My take on increasing FDI limits in Insurance . Insurance Companies are terribly under capatalised. Insurance is a very simple business.People sell u risk and u sell protection for a premium. U earn nothing unless there are no claims. The money u have is not yours and is called float. u need to invest the float to earn adequately to cover future claims settlement, if ur unable to honor ur commitments the business is a lemon. Some of the most successful Insurance companies like GEICO are money makers because they are very careful about the policies they write and the risks they buy. One of the star managers at GEICO is Ajith Jain who specializes in buying enormously high risks for enormously profitable premium . The trick is the probability of occurrence of the risk is remote. Therefore Indian Insurance market will be benefited with this.
Posted on: Thu, 10 Jul 2014 14:04:54 +0000
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