Why MD of Chola MS is batting for reduction in GST on insurance premiums

Chennai-based insurance major Chola MS, a part of the Murugappa Group, advocates lowering the GST on health insurance from 18 per cent and has set an ambitious target to achieve ₹10,000 crore in revenue before its 25th anniversary.

In a conversation with The Federal, V Suryanarayanan, the MD of Chola MS, discusses the company’s plans to expand into tier-2 and tier-3 cities, the impact of 18 per cent GST on life and medical insurance premiums, the IRDAI’s Bima-Sugam initiative, collaboration with the Olympians, and potential listing plans. Edited excerpts:

With 23 years in the business and just two years away from a silver jubilee, are there any milestones or internal targets you’ve set for the magic year?

We’ve seen solid growth over the past 10 quarters, which has been consistently increasing by 22 per cent. To accelerate our progress, we aim to reach ₹10,000 crores in revenue before our Silver Jubilee year. With five-six firms currently at that level, we’re determined to join their ranks and be part of that exclusive group.

Currently holding a 3 per cent market share, which is primarily concentrated in metros, do you have plans to expand into tier-2 and tier-3 cities?

Though we’re based in Chennai, around 26 per cent of our business outside of crop insurance comes from rural markets. We have a strong presence in tier-2, tier-3 and even tier-4 cities. We believe that India’s heart lies in its villages, and our goal is to enhance insurance penetration – especially in motor and health insurance – within these rural areas.

Given the rapid growth of e-commerce and advancements in AI, how do you anticipate these trends disrupting your distribution setup at Cholas MS?

We’ve observed a shift in the industry where business is increasingly moving from individual agents to corporate entities and brokerage firms, leading to broader growth and penetration. Additionally, our government channel – the CSC channel – has positioned us at number 3, which is a significant achievement. Focusing on this channel is a key priority for us. Despite being headquartered in Chennai, Chola MS has been designated for insurance penetration in the state of West Bengal, and we are dedicated to expanding our presence and growth in this region.

The regulatory body is also working on bringing in an insurance e-market place — Bima Sugam — by next fiscal. Do you think this could be a gamechanger for the industry?

One positive effect of Bima Sugam will be enhanced price discovery. With all insurers on the platform, digitally savvy customers will have access to more accurate pricing information. As a result, the company that provides the best coverage and demonstrates greater credibility is likely to attract more business.

Will this also intensify competition within the sector. Are you bracing yourself to re-strategise your pricing plans for your insurance products?

Naturally! With 30 players already in the market and potentially more entering, competition is inevitable. However, in this industry, earning credibility is paramount. Companies that excel in building and sustaining that credibility are the ones most likely to prosper.

Given the 18 per cent GST on life and health insurance premiums, and the growing calls for a reduction, do you think lowering this rate is essential at this moment?

India's lack of comprehensive social security measures makes the reduction of GST particularly significant. An 18 per cent GST is a substantial amount, and reducing it could relieve customers financially. If the savings from such a reduction are redirected towards providing larger coverage, it would greatly benefit policyholders by improving access to better healthcare.

I’m sure it must be heartening for you to see Olympians who were covered under your insurance policy winning medals at the Paris Olympics. Tell us a bit about your collaboration.

We’ve been providing insurance coverage to the Sports Authority of India for the past two years, supporting their efforts to assist athletes and various competitions. Seeing our coverage contribute, even in a small way, to their success at the Olympics is a moment of great pride for us. We’re indeed really happy.

With the Murugappa Group already having 10 listed entities, are there any plans for Chola MS to go public and join the ranks of listed companies?

Our solvency ratio is comfortably at 1.92 times, and our promoters are committed to providing additional capital as the business grows. Ultimately, the decision to list would rest with our shareholders, and for now, we are focused on managing our capital effectively. The choice to go public will be made at the appropriate time based on their preferences.