Major Challenges and Policies in Insurance Sector

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Major Challenges and Policies inMajor Challenges and Policies in

Insurance sectorInsurance sector

Submitted To:

Prof. Abhishek Parikh

Subject:

Insurance Management

Submitted by: Ricky Mehta(61)

Heta Shah(80)

Hardik Thakor(91)


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Major Challenges of Insurance sectorMajor Challenges of Insurance sector

1. Industry Challenges(i) Commoditization in personal line products.

(ii) Shifting consumer requirements( everyone wantsproducts tailored to them, customization)

(iii) Heightened competition.

(iv) Global economic meltdown.

2. Business ChallengesMost of the insurers is to reduce the turnaround time andimprove their speed to market their products.

Distribution Channel pressures and emerging consumerdemands for mass customization and hybrid products aremoving rapid product development from beinga competitive advantage to a necessity.

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Cont

3. Process ChallengesLack of stream lined processes, change management, automated

processes, central repository.Solutions

1. New approaches and technology are needed to manage anddevelop insurance products which reduces the cost and timeto market.

2. Speed, quality, efficiency and capacity are differentdimensions to counter the above challenges.

4. Product ChallengesSame type of products are available in the market.

Solutions

1. Deliver new products/product customizations efficiently,quickly and in a flexible manner.

2. Making change to existing products quickly.

3. Meeting demand for combination products i.e developingproducts that encompass multiple features in todays products.


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Cont3. Preparing for mergers and acquisitions: Todays insurance market

is highly fragmented. Coming year that insurance companies evaluateM&A as part of a strategy to restructure and survive.

4. Leveraging new opportunities: As a result of the recession,companies simplified product portfolios, increased pricing and avoidedrisky market segments.

Many withdrew from some of their geographic markets andscaled back on some lines of business.

This has given rise to new opportunities for companies still inthe business.

4. Handling Regulatory reform: Rule 151a which requires registrationfor equity-linked annuity products is expected to take effect in twoyears time.

Rule 151a is aimed at determining who runs the risk ofmaking the investments underlying these products and dealingwith how these products are marketed.

This new rule will result in new compliance requirements asregistrations become mandatory.

In a larger context, the governments plans for a federal

Insurance office will bring in greater federal oversight andultimately lead to a dual regulatory system.


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ConclusionConclusion

Players with a superior understanding of their risk

will be in a better position to leverage potential

opportunities, in 2010-2011.

Insurance companies must carefully consider how

best to tackle these challenges.

They can either resort to the wait-and-watch

approach or look at the challenges as an opportunity

to bring about far-reaching changes.


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Eyes of Porters 5 Forces.Eyes of Porters 5 Forces.

Threat of New Entrants:The insurance industry has been

budding with new entrants every other day. Therefore thecompanies should carve out niche areas such that the threat ofnew entrants might not be a hindrance. There is also a chance

that the big players might squeeze the small new entrants.

Power of Suppliers:

Those who are supplying the capital arenot that big a threat. For instance, if someone as a very talented

insurance underwriter is presently working for a smallinsurance company, there exists a chance that any big playerwilling to enter the insurance industry might entice that personoff.


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Cont

Power of Buyers:No individual is a big threat to the insuranceindustry and big corporate houses have a lot more negotiatingcapability with the insurance companies. Big corporate clientslike airlines and pharmaceutical companies pay millions ofdollars every year in premiums.

Availability of Substitutes:

There exist a lot of substitutes in theinsurance industry. Majority, the large insurance companies

provide similar kinds of services be it auto, home, commercial,

health or life insurance.


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Major Policies of Insurance sectorMajor Policies of Insurance sector

Insurance

Life Insurance

1. Term Assurance Policy

1. Whole Life Policy

1. Endowment Assurance Plan

1. Money Back Policy

1. Unit Linked Insurance Policies

(ULIPS)

6. Annuity (Pension) Plans

General Insurance

1. Fire Policies

1. Marine Policy

1. Motor VehiclePolicy

4. Health Insurance

5. Rural InsurancePolicy

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1. Term Assurance Policy

Provides death cover only during policy period

Premium is low

No refund of premium

Sum assured paid on death

2. Whole Life Policy

Death Cover only Period is not specified

Premium is low and paid during life time

No refund of Premium

Sum assured paid on death

Life Insurance Policies:Life Insurance Policies:


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3. Endowment Assurance Plan

Covers death and survival benefits

Sum assured paid on death or on maturity of

policy

Period of policy at the option of proposer

Most Common Plan

4. Money Back Policy

Available for different periods

Covers death and survival benefits

Lump sum paid periodically

Full sum assured paid on death

Cont


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1. Fire PolicyFor Building or Flat, Furniture, Fixtures and Other

Contents

Policy which cover loss on account of fire

The competition is maximum in this segment

2. Marine Policy

Marine Cargo Policy:

Policy insures physical loss or damage to the

goods in transits by road, rail, air, water caused due

to accident, fire etc.

Marine Hull Policy:

Policy insures marine ships, steamers etc.

General Insurance Policies:General Insurance Policies:


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3. Motor Vehicle Policy

Liability only motor policy:

Mandatory motor vehicle policy

Package motor policy:

Motor policy insures loss and damage of the motor vehicle due

to theft and accident along with third Party risk.

4. Health Insurance Medi claim policy

Overseas medi claim policy

Videh yatra mitra policy

Corporate frequent travelers policy

Employment and study policy

Group medi claim policy

Cancer policy

Cont


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5. Rural Insurance Policy Cattle policy

Poultry policy

Agricultural pump set policy

Crop insurance

Cont


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ThankYo

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Bibliography

www.wns.com/Insights/Blogs/tabid/44163/en

http://www.docstoc.com/docs/3740019/Intro
http://www.wns.com/Insights/Blogs/tabid/44163/entryid/97/default.aspx%20dated%20on%20March%202http://www.docstoc.com/docs/3740019/Introduction-to-Insurance-Sectorhttp://www.docstoc.com/docs/3740019/Introduction-to-Insurance-Sectorhttp://www.wns.com/Insights/Blogs/tabid/44163/entryid/97/default.aspx%20dated%20on%20March%202

Major Challenges and Policies in Insurance Sector

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