Kotak Life Insurance Co. Ltd. sees a ~15% growth in the Life Insurance Sector

THE INDUSTRY

The industry plays a crucial role in nation-building by mobilising public savings into long-term investment, which represents capital available for funding long-term projects for economic growth.

THIS YEAR

The industry has maintained its steady growth in line with the past few years’ trend. New Business Premium (NBP) for YTD November period was Rs 1.7 trillion with y-o-y growth of 37%. KLI grew by 44% in the same period. November saw particularly strong growth of 76% (KLI grew by 79%), after three months of moderate growth.

Individual Adjusted Premium Equivalent (APE) has grown by ~17% this year so far. We expect the full year growth to be around the same levels. 

FUTURE OUTLOOK 

We expect the industry to sustain growth rates of around 15% levels, which are significantly higher than the growth rate of the overall economy. An important factor driving this is the composition of household financial savings that has been marginally shifting in favour of financial savings (rather than physical assets like gold) - this could be attributed to interest rates, industry initiatives and government policies. Other favourable factors include a young population and growing working age group, increasing incomes, rising awareness about insurance, and an under-penetrated market. India is a highly under-penetrated market with life insurance penetration at under 3%. 

Within financial savings, insurance has been an important instrument for long-term savings. Approximately 17% of incremental household financial savings are allocated to insurance.

RECENT DEVELOPMENTS

The recent product guidelines are focused on policyholder interests and are a welcome initiative from the regulator. Key areas of change include enhanced surrender values and relaxed revival period for lapsed policies. Moreover flexibility has been introduced in the design of pure protection products, which is in the interests of all stakeholders. 

The regulatory sandbox initiative is a very good move as it allows insurers to evaluate and test innovative solutions. We expect this will enable introduction of innovative solutions or processes that could improve the proposition to customers.

ADVICE TO CUSTOMERS

Our advice to customers is to primarily ensure adequate protection through a term cover of at least 10 times of annual income. Apart from this, maintain a balanced portfolio of guaranteed plans, participating plans and unit-linked plans, with a long-term commitment.  

Kotak Mahindra Life Insurance Company Limited (KLI) FACTSHEET

Company Background

KLI is among the top few life insurance companies in India, and one of the fastest growing. KLI covers over 2.31+ crore lives as on 31st March 2019 and has covered more than 7 crore lives till date.

 Commenced operations on 10th January 2001

 Present in 149 cities through 245 branches as on 31st March 2019

 Consistent profit track record for 11 years in a row as on 31st March 2019

 Balanced distribution mix consisting of Bancassurance, Agency, Brokers, Corporate Agents, Direct Channels and Group Insurance

Key Financial Highlights (FY19)