The Hindu Business Line : Kotak Mahindra OM Life to focus on semi-urban areas

KOTAK Mahindra Old Mutual Life Insurance will be expanding in semi-urban and rural areas this fiscal, Mr Gaurang Shah, Managing Director, told Business Line.

The company, which derives 65 per cent of its business from unit-linked products (ULIPs) and 35 per cent from traditional products, targets high net worth individuals.

This year, Mr Shah said, 20 branches would be added to the existing 43 in Tamil Nadu, Kerala, Punjab, and Gujarat. Eleven of these branches will be located in the South.

"By focusing on semi-urban and rural areas, our premium per policy - which was at Rs 28,500 (one of the highest in the industry) - might go down to Rs 20,000. However, this would also mean three times the growth in terms of the lives we cover," Mr Shah said.

The insurance company, which has a bancassurance tie-up with Kotak Bank, is present in 42 of its branches. Bancassurance brings 25 per cent of its business.

Mr Shah said that while Kotak Mahindra Old Mutual Life would like to expand its bancassurance tie-ups, few banks are available. "The regulation does not allow for banks to tie up with more than one insurance company. There is a case for banks to have more than one tie-up because every company has a significantly different bouquet of products to offer."

The company plans to launch a ULIP and a retirement plan this year. Like some other private insurance companies, Kotak Mahindra Old Mutual Life has suffered a drop of 70 per cent in terms of group insurance premium as a result of FBT on superannuation.

The company reported a total premium income of Rs 374.75 crore in 2004-05, of which group premium accounted for Rs 15.06 crore.

In the first quarter of 2005-06, group premium stood at Rs 1.33 crore - a drop from Rs 4.62 crore in the corresponding previous period.

The company's market share slipped to 0.77 per cent in June 2005 from 1.48 per cent in March this year.

However, Mr Shah is confident. "Given that our customers are from the higher strata, their buying is more tax-based. In the last quarter, 59-60 per cent of our business came in March. So, our figures can be assessed at the end of the fiscal."

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