Question

Outline the broader, key STRATEGIC challenges facing a business operating in an insurance industry ?? (20) Assume the company offers life, business, short and long term insurance.

Answer 1

STRATEGIC CHALLENGES OF INSURANCE INDUSTRIES

Insurance companies are those companies where one party, insurer, will guarantee payment for an uncertain future event and the other party, the insured, pay a sum called premium to the insurer in exchange for protection on that uncertain event. There are many players in insurance industry. And they offer protection for different types of risks. There are life insurance which provides protection for one's work in which the amount is paid either at the end of the period or else when the insured is deceased and the amount is paid to his/her family. Another type of risk is business risk and there are insurance policies to cover up those kinds of risk. There are insurance for both long and short term purposes. Short term insurance are those which are taken to cover unforeseen events in short future like crime, flood, fire, theft etc. And long term insurance are those which are taken for a longer period that is for health, retirement or disabilities. But the insurance industry is on a slow phase now the various challenges they have to face are discussed below,

• Slow growth :- The insurance industry is facing a slow phase of growth and there is less sale of their products whether it is life insurance or for business. For this the managment has to change its tactics and build more customer base to keep the good customers and add more new customers.
• Changing customer preference and trust issues :- customers expect more flexible and stress-free transaction and communication between the insured and company. And also many believe that there is no use of taking an insurance as sometimes they fail to pay the claims and it creates problems for the customers.
• Rules and regulations :- It is difficult to change the strategies of the business easily the regulations are more rigid. For operating outside the country the company has to undergo certain obligations and this creates problem inside the company.
• Involvement of politics :- there will be politics in any of the sector but if exceeds certain level the managment of any company gets effected.
• Competition :- The competition is increasing and the insurance companies are growing in slow phase so there is a high chance it will get out of the race if they doesn't change the tactics or managment pattern. New insurance companies are less trusted and people are reluctant to take risk.
• Lack of management :- if the company doesn't follow the norms of business or fail to pay any claims of the people it is a sign of bad managment. Nowadays there is seen that policies are not being formulated and implemented effectively and this makes the industry outdated.

There are many challenges a business should face and if they are not able to overcome those limitations and challenges they are thrown out of the race. To overcome the challenges the company should try to expand the customer base and providing attractive policies and improving their experience so that they would suggest the company to other people. Usage of technology to broaden the market in online sectors and improving the customer data base is also a way to overcome the challenges. Customers grievance are to be given utmost importance and try to solve them as soon as possible.