The Hindu Business Line : Kotak Life posts 100% premium income growth

Kotak Mahindra Old Mutual Life Insurance (Kotak Life) has registered a 100 per cent growth in its regular premium income at Rs 349 crore in 2005-06, from Rs 174 crore in 2004-05. However, single premium income fell to Rs 33 crore from Rs 180 crore in the same period.

Mr Gaurang Shah, Managing Director, Kotak Life, said that around 60 per cent of the company's business came in the last quarter buoyed by the success of its newly introduced capital guarantee product. "Our capital guarantee product, Kotak Privilege, has seen tremendous success in the last quarter. This product alone has raked in Rs 112 crore in premium," he said.

Adjusted premium equivalent

"The adjusted premium equivalent, a standard measure in the industry that takes single premium income at 10 per cent, has grown from Rs 209 crore in 2004-05 to Rs 366 crore in 2005-06, a growth of 76 per cent," said a release from the company.

Bancassurance tie-ups with Kotak and other banks added Rs 150 crore to the new business. "With Kotak Bank expanding to more locations and increasing its retail base, we are riding on the infrastructure to penetrate deeper to semi-urban areas," he said.

Group business

However, growth in the group business was flat. Mr Shah said that fringe benefit tax on group superannuation had a negative impact on the company's group business, with only Rs 16 crore coming from the portfolio, unchanged from the previous year.

Kotak Life will focus on group credit term and superannuation to grow its business in the current fiscal.

New products

In terms of new products, the company will introduce two more capital guarantee policies — a children's plan and a retirement product.

The company will have to alter three of its Unit Linked Insurance Plans to conform with the guidelines effective July 1. Mr Shah said the modification would mainly consist of introducing a lock-in period.

Kotak Life will strengthen its distribution network this fiscal by opening 24 more branches and increasing its agency force to 25,000 from the current 12,500.

Mr Shah said the focus of the life insurer would continue to be the mass affluent and high net-worth individuals. The average premium per policy of the company is Rs 36,000.