"Assignment 21.Which are the customer segments that show the highest renewals for:a) loan productsb) insurance productsc) bothRenewals in the customer segments are highest for loan products. Renewals are calculated as follows:? For a loan product: Given the data set I have used the product maturity dates and productclose dates to analyse loan product renewal. The maturity date is the date on which theprincipal amount of the loan becomes due and is repaid to the investor and interestpayment stops. The product close date is the date after which the borrower will not beable to withdraw from the loan account. Loan renewal means extending the term of theloan when it matures. Based on the above definition I have compared the maturity dateand closing date of the product. Those products that have a closing date later than thematurity period are classified as renewed loans.In the first branch there are 617 renewed loans.In the second branch there are 367 renewed loans.In the third branch there are 572 renewed loans.? For an insurance product: An insurance policy renewal is the subsequent premiums thatare paid by the insured to the insurer to keep the policy operational and avail the benefitsof the policy accordingly. The different types of loan products are: livestock insurance,personal accidental loan, term life insurance and shop insurance. Insurance policies tolower income households are typically for a year. I have compared the policy open and closing dates. If the difference of the closing and opening date is more than a year thenthe policy is renewed. Live stock insurance is on an average available for a period of 2years and its assumed that the maximum period for such insurance is 3 years.Hence, we can conclude that renewals are highest for loan products. 2.Which are the customer segments that show the highest dropouts for:a) loan productsb) insurance productsc) bothDropout rates are relatively higher in insurance segment. Overall there are geographical factorsthat affect branches and dropout rates. Dropouts can be defined as the clients that leave aprogram in a given period of time. Dropout rate can be calculated as the number of clients whocompleted a loan/insurance and did not take out a subsequent loan/insurance after the productclosing date for at least six months divided by total customers for the product. Branch Branch Branch 31 2Insurance 35.40% 87.68% 47.83%Loan 22.76% 82.13% 30.77%3.Which are the customer segments that exhibit the highest risk?? For loan products the risk arises from payment defaults by borrowers. An uncertainty inthe cash flow leads to default of payments by borrowers. Given the data set loan purpose,income, assets and household surplus. Loans given for repayment of loans puts customers in a debt cycle and leads to risk. Approximately 50% of the population in branch 1 and 2avail loans for repayment. More than 50% of the population depends on seasonal income.In the case of income shocks there are chances of default. Majority of the houses have asurplus of income but the amount varies across households.? For insurance products the factors discussed in loan products like income, assets andhousehold surplus also affects insurance and other factors like access to public healthcare, sanitation, number of livestock, vehicle also leads to risk. The insurer is prone torisk because in very few households have access to health, private sanitation facilities. For the data we can conclude that insurance product is exposed to more risks than othersectors because more than 65% of their households avail insurance and is exposed to morerisk. Lack of access to health facilities, private sanitation facilities are the reasons for suchrisk.4.Can you draw any other insights that can inform business decisions for each branch?Branch 2 is exposed to more risk in insurance than other branches. 77% of households availinsurance and the socio-economic indicators are very low. Only 4% of the households availpublic health services and 89% of households do not have access to private sanitation facilities.There are more chances that people fall ill in this area. Personal accidental insurance and termlife insurance are the most bought insurance policies at this branch.5.Based on the questions above, how do each of the three branches compare to each other?? More renewals happen at branch 1 and lesser dropouts happen at this branch. The socio- economic factors are better at branch 1. They face lesser risk. ? Branch 2 is heavily dependent on insurance and faces huge risk because of the socio- economic factors and faces high dropout ratio in both loan and insurance products.? Branch 3 is a well managed branch like branch 1 with diversified products and risk. "