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Mumbai, Sept. 8 Kotak Mahindra Old Mutual Life Insurance (Kotak Life) hopes to sustain a growth of 80 per cent in new business premium on the an expansion in its distribution network.

“We hope to receive new business premium of Rs 1,800-2,000 crore this year, which will maintain an 80 per cent growth in business,” said Mr Gaurang Shah, Managing Director, Kotak Life Insurance, said.

Kotak Life Insurance raked in new business premium of Rs 1,106 crore in 2007-08, an 80 per cent jump against Rs 615 crore the previous year.

Mr Shah said that Kotak Life’s branch network would be expanded from 164 to 200 by the end of the year, while the agency force of 36,000 would be increased to 50,000.

The company also expects to increase the contribution from the bancassurance channel. Bancassurance brings in around 27 per cent of the business, the bulk of which comes from Kotak Bank.

“Kotak Bank as well as some NBFCs bring in around 27 per cent of the business. We expect the proportion to increase to 40 per cent in three to five years,” said Mr Shah.

The company also plans to infuse around Rs 100 crore of capital this year. Its current capital base is Rs 530 crore.

Kotak Life Insurance plans to introduce a new annuity product this year and continue its focus on unit-linked and term plans.

The Managing Director said the company would look at designing products with back-ended charges. “All the products have front-ended charges and have a high allocation in the first few years. A back-ended charge structure will be an incentive for insurance agents as it will push them to maintain the persistency of the policy,” Mr Shah said.

New guidelines from IRDA on lower solvency for term products has also prompted Kotak Life to slash the premium rates on its term plans by up to 40 per cent.

According to Mr Shah, the entry of several new players has made human resource management the biggest challenge for insurance companies.

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