Insurance Policy Acquisition Costs
Insurance policy acquisition costs refer to the expenses incurred by an insurance company when it acquires a new policyholder. These costs include commissions and fees paid to insurance agents and brokers, advertising and promotional expenses incurred to attract new policyholders, underwriting expenses, and any other expenses related to the acquisition of a new policy.
This financial metric is important because it gives an indication of how efficiently an insurance company is acquiring new policyholders. A high acquisition cost can indicate that an insurance company is struggling to attract new business, which can negatively impact its profitability. On the other hand, a low acquisition cost can indicate that an insurance company is efficiently acquiring new business, which can lead to higher profits over time.
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