Kotak Mahindra Old Mutual Life Insurance is keen on growing at a significantly faster pace than the industry during the current financial year, managing director G Murlidhar said.
In an interview with Mithun Dasgupta, Murlidhar explains that the strategy for growth would be a balanced mix of distribution between agency channel and bancassurance channel, backed by higher synergies between branches of Kotak Mahindra Bank and erstwhile ING Vysya Bank.
The insurer’s parent, Kotak Mahindra Bank, had acquired ING Vysya Bank two years ago.
What would be the strategies of Kotak Life Insurance to grow its business as well as the customer base this fiscal?
Our future strategy is to continue with a balanced mix of distribution between bancassurance and agency channels. As far as bancassurance is concerned, our growth is likely to come from expansion of the bank as well as from deeper penetration in the existing customer base. Agency channel growth is expected to grow from recruitment of more agents and improvement in per agent productivity. We intend to drive a significant part of growth through productivity and efficiency. This will help us grow in a cost-efficient manner. We are also driving sales through online channel. However, with low level of insurance awareness in India, this channel is not likely to generate a larger share of business. We have promising and strong relationships with corporates. We expect our group insurance business to show a reasonable level growth.
How ING Vysya Bank’s merger with Kotak Mahindra Bank has helped the life insurance company grow its bancassurance channel? How do you plan to grow the company’s pan-India presence by leveraging increased number of bank branches?
Our Bancassurance channel has shown good growth over last year. New business premiums from the existing branches of Kotak Mahindra Bank grew by 45%, and new branches from the merger provided an additional impetus. About one third of our bancassurance new business premiums was contributed by the erstwhile ING Vysya Bank branches. With the bank now integrated, we expect the synergy to increase this year.
Currently, what percentage of your business comes from bancassurance channel? Will the contribution of bank route to the insurer’s business rise in next two-three years?
Last year, bancassurance channel contributed approximately 50% of our individual new business premiums (APE). We expect to continue a balanced distribution mix between bancassurance and agency channels.
At present, how many agents does Kotak Life have? What is your plan to grow this channel?
As of March 2016, the individual agent count was around 86,000. Over the last few years, we managed to consistently improve productivity of our agents and sales employees. We maintain high level of engagement with our life advisors, which we achieve through distinctive experience in terms of on-boarding experience, training, hand-holding, business support, growth path, recognition, etc. Last year, in recruitment of new agents, we ranked third among private life insurers. We did this with a 13% share. We expect to continue our focus on recruitment and expanding the agency channel. The agency channel will be of strategic importance for us, as we continue to expand and enhance productivity.
The company has plan to launch a few group insurance products soon. Will it stay focused on group insurance?
The group insurance business continues to be critical for us. We expect to penetrate into the affinity group segment this year by launching affinity group product(s). All other products like group term cover, group credit life, micro insurance and retirement fund will continue to grow.
How many new products you are planning to launch this fiscal? Are you designing
insurance products exclusively for online customers? What percentage of your sales is online and what is its growth outlook?
We keep working on finding innovative solutions to meet needs of our customers. We are looking at introducing a few new products this year. As far as the online segment is concerned, we already have a few online products in which are doing well. While online sales are likely to grow, they are expected to
be less than 5% of the overall product mix.
What is the new business premium target for this fiscal?
We have consistently grown faster than the average new business growth of private life insurers over the past several years. We expect new business premiums to grow 12-15% during 2016-17. This year, our focus is to continue to grow at a significantly faster pace than the industry.