OM Kotak new premia income up to Rs 127 cr

OM Kotak Mahindra Life Insurance yesterday reported new premium income of Rs 127 crore for the year ended March 31, 2004.

Its total premium income, which includes renewal premiums, grew by 282.5 per cent, aggregating Rs 153 crore compared with Rs 40 crore recorded in 2002-03.

The company sold about 52,000 policies in fiscal 2004 against 34,000 policies last fiscal. Total business under sum assured amounts to Rs 3,584 crore. Premium income from group business rose from Rs 1 crore in fiscal 2003 to Rs 10 crore in fiscal 2004, while single premium income stood at Rs 20 crore, said OM Kotak managing director Shivaji Dam.

"We have tied up with Swiss Life to leverage the latter's global affiliations for growing the group business," he said.

Private life insurance companies have managed to capture about 17 per cent of the entire market in fiscal 2004 against eight per cent in the preceding fiscal.

It is estimated that they have mopped up new business exceeding Rs 2,400 crore against the Life Insurance Corporation of India's (LIC) Rs 12,179 crore. While the private insurance industry has grown at the rate of 146 per cent, LIC, on a much larger base, has grown by seven per cent.

OM Kotak aims to improve total business through greater emphasis on alternate distribution channels and focus on top 20-25 cities where the affluent and very high networth individuals reside.

"Alternate distribution channels will constitute about 45 per cent of sales and the tied agency force another 45 per cent. The balance would be by way of group sales," said Dam.

Currently, the tied agency force contributes 60 per cent towards premium income and alternate channels 40 per cent, with Kotak group companies constituting 20-25 per cent of premium income.

"Agents are more expensive and take more time to build business," said Dam.

OM Kotak is focusing on the upper middle-class segment with a household income in excess of Rs 2.5 lakh a year. With the company increasing the minimum premium income at Rs 6,000 from the earlier Rs 2,000, the average size of policies has crossed Rs 3 lakh.

Its average premium per policy at Rs 20,400 is among the highest in the industry. "This has ensured that our lapse ratio is small at about eight to 10 per cent," said Dam.