenses of management regulation. People want to write more low-commission business to be able to grow their retail book. So they’re being more aggressive on pricing in group health to create headroom.

”“In balance, it’s a good regulation. Eventually, it ensures that customers get better value,” said Rau. For Future Generali, the company’s focus remains squarely on retail health. “There’s still headroom for growth in retail. We’ve grown at twice the pace of the industry and will continue to invest in that,” he said.The company has also reined in its exposure to crop insurance, which previously accounted for a quarter of its business.

That line is now under 10%. “We’ve reduced crop as a precaution. The model does not leave enough room to manage risks effectively,” he explained, referring to the so-called “cup-and-cap” framework, where profits are clawed back and losses subsidised which distorts pricing incentives.According to Rau, while there is a proposal to allow composite insurance companies, there are strong benefits in being a specialised insurance company.

“My personal view is that if you want to grow your business and be a player of consequence and size, you are better off having two separate companies”. Rau provided the example of standalone health companies that have grown faster than industry. “Most of the market is dominated by standalone health companies,” Rau said.

“They have the distribution arbitrage. They can tap any life agent without having to license them.”Rau believes Future Generali’s differentiated proposition lies in its claims execution and investment in backend systems. “We are not the cheapest. Our proposition is that we settle claims fairly and quickly,” he said. “We don’t offer the highest commissions or lowest prices. We offer the best claims experience we can.”This operational focus underpins the company’s support for

Bima Sugam

, a digital platform under development by the industry.

Rau is optimistic about its potential. “Bima Sugam has a lot of potential beyond selling,” he said. “It can make the ecosystem more efficient and the environment more enabling.” In his view, the platform’s greatest value lies in shared infrastructure. “Measures like common enrolments of hospitals and a common provider network can help the council negotiate rates on behalf of the industry.

That will deliver better value to the customer.”He pointed to the unregulated nature of private healthcare pricing as a problem. “Hospitals don’t have a regulator. There’s still a vast difference in the claimed amount between a person who has insurance and someone who doesn’t. A unified platform can solve a lot of these issues.”According to Rau there would still be differentiated products and specialised agents. “Agents may use the platform, but they’ll also pick and choose companies they are comfortable with.

They want access to management, confidence in claims processes, and a good understanding of the products.”He argues that the real transformation lies not at the customer interface, but in the infrastructure beneath it. “The front end gives the customer more options, but customers still want advice and handholding,” he said. “The real diamond is a solid backend that gets the entire ecosystem to engage better. That’s the game changer.”Rau offered a practical vision of how this might work. “An agent can sell a product on the Bima Sugam portal, register a claim, access the network and bills—all through the same system. It would significantly improve the customer experience. Historically, shared backends have been more successful than front ends—look at mutual fund platforms or Vahan.”Such platforms could include features like real-time updates, hospital networks, procedure tracking, agent locators, and surveyor rankings.

“People talk a lot about the front end, but if we can get the backend right, it can really improve the experience for all stakeholders,” he said.Future Generali is investing accordingly. “We are changing our core system and building capabilities around it,” Rau said. But he pushed back against the notion that technology brings cost savings. “People think tech leads to savings—whether manpower or other costs. It doesn’t.

Technology costs money. It costs even more to keep it running. Skilled people are costly and constantly in flux.”Despite this, he sees value in what digitalisation enables. “Volumes, complexity, better decision-making—that’s all real,” he said. “But even things like AI-generated suggestions can be annoying. I keep clicking ‘no’ to co-pilot prompts.”New models in the health ecosystem like managed healthcare being tried by newcomers are welcome, Rau added.

“These experiments are good. The industry needs to test hypotheses and see how they play out. If successful, they could move the needle not just for the company but for the entire sector.”Future Generali is running AI and chatbot pilots across all personal lines. “This is not just for health, but across the board,” he said. The company’s operational metrics back its strategy. With a solvency margin of 196% and one of the best combined ratios in the sector, it has sustained profitability despite limited capital infusions since 2019.

“The combined ratio is one of the best in the industry, despite our smaller scale.

We’ve grown faster than the industry and intend to maintain that pace,” Rau said.The insurer has moved up the league tables too. “From being ranked between 13 and 17 in 2018, Future Generali is now among the top 10 general insurers,” Rau said. “We will continue to grow faster than the industry. We may not always know our exact position, but we will grow our market share.”“Our CAGR over the last five years has been 21%, compared to the industry’s 15%,” he noted. “We’ve tripled our top line in the last six years, excluding crop insurance.”Future Generali’s emphasis is not on scale alone, Rau concluded, but on execution. “In general insurance, unlike life, the difference in scale between the top player and number ten is not big,” he said. “We see a clear path to grow our presence and penetrate deeper into retail health.”