Kotak Mahindra Life Insurance expects its premiums to grow at 25-30 per cent this year, according to Sudhakar Shanbhag, Chief Investment Officer.
“Year to date, our growth is 37 per cent and the full-year growth should be between 25 and 30 per cent,” he said.
In FY17, premium growth for the company was at 29 per cent, faster than the industry growth of 21 per cent. New business premium stood at Rs. 2,850 crore and renewal premium, at Rs. 2,290 crore. The company reported profit of Rs. 324 crore on total premium income of Rs. 5,140 crore in FY17.
Sudhakar said of the regular premium, about 35 per cent is from unit-linked insurance policies (ULIPs) and the rest from traditional products. “Within retail, 20-25 per cent of the regular premium comes from single-premium polices. At a broad level, of the total premium, about 50 per cent is from group insurance business,” he said.
The company is keeping its distribution bets evenly balanced between bancassurance and agency with about 50 per cent coming from both channels. But there is customer segmentation here with each channel catering to a different group with appropriate products. So, tied agency channel would focus more on savings products while the bancassurance channel would focus on ULIPs.
Explaining the logic behind the move, Sudhakar said, “We observe that based on the construct of the agency channel, the nature of people who get hired and their affinity, the probability of selling traditional products which are not market linked is higher compared to banca.” Making a strong case for ULIP products as a good investment option over mutual funds, Sudhakar recalled the pitch he had made to a 70-year-old agent who also sold mutual funds.
ULIPs, he said, were a good option for wealth creation designed to provide a systematic way of investing over long tenures. He said, ” ULIPs offer asset allocation freedom with varying percentages for equity based on an individual’s risk appetite and also offers a self-rebalancing or switching for one asset class to another with no cost or tax implications.
“The cap on charges on ULIP products is at 3 per cent up to 10 years and 2.25 per cent beyond. If we do a simple math of total cost borne by a policyholder, the same would be on par or lower than that paid for other financial intermediation.”