The insurance business is focused to protect the values of the financial assets of a person or an organization. Insurance is a type of saving which assist in protecting the people against several risks. The consumer perception regarding the value of the insurance organizations have changed dramatically due to several l factors.
- The millennial population no longer trusts on the insurance organizations after the 2008 financial crisis. The financial crisis resulted in reputation damage and loss of trust of a number of organizations.
- The consumers perceive the insurance companies according to the online services provided to them. The young population is digital-savvy so they look for the financial institutions which provide the best services to the consumers.
- The consumers below the age of 35 are more vocal regarding the service quality provided by these organizations.
- The consumers are also attracted towards the organizations which provide services at better pricing. The competitive pricing is an important factor for the insurance buyers. The companies should focus on providing competitive pricing in social bills, price, and rates for insurance claims.
- The value for money is integral in the advertisement and promotion as the customers are highly vocal regarding the savings and discounts offered to the customers.
- The consumer perception regarding the benefits provided by the organization is associated with the ability of the organizations to protect the basic rights of the consumers. There are four basic rights of the humans, namely, right to safety, right to be fully informed, right to be heard and right to choose (Buhler et al., 2016).
- According to EY Survey, the consumers have very low trust relationship issues. The insurers have a very high consumer turnover rate and a large number of consumers switch their insurance companies.
- Moreover, the traditional approaches of customer loyalty and dependability are not applicable to the insurance companies. It is possible that the consumers are loyal; however, they want to explore new options or new policies. Therefore, the companies need in-depth customer intelligence across different customer segments.
- In the insurance industry, the interactions between customer and insurer are very limited. Therefore, each instance of interaction can shift the perception of the customers toward the organization.
- In the insurance industry, the consumer perception depends upon the interaction of the insurance agents and agents in their limited meetings.
- It can be deduced that in the insurance industry, the consumers desire for meaningful, frequent and personalized interaction with the organization.
- Although digital and remote options are fast reaching; however, the consumers still gravitate toward traditional contact and interaction methods (EY, 2014).
According to basic principles of insurance, for a risk to be insurable it needs to meet the certain criterion. It includes that the loss must be random in nature otherwise, the insurer will engage in adverse selection. Secondly, the insurer must be able to charge a premium which can cover the damage of insured as well as insurer’s expenses (Hillson, 2012). The nature of loss must be financially measurable and definite. When evaluating the mentioned scenarios against insurability, following results rare obtained:
- a) Rusting of unprotected iron structure is uninsurable risk as unprotected iron structure will eventually get damaged. Therefore, the loss is not random.
- b) The genetic defects which can affect 9 of 10 new born babies is not an insurable risk as there is high chance that the next male baby born into the family will be affected by the disease
- c) A person can be insured against cancer when he is completely healthy. The insurance amount will reflect the earnings and the emotional impact of the demise of the person
- d) The eventual obsolescence of a personal computer cannot be insured because it is an inevitable future. It is not a risk but a certainty and the insurance company will be harmed if it engages in such types of insurance.
- e) A person cannot get insured against losing money at insurance. It is due to the fact that a person cannot get insured against speculations (CTI Reviews, 2016).
Today, insurance is an integral part of the society. It offers a variety of advantages and benefits to the people.
- Firstly, it protects the wealth of society. It protects against human wealth loss. The insurances also offer protection to stabilize the business condition and the financial position of the society.
- The insurance also reduce the social evils in the society.
- They maintain standard of living and rescue people who are hit by misfortune.
- Insurance plays a significant role in creating provisions for old age, sickness and disability of person.
- It also assists in distributing accidental loss in equitable manner (The Truth about Insurance, 2017).
Insurance provide benefits to the individuals in the society in several ways which are discussed below.
- The most important benefit of insurance is that it provides immunity to risk. It provides payment to losses which can benefit to the individuals
- The second benefit of the insurance is that it manages cash flow uncertainty. Insurance provide payment for the covered losses whenever they occur. The individuals engaging in business actively engage in risks as the uncertainty of paying from pocket is reduced significantly.
- Another benefit of insurance for individuals is that it allows the people to engage in legal compliance as insurance requires statutory and contractual requirements and provide evidence of the financial resources.
- In business organizations, insurance encourages risk control activities. The insurance organizations provide incentives to create a loss control program within the organization.
- It also assists in the efficient use of the financial resources of the insured person. The insurer makes it unnecessary to put aside a financial amount to cover the losses due to exposure to any risk (Butler, 2012).
Buhler, P et al. (2016). The consumer’s view of consumer protection: an empirical study of the Swiss insurance market. Institute of Insurance Economics, 57.
Butler, R.J. (2012). The Economics of Social Insurance and Employee Benefits. Springer Science & Business Media.
CTI Reviews. (2016). Principles of Risk Management and Insurance. Cram101 Textbook Reviews.
(2014). 2014 Global Consumer Insurance Survey. Retrieved on 15 ay 2017 from
Hillson, D. (2012). Managing Risk in Projects. Gower Publishing, Ltd.
The Truth about Insurance. (2017). What Are the Benefits of Insurance and Why Does It Exist? Retrieved on 15 ay 2017 from