 "Insurers with bank partners have seen growth: G Murlidhar")
Kotak Mahindra Old Mutual Life Insurance is gearing up to re-file products in line with the new guidelines for traditional products, while constantly maintaining new business premium growth. In an interview, G Murlidhar, managing director of Kotak Life, explains the company’s growth strategy to M Saraswathy. Edited excerpts:
While most insurance companies have seen their new premium income falling, you have managed to grow. What are the factors that have contributed to growth?
Insurers with bank partners have seen some growth. We also have a bank as a partner and promoter, so we are relatively less affected. Nevertheless, insurance with its protection and long-term savings premise is a fundamental product, more so in the Indian context where it fills a crucial social security gap. So the medium- to long-term opportunity is good for insurance companies.
Business growth was muted for the life insurance sector in FY13. Do you think growth will come back in this financial year?
A lot of life insurers are now focusing on health insurance. What is your take?
In the first half, our focus will be on aligning products to conform to the new product design guidelines, which come into force in October. In the second half, we will focus on pension plans, health products and annuities.
There has been a constant increase in your IT expenses. Will more products be available online?
Digital initiatives will have to be taken, more from the point of view of improving the quality and ease of the sale process and information sharing, all crucial aspects for customer delight. IT interventions in both pre-sale and post-sale servicing will play a critical role. It would also improve the product range.
Have you seen a shift towards unit-linked insurance plan (Ulip) sales?
Ulip has seen a small shift upwards, especially in the big-ticket sizes, but there is still a long way to go. Ulips are very transparent and streamlined, but the uptick has not matched that earnestness. As more customers appreciate and align with the dynamics of the marketplace, Ulips will find its mark.
But, your funds have performed better than Nifty.
Yes, we always target an alpha over the Nifty, and have consistently delivered on that. This value delivery is fast becoming the most important differentiator from a customer’s perspective and is directly linked to aspects such as persistency and customer stickiness.
Your peers are utilising various channels for micro-insurance. Which model are you adopting?
We are going to take a hard look at the products that are being sold in the market and we would also be starting a few dedicated rural branches this year. This is on a pilot. This is because we believe that rural business will have to stand on its own feet and should not be a loss making business. It is possible to do it.
Cost of delivery and rural branches will have to structured differently so that they operate on a lower cost. We will first try it out with a few branches, with a structure. And once it works, we will take it forward. The bank also has some rural branches, which we could take advantage of. We don’t just want it to be an obligation; we believe it is a serious business opportunity.
However, it may not be possible at current cost and we need to have a breakthrough in costs. I think we will get there. We have also got a senior person to focus on rural business.
While most insurance companies have seen their new premium income falling, you have managed to grow. What are the factors that have contributed to growth?
Insurers with bank partners have seen some growth. We also have a bank as a partner and promoter, so we are relatively less affected. Nevertheless, insurance with its protection and long-term savings premise is a fundamental product, more so in the Indian context where it fills a crucial social security gap. So the medium- to long-term opportunity is good for insurance companies.
Business growth was muted for the life insurance sector in FY13. Do you think growth will come back in this financial year?
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I will be conservative for this year, too. It has more to do with the macro-economic environment. The industry will feel the heat. But India remains hugely underinsured and insurance fills a critical gap. So the opportunity is huge, and the future prospects are definitely bright.
A lot of life insurers are now focusing on health insurance. What is your take?
In the first half, our focus will be on aligning products to conform to the new product design guidelines, which come into force in October. In the second half, we will focus on pension plans, health products and annuities.
There has been a constant increase in your IT expenses. Will more products be available online?
Digital initiatives will have to be taken, more from the point of view of improving the quality and ease of the sale process and information sharing, all crucial aspects for customer delight. IT interventions in both pre-sale and post-sale servicing will play a critical role. It would also improve the product range.
Have you seen a shift towards unit-linked insurance plan (Ulip) sales?
Ulip has seen a small shift upwards, especially in the big-ticket sizes, but there is still a long way to go. Ulips are very transparent and streamlined, but the uptick has not matched that earnestness. As more customers appreciate and align with the dynamics of the marketplace, Ulips will find its mark.
But, your funds have performed better than Nifty.
Yes, we always target an alpha over the Nifty, and have consistently delivered on that. This value delivery is fast becoming the most important differentiator from a customer’s perspective and is directly linked to aspects such as persistency and customer stickiness.
Your peers are utilising various channels for micro-insurance. Which model are you adopting?
We are going to take a hard look at the products that are being sold in the market and we would also be starting a few dedicated rural branches this year. This is on a pilot. This is because we believe that rural business will have to stand on its own feet and should not be a loss making business. It is possible to do it.
Cost of delivery and rural branches will have to structured differently so that they operate on a lower cost. We will first try it out with a few branches, with a structure. And once it works, we will take it forward. The bank also has some rural branches, which we could take advantage of. We don’t just want it to be an obligation; we believe it is a serious business opportunity.
However, it may not be possible at current cost and we need to have a breakthrough in costs. I think we will get there. We have also got a senior person to focus on rural business.