Shriram General bets on agents, vehicle makers despite proposed Irdai commission curbs
MUMBAI: Shriram General Insurance plans to add 10,500 financial advisors and secure one or two more vehicle maker partnerships in the second half of fiscal year 2027 (FY27), betting on two growth channels even as proposed regulatory curbs threaten to alter their economics. The insurer clocked 21% total premium growth in the first half.
The Insurance Regulatory and Development Authority of India’s (Irdai) September consultation paper proposes zero commission for distribution entities and a 2.5% cap for agents on mandatory third-party cover for new vehicles. For own-damage cover, it proposes caps of 5% for distribution entities and 10% for agents. The changes would limit what insurers can pay to win business through vehicle makers and dealers. Irdai also proposes cutting general insurers’ expenses of management (EoM) limit from 30% to 25% within two years and to 20% within five.
“We will follow the regulation," managing director and chief executive Anil Aggarwal told Mint. "whether OEM (original equipment manufacturer) will give us the business or not, that’s their choice,” he added, saying that either way the “vehicle has to be insured.”
Main growth engine
Its agency network remains the insurer’s main growth engine. “The major growth is coming from our agency force,” Aggarwal said.
Shriram General had 113,717 financial advisors at the end of September, all point of sales persons (POSPs), having added 9,802 in the first half, 3% more than a year earlier. “This second half, we will recruit around 10,500 more financial advisors,” Aggarwal said.
Any change to hiring plans will depend on the regulator’s final rules, he said. The insurer has long targeted 200,000 advisors by FY30, but Aggarwal said this goal was “subject to the regulatory changes” and would be a different chapter.
OEM partnerships are the other growth lever. Shriram General signed tie-ups with TVS Motor Co. Ltd, Tata Motors, Bharat Benz and Mahindra & Mahindra in the first half, after writing negligible OEM business in the previous financial year. “We were never writing the OEM business,” Aggarwal said, adding that the partnerships were the main reason behind its motor growth.
Motor premium rose 21% to ₹2,269 crore in the six months to September, from ₹1,869 crore a year earlier, against industry growth of 13.15%.
Premium sourced through motor insurance service providers (MISPs), the dealer channel through which vehicle showrooms sell insurance, rose 81% to ₹6.23 crore in the April-June quarter from ₹3.44 crore a year earlier. This accounted for about 0.5% of the insurer’s total quarterly premium of ₹1,179.82 crore.
Premium through brokers, which also include the broking arms of some vehicle makers, grew 65% to ₹294.49 crore. Tata group insurer Tata AIG General Insurance, by comparison, wrote ₹94.17 crore through dealers in the same quarter.
Shriram General also sources business from financiers, including group company Shriram Finance.
New growth avenues
Shriram General’s EoM stood at “a shade below 30%”, within Irdai’s current limits. Aggarwal said the proposed commission caps, if implemented, would bring it further below the 30% mark. The company declined to comment on the proposed guidelines or their impact.
Aggarwal also expects Irdai’s new motor insurance rules to work in the insurer’s favour. Under a 2 November circular issued in response to Supreme Court directions, every private car and two-wheeler policy sold from 15 December must follow a four-layer structure, separating third-party liability, cover for occupants or pillion riders, personal accident cover, and own-damage cover.
He said the new structure would resolve confusion over insurers’ liability to pay claims and whether policyholders were covered. “I think it will be a win-win situation for us. We will get some additional premium and this person will get the fair compensation also,” he said.
Premiums will “go up a little bit” for customers who choose additional covers, he added, clarifying that he was not referring to the third-party premium.
Beyond motor, Shriram General is building its health insurance business. “We have taken the baby step into the health premium,” Aggarwal said, adding that individual health policies could generate around ₹100 crore in annual premium over the next two to three years, rising to ₹300-400 crore including group policies.
Its non-motor premium rose 14% to ₹201 crore in the first half, against industry growth of 7.11%.
“I am expecting the same 20% growth will remain for the full year,” he said. The insurer is also sticking to its FY30 target of motor accounting for 85% of its portfolio and non-motor the remaining 15%.
In H1 FY27, Shriram General’s gross direct premium rose 20.78% to ₹2,470.41 crore, while the general insurance industry grew 8.86%.