I do not need to tell you that there is a huge Irda vs. Sebi or a mutual fund vs. unit linked insurance plan debate in the country…do I? LOL.
However this has ensured that many journos have called me…for a view. It is nice that they take my view – however I am not sure that they want to use it or perhaps I have not made myself clear. So let me tell you how 3 questions went:
Question 1: Life insurance margins are very high, no? 40% is too much. What do you think?
Answer: I did not understand the question, but I guess you mean the agents commission, correct?
Q: No, No, I mean the life insurance companies have a 40% margin, do they not?
Answer: You mean 40% of the life insurance premium collected is the NET profit of the life insurance company?
Answer: Whoever told you that must be having some sense of humor. In case of any business there are lots of complications, and a lot of work to be done to earn money. In life insurance business people have to be hired – as actuaries, as underwriters, accountants, sales managers, etc. AND all this is funded by the Share capital of the company. Once the plans are up and running running costs have to be incurred. Life insurance is a reasonably profitable business after the company spends at least a decade doing developmental work. It is clearly a long term project but still the margins are nowhere near 40% of the total premium collected.
more queries will follow…I need to consider the load I can put on your stomach – imagine having a reader dying of laughter 🙂
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