Prohibitive cost of insurance

The concept of profit in insurance is extremely contentious. It is difficult to suppress suspicions that some of the profit and loss accounts do as much to obscure still further the true underwriting profit achieved as to clarifying the issue. Provisions for reserves over and above those required legally or even by the canons of prudent insurance practice are one source of obscurity. Life insurance business can also involve a substantial drain if the funds generated by it are invested out of the country. The loss of the physical use of life insurance funds (or mathematical reserve, since it is calculated on actuarial principles) can be of potentially great importance to countries in the basic stages of economic development when investment capital is scarce.