| Topic : Challenges Faced in Insurance Markets |
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Secure the future - Insurance |
Microfinance and Micro insurance Specialists |
Bajaj Allianz |
8 more ...
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Activity:
84 views;
last activity : 07 06 2010 20:18:09 +0000
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Reduces Future Profitability
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insurance should be done in good time when we dont need it
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Insurance is good in bad times as well as good times
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Affecting Liabilty and Asset
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I feel life companies that have a large proportion of assets in equities or strayed too far down the credit curve could be facing difficulty. The recent plunge in equity values will greatly reduce the future profitability of separate account variable and unit-linked products. Insurers that have taken a somewhat more aggressive investment posture may experience a sizable reduction in their statutory capital levels that could result in some rating downgrades.
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yes definitely the present economic crisis will reduce future profitability , but not only for firms or industry-vide, but from the consumers point of view. as we know that most of the population in india which is insured contains irrational persons.. they will never look for such products again..
they actually dont know what is happening. even at the time when this segment of people take these insurance products they blindly believe the agent or Financial advisor without having the insight about the profitability.
the future profitability will be lost for all the insurance expertise, not in short term but taking long term as measure,the sales with slow down and thus reducing the profitability.
also the customer retention would be a serious problem now. people will hesitate to take any of these equity plans...
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Insurance should be done at a time when we dont require it. |
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i believe insurance should be done at a time when require it least.because at that time when we dont require it.is a best time to take by which we can make sure that in any future troubles.we would not be sufferred with any trouble in life.so atleast we can make sure our dependents would be safe,anyway
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Insurance is one of the Industries which is presented with increased opportunities in Sales in a Downturn as well as an Upturn and this is the 2 way effect in the Economy. It is easier to convince people to Insure in bad times than in good times ; people have more money in good times but the investment depth is limited by competing opportunities whereas in a Downturn the competing opportunities have a very high risk profile or have completely vanished and so the limited funds are better invested in Insurance as a defensive investment. Economic crisis lead to evening out of all illogical spends and status conscious budgets and lead to a more business directed decision making; which ensures increased competitiveness and better profits in an Upturn. |
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I could say crisis is affecting both the liability and the asset sides of company balance sheets, but the degree of impact varies significantly by industry sector and individual company. Companies that entered directly into credit guarantees of one form or another will be hardest hit by the subprime crisis. Companies may also face write-downs and losses on their investments in failed financial institutions. However, since insurers generally do a good job of diversifying their investments, these losses are not likely to threaten any individual company’s solvency.
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I agree with this. The degree of effect of crisis varies with the exposure taken in financial products. If I talk about India, we have the strong regulator - IRDA (Insurance Regulatory and Development Authority) which has a proper framework which recommends Insurance Companies on how to invest and what are rules and regulations for Investments.
In current situation, it is necessary to maintain healthy asset to liability ratio. Its better to have slim and trim organization which has higher productivity rather than focusing on expansion which increases your liability.
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