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Monday, July 27, 2009

IRDA pulls up six pvt life insurers for overspending

Some half-a-dozen life insurance companies have come under fire from the Insurance Regulatory & Development Authority (IRDA) for crossing prescribed norms on administration expenses such as commissions, fund management fees, custodial fees, and expenses on marketing and advertising.

The expense ratio has a direct impact on the profitability of an insurance company and is important for long term sustainability. Many life insurance companies are yet to break even, and rising expenses could further delay their break-even.

IRDA member R Kannan said, "Out of the 22 life insurance companies, 6 or 7 companies have exceeded the expense ratio. We have told them to keep it in check. The capping of the charges for Unit Linked Insurance Plans (by IRDA) will help in bringing a discipline in expenditure management by companies."

source: HT

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