16/March/2007
Though private life insurance companies have a growth rate of over 100%, but the downside is that they are raking up huge losses too. The total loss of all life insurance companies put together had grown by 46.3% in 2005-06, and stood at Rs. 3790.81 crores by the end of March '06. This has led to inflow of funds to the tune of Rs. 1538 crores by the respective promoters. This has raised the total investment by investors to Rs. 5886 crores, with Rs. 4500 crores coming from Indian partners.
Commissions for first year premiums as paid by the private sector were 17.54%. In comparison, LIC paid up 25.26% in such commissions. The commission paid by some private insurers went up whereas that paid by LIC went down by 1.11%.
Though companies might be running into losses at present, but that is because the consumer has been provided with ever-low premiums for their policies and lower commissions, thereby improving the return on customer's investment. IRDA has regularized the rates constantly for last 6 years to bring them to their lowest levels today. Though this looks like a situation of loss for the companies but is only short termed, since in the subsequent years, earnings come gradually by the way of premiums.
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