Major differences in product offerings of private players

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Reference no: EM132227389

Jamaica do not show major differences in the product offerings of the private players and the LICC. Even the products have been christened similarly. So, if SSL has money back policies (it’s best-selling products), MLI calls its variant as SSL CashBack and MLI Standard Life actually calls it Money Back. Says John Cross, Head of Marketing, for Sagicon Solid Life (SSL): “That’s deliberate because when the company and the product is new, a customer may not be able to appreciate too innovative a product. We will soon introduce more innovative products.”

The innovations come in terms of the flexibility private players’ offer; the way products can be customized to suit individual requirements. For instance, (MLI) offers a set of basic products to which a consumer can add health and term (maturity period) riders and design his policy depending on his or her needs. Says Laura Young, Marketing Head at (MLI): ‘‘the basic philosophy of our product design is to give the consumer freedom to choose and pay only for what he needs.”

So, (MLI) has five basic products, which come with four add-on riders like Level Term Cover (double the cover), Critical Illness Benefit, Accident and Disability Benefit, and Major Surgical Assistance Benefit. The idea: A customer who buys a basic product (say, a pizza), and depending on his age and need, he can take the add-on riders (toppings) by paying a nominal premium. HDFC Standard Life provides similar flexibility.

For instance, a customer may not take a critical illness benefit if he’s young and not married. But as he gets married, he may like to double his cover by taking a level term cover. As he grows old, he may take the critical illness benefit and the major surgical assistance benefit. Similarly, someone having a credit card may not need an accident benefit. A common plank that cuts across spectrum is need-based selling. What's more, the products launched by the private players are competitively priced.

(LICC), though taking note of competition, doesn’t seem to be too impressed with the product offerings. Says Samantha Brown, Executive Director (Marketing), LICC: “The add-on riders provide a lot of flexibility to a product. Right now, we may not have products that match on a product-to-product basis with those being offered by private players. But we have 61 schemes which can be combined to offer customized solutions.”

LICC believes that a customer’s prime concern in an insurance product is the kind of cover he’s getting and how much he is likely to earn upon maturity. “In some cases, while the premium installment could be less than ours, upon maturity we offer a better maturity value,” says Brown. “They promise guaranteed additions at the end of 20 years; we offer the same. They promise guaranteed loyalty additions; we don’t but we have a track record of providing loyalty additions,” adds Brownn.

Any new player entering the insurance business would try to differentiate its product offering, but it’s in the service delivery system, which could become the key differentiator between both pre-sell and post-sell service. For instance, the agents (private players euphemistically call them consultants or insurance advisors) are being specially trained – after they get the 100-hour

mandatory training from well-known training institutes – like the Insurance College of the West Indies for example – to customize solutions after assessing individual needs.

Companies are also investing heavily in back-end infrastructure, especially IT systems. SSL, for instance, will connect all its branches that will allow for real-time access, enable its consultants with MIS support and premium calculator in a specially- designed ‘Consultants Corner’, and set-up call centers. (MLI) is also putting in place a host of systems to provide superior customer service. King & MoonWright, which will enter the non-life insurance business, has set-up an IT subsidiary, King & MoonWright IT Solutions (Jamaica), which will provide back-end services for its operations throughout the Caribbeam and worldwide.

Question

1. Making use of Porter’s five force model, analyze the insurance industry.

Reference no: EM132227389

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