Insurance Renewal premium to overtake new policies soon

Chennai, Sep 15 (IANS) Seeking to arrest policy surrenders through guidance to policy-holders, Kotak Mahindra Old Mutual Life Insurance expects its renewal premia to overtake the amount raised from new policies in a year or two.

 “We expect our Insurance renewal premium to overtake new premium in a year or two. Currently the gap between the two is small,” Sunil Sharma, appointed actuary and chief risk officer, told IANS on Tuesday on the sidelines of a product launch.

Sharma said the company hopes to grow its new business premia by 25 percent this year as compared to previous year’s figure of around Rs.1,700 crore.

hdfc life banner

The top executive was here to launch Kotak Premier Pension Plan – a pension policy with guaranteed bonus for first five years. With a healthy policy renewal or persistency ratio, the renewal premium for a life insurer will be higher than the premium income from fresh business.

Sharma said the difference between the renewal and fresh business premium for Kotak Mahindra Old Mutual Life was narrowing. For the first quarter of this fiscal, the company had earned fresh businesspremium of around Rs.274 crore while the renewal premium was Rs.242 crore.

Queried about the outgo of around Rs.242 crore due to surrenders during the first quarter of the current fiscal Sharma said it is due to the old unit-linked insurance policies (ULIP) and it is an industry-wide phenomenon.

“Our policy retention team is working with policy-holders to guide them on understanding the policy.”

The outgo due to surrenders during the first quarter of the current fiscal was lower as compared to around Rs.356 crore paid during the corresponding period the previous year.

Sharma also said the company is more than adequately capitalised and there is no urgent need for the shareholders to infuse additional capital. He said the acquisition of ING Vysya Bank by Kotak Mahindra Bank has given the life insurer higher distribution points in south India.

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