Performance of Life Insurance Corporation of India part-II By R. Ramakrishnan Retd. CHIEF ACTUARY (LIC OF INDIA)
- 25-February-2020
- in: LIC
The Management Expenses of a life insurance company can be divided into two parts: Expenses in respect of agency commission and Operating Expenses. The agency commission will be directly related to premium income. Higher the premium income, higher will be the commission. In the case of single premium policies, the commission cannot exceed 2% of single premium. The commission rates under unit linked policies will generally be less than that under traditional policies. The total expenses on agency commission will therefore depend on the nature and volume of business procured by a company and will not in any way be a measure of administrative efficiency of the company. On the other hand, the operational expenses will give an indication of the administrative efficiency. The profitability of a company will also depend on the extent of control exercised on the operational expenses.
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