With nearly Rs 4,000 crore in gross premium income for Q2, Kotak Mahindra Life Insurance Company ranks among India’s top 10 private life insurers. In an interaction with Narayanan V, the company’s MD & CEO Mahesh Balasubramanian discusses the company’s recent performance, the impact of surrender value guidelines, and its product and distribution strategy.
Why was Kotak Life’s individual premium growth of 17% lower than the industry’s 24% in the latest quarter?
Kotak Life predominantly has a traditional book, with about 72% of our policies being traditional in nature. In contrast, the private industry has been leveraging the buoyant capital markets to drive the sale of unit-linked insurance plans (ULIPs). Our proportion of ULIPs is among the lowest in the industry. We believe that life insurance is fundamentally about protection and long-term savings. This focus has shaped our strategy over the years. Our emphasis remains on traditional long-term products such as term life, participating and non-participating policies, and annuities, which we consider to be value-accretive for both the company and our customers.
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But the industry is going a whole hog on ULIPs?
We do sell ULIPs, but we maintain a balanced portfolio rather than going too far in either direction. The market is vast, and each company adopts the mix it believes works best for its business model. From a topline, bottomline, and margin perspective, we believe it’s more effective to maintain this balance.
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Despite our focus on traditional products, our assets under management (AUM) have grown by 28%, and we rank among the top 2-3 players in terms of AUM. Our surrender-to-AUM ratio is also one of the lowest in the industry. Customers often exit ULIPs after the five-year lock-in, we believe life insurance is a long-term savings product, benefiting those who adopt a long-term investment approach.
We allocate 5-10% of our business to protection policies, with the remaining 90% equally divided among participating, non-participating, and ULIPs.
How have the surrender value guidelines impacted your business?
The surrender regulations have affected all insurers.
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