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Tuesday, 25 March 2014
1273619 Rakesh Uppal MBA 4 B Q 20 Comment on Regulatory trends i.e. mandated regulatory changes by the IRDA to promote a competitive environment in both the life and non-life insurance sectors
Comment on Regulatory trends i.e. mandated regulatory changes by the IRDA to promote a competitive environment in both the life and non-life insurance sectors
Introduction
The Indian insurance industry seems to be in a state of flux. After a decade of strong growth, the Indian insurance industry is currently facing severe headwinds owing to:
- Slowing growth
- Rising costs
- Deteriorating distribution structure
- Stalled reforms
-
Life insurance industry in India
According
to Swiss Re, India’s life insurance market was ranked at number 9 among
156 countries in terms of premium in FY11; India’s total premium
adjusted) while the total global premium grew by 3.2%. The sector has
grown at more than 24% CAGR over the last 10 years. The number of
policies issued, declined at a rate of 22.61% to 48.2 million in FY11
from 53.2 million in FY10.
Non-life insurance industry in India
According
to Swiss Re, India’s non-life insurance market was ranked number 19
among 156 countries in terms of premium in FY11; India’s total premium
in adjusted) while the global total premium grew by 2.1%. The sector has
grown at a CAGR of 16% over the last 10 years.
The number of policies issued increased at a rate of 16.52% to 79.3 million in
FY11 from 67.5 million in FY10. million in FY11 from 67.5 million in FY10.
Discussion
Despite strong improvement in penetration and density in the last 10 years, India largely remains an under-penetrated market. The market today is primarily dependent on push, tax incentives and mandatory buying for sales. There is very little customer pull, which will come from growing financial awareness and increasing savings and disposable income.In the long run the insurance industry is still poised for a strong growth as the domestic economy is expected to grow steadily. This will lead to rise in per capita and disposable income, while savings are expected to be stable.
The
IRDA has mandated regulatory changes in order to promote a competitive
environment in both the life and non-life insurance sectors.
The
IRDA has recently dismantled the third-party liability pool in motor
insurance and replaced it with the declined risk pool. While it is
likely to have widespread implications on the size and loss ratio of the
pool, the move is expected to drive the industry toward risk-based
pricing.
Recent
regulations pertaining to cap on ULIP charges and increase in the lock
There is enough potential for positive growth of the Indian insurance
industry given the focused efforts of the regulator, government and
players in the backdrop of rising demand for insurance. The industry
does,
however, face numerous challenges primarily on product designing,
distribution and regulatory front. The following sections throw light on
typical challenges faced by the life and non-life industry. in period,
translated to reduction in overall distributor payouts, which in turn
reduced the overall contribution of ULIPs to new business premium. With a
cap on surrender charges, insurers showing
to be able to sustain the market.
There
is enough potential for positive growth of the Indian insurance
industry given the focused, synergistic efforts of the regulator,
government and industry players in the backdrop of rising demand for
insurance. The industry does, however, face numerous challenges
primarily on the product designing, distribution and regulatory front.
The following sections throw light on typical challenges faced by the
life and non-life industry.
Conclusion
Insurance growth drivers in India
The demand for insurance products is likely to increase due to the exponential growth of household savings, purchasing power, the middle class and the country’s working population. Listed below, are the various underlying growth drivers for India’s insurance industry:- Growing of the financial industry as a whole
- Growth of life and non-life industry
- Promoting innovation and removing inefficiency
- Competition and orderly growth
- Growth of specific insurance segments such as motor insurance
There
is enough potential for positive growth of the Indian insurance
industry given the focused, synergistic efforts of the regulator,
government and industry players in the backdrop of rising demand for
insurance. The industry does, however, face numerous challenges
primarily on the product designing, distribution and regulatory front.
The following sections throw light on typical challenges faced by the
life and non-life industry.
So
there is much work done by the IRDA for improving the and promoting
competition in both the sectors life and non- life which will benefit
all the stakeholders and the country as well.
1273671_Yachika Singh, F2, Q47 – Comment on making sales and marketing more responsible and answerable in Insurance industry.
INTRODUCTION:
Insurance is the equitable transfer of the risk of a loss,
from one entity to another in exchange for payment. It is a form of risk
management primarily used to hedge
against the risk of a contingent, uncertain loss. The
demand for insurance products is likely to increase due to the exponential
growth of household savings, purchasing power, the middle class and the
country’s working population. Listed below, are the various underlying growth
drivers for India’s insurance industry:
- Growing of the financial industry as a whole
- Growth of life and non-life industry
- Promoting innovation and removing inefficiency
- Competition and orderly growth
- Growth of specific insurance segments such as motor insurance
DISCUSSION:
An insurer, or insurance carrier, is a company selling the
insurance; the insured, or policyholder, is the person or entity buying the
insurance policy. These are the factors, which we should consider:
1 – Know Your Client
Be alert to details that matter to the client and recognize what makes every encounter with each client unique. Our brand promise, “Because You’re Different,” hinges on employees knowing their distinctive clients and sustaining a positive relationship. Tell your client things you are doing for them that they might not know about and make a point to ask those questions about their business.
2 – Share ProblemsBe alert to details that matter to the client and recognize what makes every encounter with each client unique. Our brand promise, “Because You’re Different,” hinges on employees knowing their distinctive clients and sustaining a positive relationship. Tell your client things you are doing for them that they might not know about and make a point to ask those questions about their business.
Make the customer’s problem your problem.
3 – Mobile Friendly
Make your insurance website mobile-friendly so your customers on the go can easily access your information if they need it.
4 – Customer’s Shoes
put yourself in the customer’s shoes. Think: “If I were them, what questions would I ask?”
CONCLUSION:
In the nutshell, we can say Sales and Marketing plays a major
role in Insurance because without sales we can get earn profit and profit
maximization is the backbone of a company.
sameer thakur 1273633 F2 Q 27
In developed economies that have strong insurance industries, the life arm usually drives the sector by contributing the highest unlike what obtains in Nigeria‘s where it contributes just about 16 per cent of the industry‘s total premium.
Nigeria has continued to record the lowest penetration level in Africa‘s insurance market, in spite of its huge population that is capable of driving the biggest insurance market on the continent.
For instance, South Africa, the largest insurance market in Africa, has a population of 40 million people and contributes 78.13 per cent of the continent‘s premium.
It rakes in 16 per cent of the country‘s Gross Domestic Product, while Nigeria‘s insurance industry contributes less than one per cent of the country‘s GDP and rakes in 2.3 per cent of the continent‘s total premium.
Interestingly, the life arm of South Africa‘s insurance market alone generates about 70 per cent of the industry’s total income.
With the potential available in Nigeria‘s population, experts say that if the country is well positioned, it can attain a leadership position on the continent.They stress that if infrastructural problems are solved, and purchasing power of the masses is raised, there will be positive effects on life insurance business.
Life insurance has the potential to stimulate individual patronage through innovative products, while also carrying less risks compared to the general business.
The National Health Insurance Act, 1999, which transferred a traditional part of life insurance business to the Health Maintenance Organisations, and the Pension Reform Act, 2004, which transferred pension business from insurance firms to Pension Fund Administrators and Pension Fund Custodians, are examples of some of the legislation.
The pension business was handle for many years by insurers until a group sold the idea of a contributory pension scheme to the government, which eventually bought it.The failure of the former scheme in which pensioners could not get their pensions, queuing for days to get their benefits, led to the collapse of the old scheme.
The repeal of the old Pension Act of 1979 and consequential amendment of the Nigeria Social Insurance Trust Fund Act of 1993, brought in the new Pension Reform Act, 2004.Today, the pension fund has grown tremendously and is in excess of N1.6tn, about 10 times the premium of N164.5bn recorded in the insurance sector in 2008.In the present dispensation, the sector stands the chance to get boosts from some of the statutory policies set for enforcement.
They are the employer‘s liability insurance under the Workmen Compensation Act, group life assurance and annuity opened for voluntary patronage by pensioners.The Workmen‘s Compensation Decree of 1987 provided cover for permanent or partial disability, accident, sickness and death of workers arising in the course of job.Section 40 of the Act compelled majorly factory owners to have this policy for all their employees, regarded as workmen.Section 9(3) of the 2004 Pension Reform Act states that, ”employers shall maintain life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee,” under the group life scheme.Though, this Act has been experiencing some bottlenecks since its official inauguration in November 2008, it is already making impact in the life arm.
When it was officially kick started, the Federal Government paid the largest single premium of N4bn and this year, paid N7bn into the scheme.Section 4 of the Pension Act provides that on attaining the age of 50 or at retirement stage, which is stipulated by the employees‘ organisations, a pensioner‘s RSA savings shall not be withdrawn but shall be utilised either as programme withdrawal or as annuity.The Act delegates the duty of providing the annuity service to the life insurers, but their share of the fund depends on their ability to win the confidence of retirees.The Managing Director, Royal Exchange Prudential Life, Mr. Larry Ademeso, says that life insurance business is still developing in the country.According to him, what the operators had done in the past is to sell the same traditional products until recently when new products started becoming visible.
Ademeso says, ”In a very dynamic environment, the need of the customers and Nigerians constantly change, so you will agree with me that we need to constantly develop new products that will meet the needs and aspirations of Nigerians.”He notes that though life business is still low in the country, it is not worth comparing the Nigerian economy with others due to certain factors.Some of the foreign economies with developed insurance sector, he says, include pension accounts as part of their industries’ gross figure, which is not the same in Nigeria.He points out, ”Pension contribution in Nigeria as at the last report was about N1.6tn, so imagine that if this is part of the figure we record in insurance, we will not be talking about the kind of low figure that we constantly talk about.”
Ademeso observes that insurance is not accorded high priority by Nigerians due to the low economic power of the average man.He says that a man, who is struggling to feed his family and have a roof over his head, will not want to talk about tomorrow because insurance is all about tomorrow.Until there is an environment where a man can take care of his needs reasonably and comfortably, he explains that he can start to think about future security.”So, the low penetration of insurance, especially life assurance, is also a function of all these dynamics; but as practitioners, we have a lot to do in terms of product development that can satisfy this critical segment of the society so that even in the midst of the little that they have, they will remember to keep some for tomorrow, that‘s the role that we need to play and I think we have started to play that role,” Ademeso says.The Director-General, Chartered Insurance Institute of Nigeria, Mr. Adegboye Adepegba, notes that the country has not fully maximised the potential in its huge population like other developing economies with large populations.
He harps on the need to develop the life market as this will be an advantage to the country on the continent.
According to him, ”If the industry could develop the life market and maximise the potential in the Nigerian population, the face of insurance business in the country will change.”
Adepegba observes that information technology is still at its rudimentary stage in the country‘s insurance sector while it has been fully developed in other developed sectors with huge population like India, thus allowing premium to be paid on line in any part of the country.
The CIIN boss says that there are presently about 15,000 agents driving insurance penetration in Nigeria, compared to about 20 million in India.He stresses the need for operators to drive insurance to the grass roots as this will help to grow the sector.The CIIN boss says that Nigeria has 49 insurance companies, while India has 46 with 23 life and non-life firms each.He notes that life insurance in India is thriving with the backing of government policies and the existence of over 650 million policies.
sourabh aggarwal ,1273652,f2,ques.39
The case discusses the
various types of insurance products available in the Indian insurance market.
It examines the need for insurers to develop innovative products. The
significance of having a wide range of products has also been discussed.
Further, the case suggests ways of making insurance products flexible using riders, so that they suit the tastes and preferences of different sets of customers.
Further, the case suggests ways of making insurance products flexible using riders, so that they suit the tastes and preferences of different sets of customers.
It used to be that managing the life cycle of an insurance product
meant getting the policy issued, storing it in a dark closet and processing
periodic premium checks until the term expired.Information technology (IT) has
made the world a much more interactive and volatile place, though, and insurers
are continuing to learn that managing a product for optimum profitability
entails a continuous and quick analysis of large amounts of data, as well as the
ability to respond in near real time to the messages that data is sending.Traditionally,
insurance companies, whether they focus on life, health, or property and casualty,
haven’t demonstrated a significant degree of creativity or originality in their
product offerings, and have been relatively slow to respond to new market
opportunities. To be sure, the industry as a whole has made some good progress
in terms of managing existing products via tiering and segmentation, but at the
moment it appears to be stuck in a late 20th century mindset that sorely
underestimates the full value of both customers and market information.Customized,
niche products in life, health and property are the next phase in insurance.
Capitalizing on that trend will require dynamic product life cycle models
designed to quickly take advantage of fluctuating market and customer demands,
as well as information systems and data to help identify, predict and manage to
those demands.hildren in a selected income bracket with parents of a certain
age. Data from across the value chain – quickly located, collated and submitted
for analytics – will be required to determine the viability of the market, the
right price point and the timeframe for the offer. A central data repository
for insurance products is a crucial component in a service-based insurance
processing environment because it enables standardized product definitions and
rules – as well as the availability of those rules for use with other core
insurance system components. Internal operations ranging from risk and claims
analysis to underwriting, product pricing, marketing, segmentation management
and customer retention all can help squeeze significant value and business
insight from the same centralized pool of information.2Having that information in
a single repository – and available for analysis and distribution across the
enterprise – permits an insurer to feed a multitude of processes in an
integrated fashion. It also allows existing products to be shared and customized
throughout the enterprise. A key strength of product life cycle management, in fact,
is the capacity to enhance and adjust offerings that are already on hand, and then
quickly reintroduce them to the market in new forms to serve different needs.Product
life cycle management systems also must be multidimensional if carriers expect
to be able to develop and deliver innovative products and coverages quickly. An
integrated IT framework based on a central data repository and analytic engines
must be set up to translate into useful
Monday, 24 March 2014
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