South Africa's Micro-Insurance Industry Essay

Wants to take advantage of the opportunity in Data and Voice services and steer it to a successful IPO

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.

Dealing with risks such as health problems, loss of crops, loss of livestock, the death of a family member, loss of assets, income and employment is much harder by poor and low-income groups than others. Many poor households engage in activities which are smaller and bringing greater degree of risk and uncertainty and therefore likely scale financial risks and income. Every serious illness, every accident and every natural disaster threatens the existence of the poor and usually leads to more poverty. Thus the vicious cycle of poverty carries on.

Invention is the result of a long study, research, and experimentation (Innovation, n.d.); Innovation is “the discovery and the execution of pioneering ideas that create value” (Greco, 2011), in other words, new application of known concepts. A practical example of invention is the alkaline battery that provided a light-weight, small, and portable power source; innovation applied this concept to anything possible from communication devises, mecanich and construction tools, and even toys. Technical workstream leaders understand that innovators are today’s competitors reducing times, and maximazing profits with new techniques; but inventors have the potential to reshape the landscape of today’s markets leaving dominant companies out of bussiness. Who remembers door-to-door salesmen or “dear John”

“In Ciporin’s view, consumer-facing FinTech startups have arisen naturally out of the limitations in banking operations.

Joseph Schwartz got his start as an independent insurance broker nearly 30 years ago. His firm,

As a hot deal in a hot market, competition among venture capital (VC) firms had driven the pre-money valuation from $17 million to $27 million, with a post-money close at $35 million. Although the Series C round had been slated for November/December 2000, Papa had noted the increasingly difficult financing environment and managed to make his funds last for 18 months, rather than the anticipated 12. The company had hit every milestone on its original plan. Its product had been installed at several marquee customers, including Tower Records and one of the world’s largest asset management companies, and it was about to be in trials at Putnam and a major investment bank—Dean Stanley Goldman Credit Partners (DSGCP). A veritable who’s who of potential customers was seriously considering the technology. Papa expected that $7 million would take his company to break-even,

Joe Lewis and fellow lawyer Jack Green founded Progressive, after they worked on an unethical insurance fraud case. From the beginning, they offered innovative ideas, as they sought to serve their customers, especially high-risk individuals who could not obtain deals elsewhere. Progressive’s main focus was to become a leader in the automotive insurance industry, and in 2006 they were the third largest company in the automobile insurance industry. However, as premiums declined in 2005 and 2006, and the market grew stagnant, Progressive had to figure out how to retain and gain market share. Progressive’s stated mission was to reduce the human trauma and economic costs of automobile accidents.

Essentially, investors sign up to back a special syndicate lead without knowing about the startup projects they are interesting in.

The team is engaged and motivated. The right people, strategy and tools are in place. They remain focused on driving value to advisors and intermediary clients and earning a greater share of flows in equity, fixed income, and multi-asset products. The retail business is complemented by a strong and growing traditional third-party institutional business. Ameriprise is managed globally through sales, consultant relations, and client service” (Ameriprise Financial, 2012).

The author of the case study indicates that “NTUC Income’s life and general insurance operations now ran on one integrated platform, providing efficient straight through processing workflow, high flexibility and customer centric view.” (1)

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.

In their first year, they only wrote Life and 56 accident policies. Now, of course, that is not enough to make the company stay strong. Instead of giving up and going out of business like half of the other 70 life insurance companies running out of New York, they looked for ways to better themselves and become number one. The president for MetLife, Joseph F. Knapp set his eyes out to find the leading insurance company and find out what the secret was. He found what he was looking for in England where insurance policies for working men were proving to be very successful, something America had not yet looked into. So MetLife made the decision to bring over the British agents to train in American agencies and business started to boom. They were signing up 700 new customers on the daily. MetLife was defiantly becoming a household name. Agents were instructed to call homes and the same time each week to talk with clients to create trust and

IT plays a role in servicing a large number of clients and reduce processing cost. At the same time IT can help in churning out statistics and information necessary to analyse the performance of current and potential business. As such, Sun Life need to look into the aspect of insurance systems and IT infrastructure in Malaysia.

According to the report from The Octopus Holdings Company, the executive management was found the potential commercial of selling the private information early. The Octopus chief executive officer mentioned that the company was investigating a plan with AIG and CIGNA, which is the insurance company, and they got the satisfied result. For example, AIG, 35 thousands card holders received the insurance planning which was six months free life insurance. Over 1500 of that card holders were paid for upgrade their insurances. After they upgraded their insurance, the premium charged to 1.6million dollars for one year. The Octopus Holdings Limited could have a quarter profits in 3 years. Another example of CIGNA, the profit was better than AIG. Over 1300 card holders were bought the CIGNA insurance, the premium was 7.5million dollars for one year, The Octopus Holdings Limited could attain 1.5million dollars in one year. Finally, they chose CIGNA for long term partnership of insurance.