Group Schedule Now - Begin working on the research paper April 11th - Finish the paper Week of

Threat of substitute is low within the insurance market as a whole. Whilst there are little to no switching costs for a customer of insurance products there is no other immediate market that a customer can purchase a product from to satisfy their need for risk protection, and therefore no substitute product is available in the industry, however there is a high threat of substitutes in parts of the individual value chain as companies try to disrupt the market. Aggregators are a threat of substitute for distribution channels, with companies such as “iSelect” starting in Australia.

Competition is forcing consolidation of health insurers. Two years ago, there were fifteen major for-profit insurance plans that controlled the national market. They have consolidated into nine players, and further changes are predicted. (Singh & Sawhney, 2006)

been increasing interest in Congress and significant sectors of the insurance industry to establish some form of federal insurance regulation” (Grace, & Klein, 2009). There are many different arguments for those opposed and those in favor of federal regulation.

Eldercare Market- This market is growing considerably annual as the baby boomer generation is starting to retire. By 2030, the US Census Bureau predicts, almost a fifth of the population will be over the age of 65.

The Insurance industry is very heavily state regulated. According to the Government Accountability Office (GAO) study, the state run regulatory system is Federal verses State Regulation protecting the markets, insurance industry and policy holders and was evidenced during the financial crisis of 2008-09. The insurance business is highly profitable. “Well-run companies can make a lot of money, which breeds competition” from both “inside and outside competitors” (Property, 2013). Insurance companies were well “insulated” from the “severe” financial crisis of 2007-2008 that affected the banks and security firms, because the State regulations have the Insurance Industry “walled off” from Federal Regulations (Property, 2013). During the “Great Depression of the 1930s” “Insurance policy holders were protected by the states’ prudent supervision and regulation” (Property, 2013).

Many companies provide multiple services with products that are differentiated through location. Companies like GEICO use the gecko for easy association with its brand name. The insurance arena has easy market entry and exit and some price control. To maximize profit, insurance firms must juggle three components of monopolistic competition; price, product, and advertising. In specific reference to automobile liability insurance pricing systems, the risk factors that derive price include insurer risk, regulation, geographical region, and investment returns. The rates are comprised of fixed and variable costs. Fixed costs are relatively low because of minimal operational expenses whereas variable costs are high because of the relatively unlimited risks. The insurance firm is pricing for the long run equilibrium output so that price exceeds the minimum average costs for a normal return.

The auto insurance industry provides products (insurance policies) which are more or less homogeneous creating the need for differentiation which can be achieved by advertising your company in a unique manner or identifying various target segments in the market and concentrating your business on them. For the same reason, this industry has one of the highest advertising to sales ratio. 2.1 ANALYSIS OF PORTER’S 5 FORCES 1. Supplier’s Bargaining

One of the most important economic issues in the insurance industry is the push for increased federal regulation of insurance. According to the Washington Surveying & Rating Bureau, Congress in 1945 stated that the regulation of the business of insurance would be best left to individual states. Since the release of this statement, a common argument that state regulation is inefficient, costly, and burdensome has been made. It is also argued that the 50 or so individual laws and jurisdictions embody many rules and standards that are very difficult and timely as regulatory systems. These systems have been described as very costly, and that they also deny customers the creativity of the free market to quickly develop and market innovative insurance products.

Insurance allows people, organizations and different elements to ensure themselves against significant potential misfortunes and money related hardship at a sensibly reasonable rate.

The insurance industry is a highly competitive market. The market is shared by individual’s agents and companies both competing for the same customers. In this industry one critical success factor for Allstate Corporation is changing the way it conducts business. The more technical savvy the customers are and the more popular the use of the internet is becoming. This is allowing customers the ability to obtain instant quotes online. The internet is a powerful marketing tool that gives the insurance industry the opportunity to grow and increase revenue by reaching the market completely.

The tool that insurance companies use to balance this complex financial equation is their premium. For example, with larger providers, a five million dollar deficit could be remedied by raising every policy holder's auto insurance by a few dollars. Conversely, in a year of good fortune for the company, they could lower their premiums and still show the required profit. Over time, these adjustments can create significant differences between competing insurance companies.

Most of us have to think in terms of acquiring the insurance policies, thanks to the uncertainties of life. Not any thing on the planet is predictable of how longs the things will keep moving smoothly and this is the concern that compels people to go for the various insurance policies. However before obtaining a policy a proper amount of tips and ideas to be had is advisable to avoid any inconveniences in the future. Two main kinds of the insurance policies are obtainable viz. Term living indemnity and whole living indemnity

There are a wide range of surrounding risks in activities for individual and companies, such as government finance regulations, ISO certification, IT security, compliance, increasing in natural disasters and infectious diseases, and so on. A failure of the risk management could cause a huge financial loss, a bankrupt or a degradation in the reliability. Therefore, the world has invented various risk management mechanisms. There are three main existing risk management schemes to guarantee to meet specified costs for individual, companies or organizations (Freeman and Kunreuther, 1997). One of the schemes is government benefit program. Damaged citizens or companies are benefited by the local council or government financially. While it provides

In 2012, that market grossed U.S. $ 252.4 billion in direct premiums of insurance, health insurance, pension contributions and savings bonds. Such awards and contributions served to increase provisions amounting to R$ 420 billion, which represented 5.69 % of GDP. Provisions have also secured the payment of compensation of claims, welfare benefits and redemption of pension plans and capitalization of R $ 135.2 billion in 2012 (3.05% of GDP). The importance of the sector exceeds, by far, the numeric expression. Indeed, everyday life, as we know since the Industrial Revolution, would be impossible without insurance. The companies could not take risks as they do at present, so your investment would be severely restricted and, with them, the future expansion of the economies. Entire markets would collapse: just imagine what would happen with the sale of cars, with the credit market and the trade if there was not the support of insurance. The insurance industry, increasingly supplements the State in providing critical services in health and social security, and in doing so, allows the state to focus attention and resources on meeting the needs of the poorest sectors of the population.

The article presents the difficulties insurance companies face when they are issuing catastrophe bonds. Do they efficiently hedge against large-scale disasters?