Ladies and gentlemen, good evening and welcome to the Q4 results of Niva Bupa Health Insurance Company Limited, hosted by ICICI Securities. This conference may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishabh Kothari from ICICI Securities. Thank you and over to you, sir.
Thank you. Good evening, ladies and gentlemen, and welcome to the Q4 FY 2025 results conference call for Niva Bupa Health Insurance. We have the chair from the management, Mr. Krishnan Ramachandran, Managing Director and CEO, Mr. Vishwanath Mahendra, Chief Financial Officer, Mr. Ankur Kharbanda, Chief Distribution Officer, Mr. Bhabatosh Mishra, Director of Claims, Underwriting, and Products, Mr. Direesh Rustogi, Chief Technology Officer, and Mr. Prakash Dev, Chief Investment Officer. So thank you and over to you, sir.
Thank you, Rishabh. Good evening and thank you to every one of you who is participating in this call at a late hour. It is my privilege to present the full-year financial results of Niva Bupa, the first time after we listed as an organization in November 2024. I'll walk you through some key highlights of FY 2025, and I'll request my colleagues to chip in as we move along. On a full-year basis, we closed last year, and as much as possible, I'll refer to numbers on a like-to-like basis because, as you all are aware, there was a significant accounting change affected by the insurance regulator October 1 last year. So for ease of comparison, I will refer to some numbers on a like-to-like basis. So we closed last year in terms of GWP at INR 7,406 crores, a growth rate of 32%, without the one-off accounting change.
We closed the year on an IFRS profit after tax of INR 203.3 crores on a full-financial year basis. We continue to maintain consistently high claims fulfillment ratio, 92.4% claims total out of every 100 claims that we get, and we improved our weighted average NPS to 55 for the full-financial year, up from 50 or in FY 2024. Just to walk you through progress on strategic pillars, Pillar 1 is being a health partner of choice for customers. Pillar 2 is pushing out a multi-channel and diversified distribution mix. Pillar 3 is a business model that's underpinned by technology and analytics, discipline around underwriting and claims, and a big focus on talent management. On a full-year basis, in terms of product mix, we closed the year with 65.5% retail and the balance split between group and PA and travel.
Our group mix increased on the full primarily because we had the privilege of writing two large corporate accounts that value our propositions around the wellness ecosystem and our ability to deliver on a total cost of ownership platform centered around not just insurance but also managing the health of employees at very acceptable economics. We also grew our retail market share from 9.1% in FY 2024 to 9.4% on a full-year basis. During the last quarter, we launched a new product called Aspire We're very excited about this product because it targets, what in our assessment, is the largest unserved population in health insurance in India, which is the missing middle, as NITI Aayog refers to, middle-class, lower-middle-class insurance. We launched this product in February, and we believe this opens up a whole new and large customer segment for us as a company.
We continue to make solid progress on our health and wellness ecosystem, building off Bupa's global healthcare strategy, and all of this is delivered through our customer app. We have more than 11 million downloads of our app as of last financial year, and our monthly active users on the app is in excess of 500,000. As I already mentioned, our eNPS moved to 55 from 50, and specifically, we improved on what is the moment of truth in the health insurance business, which is the claims NPS. Specifically, at the time of discharge, we moved that number to 67 for the full financial year, up from 63. We continue to expand on our distribution. During the last quarter, we added 8,000 agents, and between banks and brokers, we added 30 new distribution partners during the quarter.
Again, we continue to make progress on analytics and technology, and one KPI I'd highlight is our auto adjudication rate on claims moved up to 28.2% on a full-year basis. We also continue to execute on our preferred provider network strategy, which delivers, in our opinion, the right combination of quality and value for customers. Our PA network is now present in 40 cities across India and covers close to 600 hospitals. The average claim size, which is a good proxy for medical inflation that we experienced in our portfolio, grew by 5% and broadly, the CAGR on this has been about 6.5%-7% on our portfolio, so last year, we experienced unit cost inflation as measured by ACS of 5% and before I hand over to my colleague, I think one aspect that we are especially proud of, and we measure ourselves, is how well we do on talent.
We did get recertified as a Great Place to Work, and we ranked once more in the top 25 places to work in banking and financial services. Now I'm going to request Vishwanath, our CFO, to talk about our financials.
Good evening, everyone. So like Mr. Krishnan talked about, the growth rate on like-for-like basis in terms of GWP is 32%. On year-on-year basis, it is 21% in FY 2025 over last financial year. On PAT, by 28% to INR 4,894 crores. The PAT under IFRS grew around 21% from INR 106 crores in FY 2024 to INR 203 crores in FY 2025. The profit under IGAAP has also registered 6% growth from a profit of INR 82 crores in last financial year to INR 214 crores in current financial year, resulting in around 161% improvement. There is an increase in the combined ratio for FY 2025 by around 245 basis points, 201.2% to 98.8% in FY 2024. Due to year-on-year impact, the increase in combined operating ratio is generally driven by loss ratio, which is 59.1% in last financial year and 61.2% in current financial year.
Without one-off impact, the combined ratio for FY 2025 is 96.1%, with an improvement of around 270 basis points from FY 2024, of which 80 basis points is coming from improvement in loss ratio and 190 basis points from improvement in expense ratio on a like-to-like basis. Investment yield in last financial year is 7.4%, with AUM of INR 8,136 crores. Solvency ratio is at a healthy level of 3.03x, against a regulatory minimum of 1.50 as of 31st March 2025. This was broadly an overview of last financial year. Happy to take questions.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Supratim Datta from Ambit. Please go ahead.
On the opportunity, it's harder to understand if you could split the loss ratio between retail and group. Within group, your estimated loss and group employer-employee, how would both have stacked in FY 2024 versus FY 2022? If you could give us some color on that, that would be very helpful. In the second question, I understand in the comments you have mentioned that you have increased the share of employer-employee and at a favorable economic. I believe this business has shown time and again that loss ratios can be very volatile. So what are you doing different that will allow you to arrest this volatility in this quarter? If you could help me understand that, that would be, again, very helpful. And lastly, on the claim inflation, the claim inflation appears to have reduced versus FY 2024, at which it was around 7.4%, has now come down to around 8%.
Now, this again seems to be in contradiction with what we hear in the industry that claim inflation continues to go up. So again, if you could help us understand what you are doing differently, which is allowing you to arrest this claim inflation, that would be very helpful. And if the claim inflation is coming down, does that mean that the price hikes have been coming around 5%? Does that need to be revised onward as well? Those are my three questions. Thank you.
So in terms of loss ratio, I'll talk about IFRS loss ratios, which are 65. And these are IFRS. There is some loading for expense, claim handling expenses, which is to the tune of 66 points. So just to give you context. So last year, overall loss ratio on IFRS, the 65 IFRS was around 63%, which is 63.8% to be precise in FY 2025. So FY 2024, 63% moving to 63.8%. So in terms of retail and group, retail was around 65% last financial year, which is 66% in this financial year. So there is a 20 basis point increase in retail loss ratio. Group and then employer-employee, non-employer-employee. So in IFRS, we look at group on a combined basis, which was 57.1% last year, which has increased to 58.2%. So that's the group loss ratio.
In terms of medical inflation, 5% inflation, this is more or less in line with what we have been experiencing between 5% to 6%, 6.5% medical inflation year on year. So talk about anything on medical inflation we have been doing differently.
Sure.
Thank you for your question. At Niva Bupa, entire provider management and tariff management strategy is deeply driven by insights coming from data analytics. Instead of a generic approach of volume-based and other instrument-based discount, we have a targeted discussion with providers. In terms of provider strategy, as you would have seen, now we are getting cities with provider network, which is preferred to us, which is reasonably good quality treatment at an affordable cost to our customers, generating value. So that is a strategy we have taken forward and scaling up more than nearly 600 hospitals right now. Gradually, customers are happy to move into there because it helps them. We also deploy specific negotiation practices based on the data as I mentioned, which is about packaging of procedures and discounting on specific diagnoses and procedures, which have a disproportionately larger impact on our books, positive impact.
Last but not the least, we deploy, as you may have possibly been aware, that billing review, case management. These are measures we deploy so that the protocol basis consultation with treating doctors and protocol application, ensuring right treatment and billing review to ensure that billing formats and practices of hospitals are as further associated with them. These are some of the measures which help us achieve better control on medical inflation then.
More broadly, sir, I'll just add to what Vishwanath said. Ultimately, the focus of all of this is to manage to a target claims ratio, and we deploy broadly five levers to do that. One is the risk selection method that we have, and we have spoken in the past as well about our lifetime value approach to selecting risk. We believe that this is the most critical determinant to underlying portfolio quality and therefore claims ratio. The second is the risk assessment framework, which is making sure that we are pricing risk appropriately. So somebody who is at risk, we need to make sure that risk is priced for average cost, which is over lifetime, one and a half-two times more than the averagely healthy individual. Claims management, as Bhabatosh referred to.
The other one is a good rhythm of continuously cost-setting and updating to our customers using, underpinned by next-best offer, next-best offer analytic models. And as we have updated in the past, we do execute annual premium revisions to negate overall medical trends that we experience in our portfolio. To your question on employer groups, again, the idea is to, yes, you're right, this is a market where pricing levels fluctuate in the industry, but just making sure that we are disciplined around what price points we are able to ride this business at. And also making sure that we have a healthy mix of small and medium enterprises. That's a very focused effort within the company to make sure that overall, as a portfolio, we run this in a way that delivers economic value.
So, more long answer. That's broadly the sense of what we do to answer your question.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Prayesh Jain from Motilal Oswal Financial Services Limited. Please go ahead.
Yeah. Hi. So I have a good set of numbers. Congratulations for that. First question is on what would be your gross level Expenses of Management in FY 2025, and how would we do the right part and achieving Expenses of Management by regulation? How would you meet that? So this is one. Question two would be on your network hospitals that didn't seem to be growing in that sense. So what are the thoughts there? And just expanding that hospitals question, what is the status with respect to negotiations with hospitals coming down to a common agreed rate? And last question, what would be your AUM mix between equity? That was my question. Thanks.
Sure. So I'll address the Expenses of Management question, Prayesh. So Expenses of Management ratio for FY 2025 is 57.4%. Improvement of 290 basis points over last financial year, which was 39.3%, and incidentally, the same improvement we have seen FY 2024 over FY 2023 also. So FY 2023, 41.2%, improving to 39.3% in FY 2024, and 37.4% in FY 2025. And if you just see FY 2025, allowable expense ratio, so it is 25.5%, consisting 25%. And some allowances on insurance, etc. So we are again around 190 basis points away. So we are very confident that we'll be able to achieve this in current financial year, looking at the trajectory. You are right. The network hospital strength has not grown substantially, and that's a conscious decision. While if you see there is a network addition relations, 80%+ of claims come from a limited number of few hundred hospitals.
It does have a network of 10,500, close to that. It also enables servicing our customers across the breadth and depth of this country, and we follow a rigor of reviewing hospitals from quality, cost, and other point of view, and other practices point of view periodically. Thus, we add quality hospitals based on where we are getting reimbursement claims from. We also consciously de-panel some hospitals based on the practices, as I spoke about earlier, on cost quality and on some of the practices around customer service, etc.
So.
On the question, Prayesh, where are we on the common empanelment initiative of the industry? The initiative, as you know, is being led by the General Insurance Council. It is well underway. The idea is, teams have been formed. The entire country has been broken up into a number of geographies. Teams have been formed and allocated specific hospitals. So discussions are underway with these hospitals to get them to sign up with just the council as the representative authority to build out this common network. It's work in progress. As you can expect, in an initiative like this, there's obviously pushback because what we are asking for is to tie up with, obviously, the industry the lowest rate that we have with any provider. So there is pushback. There are also early positive signs of willingness to accept and move forward.
So all I can say is very much underway and solid progress.
Back to your question on the investment book. All of our investment book is, I guess, as of now, we have a very negligible portion that we invested in these three ETFs as of recently, but it's not practically yet for us.
Can I jump in? One more question.
Yes, please.
Yeah. So just to understand, on the industry, the way things are shaping up, one is there is a price hike that has come through. Second is there is a lot of commentary on rejection of claims. Now there is commentary of hospitals not signing up with insurance companies or continuing their tie-ups. And then now again, there is talk about insurance companies sending third-party investigators to homes of people to check. The industry seems to be riled with negative news flow. Is this kind of impacting demand, or how is seeing this kind of behavior in the industry?
So, I'll make one comment, and then I'll request Ankur to address the question on distribution. Yes, you're right. There's been a lot of recent negative press, and I'll only speak to Niva Bupa , not the rest of the industry. There's been a lot of recent negative press around the topics that you mentioned. What we did is to actually pull out the real data in terms of. There is publicly available data around in the NLs around complaints for 10,000 claims, around complaints for 10,000 policies, and claims documentation. And actually, we did an exercise to look at it in the aggregate. Are we doing a better job, worse job, or are we sort of doing what we've been doing? On these three specific areas, because that's been a very data-driven answer to is the industry really experiencing this, or is that there is just more data reporting?
The answer to this, Prayesh, and you can actually download the NLs and do this exercise yourself. On every KPI, the industry has actually improved. Claims settlement rates, and when I say industry, I'm referring to the aggregate of all the industry data on this. The claims settlement rate has improved. Claims have come down on the claims side as well as on the policy side. But the reality is that, no, absolute, obviously, the industry has grown. The absolute count of claims has increased. But more broadly, if I have to sum up the core issue that health insurance is grappling with, it is more a problem of perception driven by anecdotes as opposed to what the technology scientific is saying. Therefore, again, the council will be embarking on a fairly ambitious PR and awareness program.
We would like to fundamentally combat this perception that, genuinely, the industry on balance is doing a better job than it was doing three years ago. This is something that you will also witness in the days and weeks to come. Specifically on whether this is having an impact on demand, I'll refer to Ankur.
Yeah, thank you. On the demand side as well, if you look at all of the numbers, PR numbers or the industry number, the industry is growing at a double digit today, and we are also growing. You would have seen our number. We have grown at a 50%+ growth, so all of this is continuously happening for the industry and us as well from last few years now, so it is somehow we feel that there are so many levers which we need to work on, which can really create demand and get customers to be insured, which helps the overall agenda on Insurance for All by 2047 as well, and as Mr. Krishnan also referred, all the industry is coming together to create more demand awareness together as well, the way some of the other industries are doing.
Thank you, and all the best.
Thank you. The next question comes from the line of Annapurna from A91 Partners, LLP. Please go ahead.
Hi. I had two questions. First is that given group health for us has grown much faster than retail, I just wanted to understand what is driving the growth between employer-employee and loan attach? And again, for both of these, what would be our outlook going into FY 2023? That's my first question. The second is that our AUM also has grown much faster than our GWP. Now, of course, some of that would be because of the equity fundraising sort of done as part of the IPO. But wanted to understand if anything has changed on the business side because of which we are maybe considering more AUM. Those were my two questions.
Just to answer your first question, I will answer the first question. While, our contribution has been similar to what it was earlier, except for two large groups which we have in the last quarter we kept it up. And that's where our overall contribution towards the group side has gone up to 2.5% there. Otherwise, our group business was inching towards 10%. Now it is inching towards 12.5%. That's the difference earlier now. And as you mentioned, as he has earlier also mentioned, overall growth is at 22%. This is a mix of both retail and group, whereby all three segments, whether it is B2B, which is group, or it is B2B2C, which is cashless group and retail, all of them are growing significantly.
And on AUM, actually, you're right. So it has grown higher because of this capital raise, the primary capital raise we had. If you address all that, it is in line with our GWP growth. So no change as such in products or other things.
Okay. Thanks.
Thank you. A reminder to all participants, you may press star if you want to ask a question. The next question comes from the line of Sanketh Godha from Avendus Spark. Please go ahead.
Yeah. Thank you for the opportunity, so I have a few questions. Keep on group health, which is around 218.5% growth for the entire year. Can you view how much is contributed by businesses and how much is employee-employer? If broader, how the breakdown looks for 2022, if possible.
Sure. The total book, 65% is retail, about 13% is B2B or employer-employee, as Ankur referred to, and the balance is affinity-based. It's not just affinity-based. Yeah. Affinity-based plus Affinity plus personal accident. Our affinity business is about 22%.
Okay. Thank you. And on the next question, this calls to the retail portfolio. How much is driven by three-year cover? And I just want to understand, with the accounting, have you changed the booking strategy to not focus on three-year assets and any implication of that on the growth?
My three-year proportion is around 20%. Thank you.
It's grown on a similar line to last year, or it's probably down this year?
Last year slightly higher.
It was slightly higher. We have not done specifically anything to bring it down, but naturally, it is going down because the distributor now may not get the full remuneration but will get it annually. That's the reason actually some of the numbers will get drawn down.
Okay. So it's not a conscious decision from your side to slow it down. It's more natural it has some remuneration. Okay. And a couple of more things. One is your maybe if you can give a bit of color of HDFC , what % is contributed from if you are associated with them?
As in the past, Sanketh, the number is in the 20s, and this has been consistent with what we have updated in the past as well.
So no material change as such in the last year, right?
No material change.
Has the company witnessed any contribution in Affinity products, basically what you attach with the loans and where typically the long-term gets attached? Because of sometimes it comes in from multi-line players, especially who have very meaningfully better Expenses of Management. Or we just wanted to understand whether the company has actually meaningfully grown up in that line of business, which is obviously very possible that.
Thank you. So competitive intensity, we've been seeing all across, not just this channel, all across, goes up and down. Specifically with this, there were some of the competitors were trying to get in because of various reasons, but we have been able to get more accounts in this last six months. We've been able to get more number of partners as well in the last six months, and we've been able to get more number of lines within our partner institutes within the last six months.
Okay. So basically, bonding of your channel partners is a strategic partnership?
Yes. Yes. Both.
Okay. And lastly, if 12% bundling strategy is included in the shareholder account, looks a little higher than usual. What exactly is related to this last question I have, sorry?
Sorry, can you repeat your question?
In the shareholder account, there is an other income line item which is almost 12%, 7.9%, which seems to be meaningfully very high. Specifically, your usual trend, I just wanted to understand what this is related to?
He gave us some stats, IL&FS, R-Cap and stuff, which were written off in the past. There was recovery from those. That's the underlying reason.
Thank you.
Thank you. The next question comes from the line of Shreya Shivani from CLSA. Please go ahead.
Hi. Thank you for the opportunity. My first question is on our hospital network of 10,500 hospitals that we have. Can you help us understand what percentage of these hospitals would be corporate hospitals that we know of and what percentage would be just standalone hospitals? If you give some broad pieces of color, not an exact number is also fine. And is it possible to share how many of the hospitals would be present in bigger Tier 1 and metro cities and how much are smaller cities and beyond? That's my first question. And my second question is also on your claim reserve, IBNR reserve, etc. So there is definitely as of first of 2024 that number, outstanding claim reserve as percentage of claims incurred was about 67% or so in last year in 2024. This is down to 61%.
I mean, just wanted to understand how is our outlook for IBNR and IBNR group? Have we reduced them in the quarter and in the year? Just wanted your understanding on that. Thank you.
Shreya, so I'll just address the second question first. So if you see the whole year as a percentage of incurred claims, the outstanding has not changed. On quarter-on-quarter, there is certainly movement because of these different seasonal infectious diseases. So sometimes when you have last quarter some infection etc., so you end up having higher outstanding and IBNR. So if you see whole year, there is no change as such.
Sure. Yeah.
On the question around network hospitals, first of all, 80% of the claims, as I mentioned earlier, come from few hundred hospitals, and the balance contributes to 20%. The corporate hospitals in India are largely concentrated into larger cities. So in that sense, the vast majority of hospitals are non-corporate hospitals. And I am not referencing a standalone only, but this could be few hospitals here and there, but more here and there standalone and few small chains contribute the largest part of the 10,500-odd hospitals that we have.
Sure. Sure. And just to follow up on the IBNR question, yeah, I did check that on annual basis, actually your claim reserve plus IBNR has decreased from what it was in FY 2022 to what it was in FY 2024. However, in the years prior, like FY 2023, because FY 2022 becomes a COVID year, this was a much higher percentage. So have we become more comfortable in carrying lesser claim reserve now in the past two years versus what it was in FY 2023?
Yeah. So at that time, we were keeping some reserve because there was apprehension that some chains may rebound, and we have seen that nothing of that sort is required now. And this testing of adequacy of IBNR, we do every quarter. So we are very comfortable with this number.
Okay. Okay. Yeah. Sure. This is very useful. Thank you and all the best.
Thank you. The next question comes from the line of Akshay Jogani from Xponentia Capital . Please go ahead.
Thank you for the opportunity. Can you help us understand what claim incidence rates are like in retail business versus your employer business?
Employer-employee, is that your question?
Yes. The claim incidence rates in retail versus employee-employer business.
I think the employer-employee incidence rates tend to be higher than retail by maybe 2.5%-3% percentage points, primarily driven by maternity because maternity is typically not a benefit that you offer in retail terms. So that's probably the gap.
Sure. Sure. And what is the percentage claim incidence rate for the retail book like? Is it sort of 4%, 5%, or is it like 7%, 8%, 9%? What is it like for us?
Yeah. I'd say percentage would be 7%-7.5% for retail.
Sure. So we would be far lower than that right now, no?
We are lower than that, yes.
Sure. As we grow and sort of mature, let's say our growth rates become somewhat lower than where we are today, should we sort of expect higher incidence rates and intensity kind of grows at inflationary? So our claims ratio should then sort of inch up towards a medium?
I'll just address this. So it is not just one factor, so it's multifactorial. For example, it also has to do with age of the person. So as your book matures, the age of the average age increases. So it's an increase in the premium you realize because age is a rating factor. So as incidence rate increases up, that doesn't mean necessarily your loss ratio will go up. And also, if loss ratio goes up, then expense ratio goes down because if you have a lot of renewal book, so your expenses are much lesser there. So what we really do is combine the issue and return on equity. How do you want to address it?
Yes. As Vishwanath mentioned, that's true because age is a rating factor. A 65-year-old pays a higher premium than a 35-year-old. So they adjust the enhanced morbidity rates, which you can read as frequency. And a lot of this also is at the point of origin where appropriate underwriting, risk assessment, careful selection based on lifetime value models, etc., go towards managing this pool of risk or ensure the pool in the long run better than possibly one would expect. So these are inherently the inputs into eventual frequency of claims one would expect. I'll add one more point. Any risk pool, if it's sufficiently large, would have some underlying steady state of morbidity, right? Of course, as people age, that will go up, but there's also a continuous influx of younger lives.
So there will be some steady state. Continuously incidence rates keep going up, and more people become sicker and sicker over time. And it starts to mirror the population plus something too because it is at the end of the day a selected large pool, but a selected pool. So broadly, incidence rate and the best proxy for that is to look at B2B portfolios. In the last 18-19 years that we've been in this business, those are range bound, right? So it's not that corporate incidence rates have been going up and up and up. They've been range bound between X and Y, right? So the same thing will happen on the retail side. Therefore, what you're left with is to manage unit cost inflation. So from reserves can have the one important lever is to pass on that inflation every year through premium revision.
There are also the other levers that I referred to, including what I just said around selection, making sure you're pricing adequately, cost and upsell, claims management. So broadly, if you take a static view, claims ratios will go up. But then as an operator, there's a range of levers that we will deploy to make sure that we manage the book to a target loss ratio if you will.
Sure. So I just want to just quickly do one last thought on this thing. In our conversations with the channel, one of the things that sort of comes out is that over the last two, three years since COVID, there has been a general significant expansion in incidence rates.
And what we pick up is that as insurance has become more accessible, there is a perverse incentive for the healthcare industry to sort of get more hospitalization done because it's now paid by some third party, right? And as a result, the incidence rate seems to have shot up, which kind of is not getting under control and which kind of reflects in some of your peers' numbers, which are far, far higher than what you think is the steady state, right? So is this something that you also see? Is this something that as an industry kind of you all worry about? What would be your thoughts on it?
I think structurally, anywhere in the world, this is the problem solved, if you will, in health insurance, and certainly during COVID, we have also put that out in our presentation. There was a significant increase in inflation, and it did not revert, right? So it's moved up from a slightly sizable jump, and this has certainly been. Any third-party care system anywhere in the world suffers from this incentive of fraud, waste, and abuse, let me call it that. So that's the problem as well, and it is an ongoing problem. At the industry level, we are addressing it as an operator. We address it through all the levers that I described. Is it a problem? The answer is yes. Do we need to manage it, and are we managing it? The answer, I guess, to that also has to be yes.
So you don't see that kind of going out of control and sort of leading to far worse economics than they are?
No, we don't see that going out of control.
Sure. Sure. That's helpful. Thank you so much.
The next question comes from the line of Gaurav Nigam from Tunga Investments. Please go ahead.
Hi, sir. Thank you for taking my question. The first question was on the term that you use as one for clarification. You use the term claim inflation. I think some of your peers use the term medical inflation. Is there a definition difference, or just you're using the same definition?
It's the same. Yeah.
Okay. Some of your peers are talking about double-digit inflation, but you're experiencing mid-single digit inflation. That's correct, right? Just to clarify.
Yeah. Look, I mean, it's up to what our portfolio is experiencing.
The second question was on the hospitals. Again, one of the earlier analysts talked about this hospitals blacklisting some of the insurance companies, and we keep on hearing some of these things. Is there anything which insurance companies do to understand the hospital's satisfaction? And is that an important metric? I mean, and how are you doing? I mean, how are you ensuring that because providers are one of the important ecosystem partners, how are you ensuring that they are equally responsible and continue to work with you?
That's a great question. We do take our robust provider management team out regularly. It periodically engages with hospitals, all network hospitals and several non-network hospitals as well. It's a collaborative process. The collaboration is with regards to these following things. One, obviously, the tariff, the cost of treatment, etc. The second is processes, how to ease it for the hospital and help the patient customer in the most effective, timely manner. And third is, of course, discussions around protocols, treatment protocol applications, right treatment for the right kind of condition. These are the three important levers on which we periodically engage with hospitals, and that yields good results.
Got it. I mean, just wanted to understand, is there something which you are doing differently from others? Is it something that you are only uniquely doing? I just want to understand, I mean, what Niva Bupa is doing differently on this?
I can speak of a few initiatives which we feel unique, but I wouldn't have the complete overview of everybody's initiatives. Let me start with the preferred provider network I mentioned earlier as well. 40 cities, nearly 600 hospitals. These are, excuse me, these are quality hospitals delivering quality treatments at affordable cost. That is an initiative we continue to scale up and see at least 50% of our claims in these cities, and increasing number is moving to PPN. That's one. The second initiative is analytics-driven triggers for billing review to ensure that the billing practices by the providers follow the SOC norms and what is agreed between us. That's the second one. And third one is, as I mentioned, things like case management, which is direct engagement with all treating doctors on protocol applications, right?
Amount of stay required for a certain procedure or treatment in hospitals, things which are very medically oriented where a doctor speaks to a doctor, defining what is the right treatment for that condition with the right duration of stay.
Very interesting, sir. Thank you for sharing detailed answers. Thank you, sir.
The next question comes from the line of Avinash Goel from Magma Ventures. Please go ahead.
Yeah. Thank you for the opportunity, sir. A couple of questions from my side. Actually, on the product side, so as you mentioned that there is a tendency for some people to abuse the product benefit. So are you making any changes to your product structure so as to reduce its leakage? And also, what are your targets and how are you tracking your progress on those lines? That's my first question.
Let me start with saying this that insured population is a selected pool, and any selected pool tends to exhibit what you colloquially refer to as fraud, abuse, and waste, not just at the end of the consumer, but at the end of the provider as well. Several changes, several provisions in product already in place, and we continue to deploy more such things in the design of products, new products we bring in to manage this. So there is tremendous benefit that we have brought into product where judicious behavior by customer creates more value for them. For example, carrying forward the sum insured, smaller deductibles so that the premium goes down and customer enjoys the benefit of events which is beyond a threshold of certain small claim values. So we deploy starting from very small, like INR 20,000, INR 10,000 deductible, all the way up to INR 5 lakh deductible, etc.
So in products, we already have such provisions, and we continue to build more to manage potential abuse that may happen. Now, as you refer to the fraud, it is something that is very empirically analytics-driven fraud triggers that we use. These are learning models which factor in trends that emerge because this is something that every insurer like us has to continuously upgrade. We deploy some sophisticated tools, techniques, and methodologies to detect fraud and eliminate them. So waste part, I have already covered in the earlier questions, things like case management, length of stay management, and billing review with regards to the providers.
Sir, and any data, if you can share that, how in numbers you are tracking this progress, like number of cases, fraud cases presented, or how much your initiatives are delivered to your claims ratio? Any number you can share?
We can share that offline. We can take notes. We're happy to share that offline.
Sure. Sure. And second question is on your average age of retail and bancassurance customers, how it has changed in FY 2025 versus FY 2024?
Broadly, the age has not changed significantly. The average age has been in the mid-30s. It's not changed significantly.
Okay. So you think that your claims ratio has increased year on year. So can we say that within that same cohort, customer has shown the kind of worst behavior? So can we conclude that way?
No. I mean, the thing is, it's to do with the product design, right? So every product has periods, exclusions, which go away over time. So it's not that behavior gets worse. Of course, morbidity does go up with age. But as Vishwanath already mentioned, all our premiums are, age is a rating factor. So the premium that's charged is appropriate for that age. So it's not that we cross-subsidize across ages. So it's more to do with product design and how that plays out over time.
Okay. Okay. And, sir, what is our rejection rate in incoming cases? You said that you have a lot of focus on the risk selection. So, what is our rejection rate and how it has changed year on year?
This is reflected in our claim settlement ratios, which has consistently moved up year on year, closer to about 93% settlement ratio now, which means.
No, no, sir. I'm talking about onboarding a customer. I mean, whenever a customer approaches you for insurance, so how many of those customers do you reject and how many of those customers do you accept?
Less than 2% of customers we are currently unavailable to offer appropriate product. That's not a very useful statistic from your standpoint because what happens is over time, the institution understands what's the risk assessment and risk acceptance philosophy of a company, and over time, they bring in only cases that they believe will be accepted by the company. They would rather take the policy somewhere else because they get to know what the policy of the company is. It's not a very informative statistic in that sense.
Excellent. And sir, how has our retail lives covered changed in FY 2023 versus FY 2024? Number of retail lives covered?
Number of retail lives have grown up by around 18% last year.
Okay. In FY 2023?
Yes.
Okay. And sir, what's the guidance for FY 2026 and FY 2027?
We can take that offline.
Okay. Fine. Thanks, sir. That's it from my side. Thank you. Thank you.
The next question comes from the line of Prayesh Jain from Motilal Oswal Financial Services Limited. Please go ahead.
Yeah. Hi. Thanks for the opportunity again. Just one question. Could you give us some indication on loss ratios on your three-year cohort? There is the retail indemnity book that you would have written in FY 2022. What kind of loss ratios it would be trending at? So that can help us understand what's the kind of color of the book.
Prayesh, specifically answer that offline, but broadly, as we have indicated in the past, the idea is to manage the overall renewal book to a loss ratio of about 75%, and we are in that ballpark.
Got it. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management to clos ing points.
Thank you very much for your time late in the evening today. And thank you for your questions. In closing, I want to say that we continue to be very excited about the health insurance opportunities. Yes, as many of you have articulated, there have been some challenges, and especially around perception around the industry, there's been rapid regulatory changes in the interest of the policyholder. But to balance, we believe that we have the right business model to be able to deliver, to capitalize on the opportunity, and to be able to deliver solid, multi-stakeholder results, customer, employee, and shareholder. So thank you again, and look forward to a new financial year.
Thank you, sir. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. You may now disconnect the line.