Welcoming the GST rate reductions to 0% from 18% and making it affordable for the customers, Casparus JH Kromhut, CEO of Shriram Life, said on Tuesday the rate cuts will squeeze the margins for the companies and as it is not a high-margin industry.
Kromhut said this reduction will necessitate product repricing in the near future. Speaking to TNIE, Kromhut added, “The challenge for the industry is that we still have input tax and now we don’t have output tax coming in which we can offset. Effectively, it becomes cost to the industry and it affects our margin also. As an industry we will be able manage it over time. It is a competitive industry and there is no high margin, which necessitates to product repricing.”
He stated that the industry has been guided to pass on the full benefit of GST cut but over time repricing needs to happen. “How much repricing needs to happen that individual company will have to calculate, and depending on the impact on the margins, we will have to sit down and then decide how much repricing we have to do,” Kromhut said, adding that the company will have to some cost saving measures to mitigate the losses due to GST rate cuts.
Speaking about ‘Insurance for all by 2047’, Kromhut said that it will at least the industry to grow 20% CAGR to achieve this target and it is challenging task as India’s insurance industry is very competitive. As per Economic Survey of 2024-25, life insurance cover only 40% of the households. Speaking on this, he said, “If we want to cover 40% to 100%, then we have to focus on rural India. 20% of business industry is doing is actually from rural whereas between 60% and
70% of people reside in rural. As a company we are creating strategy which will help us scale in rural and lower-income segments. The industry is not focusing on both and we, as a company, finding ways to scale in these two segments.” According to the company, the Shriram Life Insurance Company’s retail business grew at 24% in FY23, 39% in FY24 and 45% in FY25.