Challenges Facing the Insurance Industry and How to Overcome Them

1859 Words Jun 30th, 2013 8 Pages
NAME: DENNIS BORURA
ADM. NO.: K16S/11826/2010
COURSE: ECONOMICS AND FINANCE
UNIT: BMS 101 (INTRODUCTION TO INSURANCE)

QUESTION: STATE THE CHALLENGES FACING THE INSURANCE INDUSTRY AND HOW TO OVERCOME THEM

The insurance industry (comprised of accident and health insurance, property and casualty insurance, and life insurance) is faced with slow growth and consolidation.
Price competition is accelerating as customers turn to Internet data aggregators to shop for the best deal on many types of insurance. In addition, while the insurance business and the needs of policy holders and distributors are rapidly changing, many insurance companies can’t keep up because they are unable to differentiate their business, reach
…show more content…
Incompetent management could lead to unrealistically low premiums that make insurance affordable yet not payable. Incompetency is also found in the relay of wrong message to the public by various insurance agents whose qualifications are most times in question.

Remedy
The insurer should not be tempted to seek to bolster your margins by taking actions that could cause consumer detriment. Examples might include: unfairly rejecting legitimate claims; reducing claims payments; or applying unfair contract terms. This is the lose/lose/lose option. It’s an unsustainable way to run the business because you risk further damaging consumer confidence in your industry and you will attract unwanted attention from us.

Unpopularity of insurance policy to some people - most people are not used to paying premiums in order to alleviate the risks, therefore consider these rates exorbitant thus they don't seek insurance. This has been bad for business in the industry as most insurance companies are found straining to meet their budget and pay claims. Some have resorted to unethical means of luring customers into this industry. These are mainly through reduced rates that thus lead to unpaid

Related Documents