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Thursday, June 25, 2009

Insurance industry defends itself on high commissions

Already on the back foot for high costs, insurance firms have said they are loaded with high capital requirements. Speaking at a round-table discussion on the life insurance sector's contribution to the Indian economy, SB Mathur, secretary general of the Life Insurance Council (a self regulatory body of life insurance companies) said, "The assets under management of life insurance companies as on March 2009, excluding LIC, is Rs 1,18,400 crore, which is supported by a capital of Rs 24,833 crore."

"On the other hand, mutual funds with assets under management of Rs 4,17,300 crore as on March 2009 are supported by a capital of approximately Rs 3000 to Rs 4000 crore. The insurance business is highly capital intensive with promoters required to infuse capital regularly for several years," said Mathur.

Referring to high commissions on insurance policies, Mathur said, "Not all products have 40 per cent first-year commission. The commission varies according to the type and tenure of the product. The total premium of the industry has grown 8 times while commissions have grown only 5 per cent."

source: Hindustan Times

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