Insurance as a promising Career

Every industry, by and large, can bloom in the era of globalization through capitalization of
talents at its disposal. It typically endeavors to acquire a segment of the country’s talent with the
tailor-made uplifting and promoting of its images to the young generation and their influencers –
family, friends, and mentors.

Afterward the fresher is acquainted with the particular career during the internship or work-
experience placement so as to provide them with the actual understanding of the profession in
question. And insurance is no exception in this regard. Let’s delve into the title (Insurance as a
Career for the Future Talents) of this article in more elaboration in the ensuing paragraph.

Contemporary State of Insurance Sector

What we see in the contemporary insurance sector of Bangladesh is the ever-prevailing

negativism, the acute shortage of insurance technical manpower, and the unethical as well as
unprofessional practices in the management.

The current industry is considered to be a dull and boring one which ultimately results in the
creation of indifference among the young generation to this noble profession. Due to this fact,
the insurance institutions are getting the less meritorious group of the graduates as its future
leaders.

Global Nature of Insurance Business

Thus, insurance being a business of global natures faces much technical impediment, since its
inception, in operating with its international counterparts. The financial experts go on saying that
a nation’s insurance sector can, in no way, run in a happy-go-lucky approach. So, the issue
deserves immediate dealings in the greater interest of the land.

A professional career in insurance for the future talent of Bangladesh is, nowadays, promising
than ever before with the huge unexplored potentials. It essentially has a lot to offer to the youth
upon whom the success of this very financial sector of the nation fundamentally banks.

In parallel, the soundness of the financial services market of a developing country like ours
undoubtedly rests with the strengthening as well as enabling roles played by the insurance
industry as a whole.

For that reason, the real challenges lie in attracting a segment of the meritorious through the
necessary promotion of insurance as a promising financial profession among the young people at
the schools, colleges, universities. Thus the global nature of reinsurance requires some specific
procedures to be followed in course of doing reinsurance from overseas re-insurers.

Career Versus Profession in Human Life

The Term ‘career’ means the job or series of jobs that a person does during his or her working
life, especially those related to that person’s occupation. The students in Bangladesh enjoy a few
career options to choose from.

In practice, the students habitually don’t have any career plan and enter the job
market/profession without having the required level of qualifications. Thus, they cannot
contribute to the nation’s advancement to that much extent as desired.

The term ‘profession’ literally means any type of work which needs special training or a
particular skill, often one which is respected because it involves a high level of education. The
performance of a particular professional job requires the qualification, experiences, and skills set
by the respective professional body.

Insurance as a profession

Insurance, a prosperous route to financial professional career inevitably requires a certain level
of professional skills which is lacking, so far as observed, in the majority portion of our
insurance professionals partly because there is no insurance education in our curriculum and
mainly because there is no compulsion for qualifying insurance examination from the employer
group. Consequently, the standard of the insurance services in the country remains below the
mark and the insurance profession has not been so far promoted and dignified in the last 40 years
or so.

Looking into the status of insurance professionals in the developed countries, the opposite
picture is seen since there are expertise and professionalism among the insurance practitioners.
Accordingly, the insurance contribution to GDP (Gross Domestic Product) in the UK and in
India is respectively 11.8% and 4.1% whereas the rate in Bangladesh is 0.9% (0.7% in life and
0.2% non-life insurance business).

Under these circumstances, it is evident that the lack of suitable promotion and professional
skills among the insurance-men are the root of the prevailing dull scenario. Provided that the
professional development is focused with due emphasis on the promotion of the insurance
profession, the overall image of the insurance industry would move to a better height and be next
door to banking sector which has remarkably bloomed in the last two decades.

THE REASONS WHY TO PROMOTE INSURANCE PROFESSION

WORLDWIDE

The suitable promotion of the insurance profession worldwide and particularly in Bangladesh
will have a healing effect on the Insurance sector of the country paving the way for a healthy
economy through its creative as well as innovative insurance services. The practical reasons for
promoting the insurance profession worldwide are as follows:

 Technical advantages for the insurance companies:

Insurance being the intangible products requires soft skills in its production, distribution, and
marketing. The skills of the insurance professionals have the direct effect on the product designs,
product promotions, sales and revenue generation for the stakeholders through this financial
activity. The well-trained professionals can avoid unnecessary hassle in the insurance operation
smoothing the paths.

 Exporting insurance professional and creating employment home and abroad

The creation of skilled insurance professional can open the new horizon for the employment
home and abroad. The professionalism will results in the excellent consumers’ services in the
financial sector.

The export of financially skilled professional is much more profitable for a country like
Bangladesh. The skilled expatriates from Bangladesh will be contributing more to our economy
earning higher remittance along with upholding the image of the country to the world.

 Prudent underwriting of the risks:

Underwriting, in its simpler form, is the process of shouldering the financial liability of the
policyholder arising out of an unforeseen event by the insurance company in exchange for the
premiums.

For this reason, the success of an insurance enterprise solely rests with the success of the
underwriting practices mainly because no amount of premium for a risk can compensate the
worse claim scenario.

Moreover; in the recent past, the underwriting profit has become the corrective tool for the
corporate management due to the worldwide deterioration of the insurance claim ratio. Here is
the necessity of professional skills of a prudent underwriter.

With respect to reinsurance, the overseas reinsures usually charge higher reinsurance premium if
they assume poor underwriting practices in the concerned insurance company since professional
underwriting reduces the chances of claims being made to them.

 Better Management of Reinsurance Portfolio:

Reinsurance being the business of insuring the risks of an insurance company is to be handled
with exact adroitness. The required level of knowledge and skills blended with practical
experiences is a must in the handling of a reinsurance portfolio.

All a re-insurance professional does is the placement of re-insurable business through treaty
and/or facultative arrangement, negotiating reinsurance program with professional reinsurers,
managing of financial transactions, and the recovery of claim amount from reinsurers. So the
better execution of the above jobs needs expert professionals.

 Improved standard of risk management for the steady economy

The promotion of insurance as a profession can lead to the development of a standard of risk
management in the country. The improved standard of risk perceptions will result in the
reduction of the insured event happening, and frequency of insurance claims, which in the long
run lead the ways for the advancement of the insurance market.

Additionally, the benefit of risk management is far-reaching in the business world, especially in
the RMG sector where the EU and the USA based buyer groups are pressing hand for improved
risk management in the garment factories. The overall development of the risk management will
bring prosperity to the country.

 Ensuring professionalism in the companies’ corporate management

The news of misappropriation of fund, delay in the settlement of insurance claims, lack of good
governance in the management, pervades the media. The acute shortage of the duly trained
insurance professional is opening the back-doors for fraudsters. There is less possibility of
committing frauds in presence of many knowledgeable and professional people. Nowadays in
Bangladesh, some corporate mal-practice may results in license cancellation by the Insurance
Development Regulatory Authority (IDRA), the insurance regulator in Bangladesh.

 Ensuring professional services for policyholders and stakeholders

One of the dominant factors for not attaining the due success by the insurance companies in
Bangladesh is the out-dated standard of services. Providing professional services to the
customers through skilled personnel can make a differing outcome. There lie the needs of
professional people in insurance in the near future of the sector.

 Opportunity for online freelancing in insurance services

The students with insurance knowledge can also serve online through freelancing websites as
there is the demand for insurance related jobs. In the western countries, insurance companies are
prone to the online outsourcing of various types of traditional operational activities due to the
cost-benefit since there is the little requirement of fixed-paid salaried employees in the
outsourcing programme.
  Improved insurance marketing skills leading to lead generation

Like other intangible products in the financial market, the successful lead generation of the
insurance products largely banks upon the knowledge as well as presentation skill of the
serviceman concerned in the sale negotiation.

If there is any shortage in presenting the insurance products to the prospective buyers, the sales
may be, in some case, unfeasible as the insurance companies are providing the customer with the
document of promise for indemnifying in the risk event. So, the professional skill is a requisite
for the successful sale of insurance products.

The summary:

To sum up, we can arrive at the conclusion that at least a tiny percentage of the world’s talents
can take insurance into account as a way of life. It will in return provide the promising students
with both financial means and dignity. It is high time government concerned adopt necessary
measures to attract talents for this promising financial sector not only to serve but also to lead the
insurance sector of Bangladesh.

Employ your skills

First, know your skills and figure out that how you can employ them to the type of role you have
chosen. Strong communication skills and professional approach are some skills which will
always help you to grow in this sector. However, you can use other skills, like volunteer
experience, camp counseling, etc. in this industry. Anything which is related to customer service
and problem-solving can definitely aid your abilities.

Build your network

There are chances that you had already connections with at least one insurance profession
through your life, home or car insurance. So you don’t need to start from the scratch.
Communicate with the agent and show your interest in the industry. You never know that they
can get you connected to someone from the insurance sector.

From here, you can extend and develop your connections by attending professional and social
events of the industry. It introduces you to people you will need later on.

You can also attend conferences and conventions as a student or may volunteer at an event.
Make sure that they fall within your budget.

Certification

Certification and licenses are dependent on the role you are willing to take. However, the criteria
differ from state to state. Therefore, make sure that you have required certification to work in the
insurance sector according to your state’s requirement. From time to time, you may also need to
renew your license through required CE course.
Target insurance employers

There are different types of insurance companies in the market. Take some time to research them
and find out the best ones as per your preferred role in the industry.

While applying for a job, identify your goals and project your education and experience to be
relevant to the insurance sector. It is important to demonstrate to your potential employer that
how can you justify a role given. You will have to connect your career dots and showcase it in
the best possible manner.

Prepare for the interview

Preparing for a job interview in insurance industry includes lots of research and preparation.
Keep full details about the role, the company, and current trends in the industry, structure of the
company and its areas of specialty.

Insurance is a vast field and full of limitless opportunities. You can seriously consider this
industry to start your career as this sector has been observing an enormous growth in past few
years. Hope this quick guide will encourage you to do the same.

Knowing the basics

Even after being very popular, you may not know very much about the insurance industry.

Main types of insurance:

Life and health insurance – Life insurance protects a family by paying a lump sum benefit
when an insured family member dies. Health insurance provides coverage in case of certain
disease or accident.

Home, vehicle, and business insurance – All these insurance provide the insurance coverage
against loss, damage, theft, and liability associated with owning a car, home or running a
business. It is sometimes also referred to as ‘property and casualty’ or general insurance. This
type of insurance policy aims at managing risks.

Social insurance – It includes government-administered programs, like universal health care,

employment insurance, or workplace safety insurance. Social insurance means to provide
financial support in case someone loses their job, meet an unfortunate accident or injury at the
workplace.

Common roles in insurance

Insurance broker/agent

Insurance agents assist consumers to decide the right coverage plan to ensure their life, home,
cars, business, health and belongings against any loss or accident. Brokers may represent either
one or multiple insurance companies. However, the majority of agents are seen as more likely to
sell policies of a single insurance company. As per their preference, an agent can either work
independently or for a firm. A college, diploma or university degree in a subject is sufficient to
give the entry in this profession. A degree in finance, management, or business is considered as
added advantage. In some states, insurance agents need CE course to renew their license, for
example, New York insurance CE continuing education.

Loss adjuster

A loss adjuster is responsible for making sure that people who have suffered a loss receive the
compensation for what they are eligible for. Whether a loss adjuster is employed by the
insurance company or s/he works independently, their job includes investigating the accident,
arrange the medical treatment and negotiate the final settlement to restore policyholders as
closely as possible.

Underwriter

Underwriters assess the type of insurance required by different organizations, like the
professional sports team, city government, construction company, manufacturer, etc. Their prime
work is to examine every aspect of an organization’s operation and request for insurance. Then
they decide the type of insurance company that can cover and the charges associated with it.

You can work and earn while you study

Think differently about the standard model of third level study, it doesn’t make much sense.
Three years of all-night cramming sessions as well as financial hardship, only to leave college
with a tonne of debt and few prospects. A Master’s degree can stave off the hard employment
decisions but sooner or later you’re going to have to face that you’re highly qualified, yet
inexperienced in a very competitive labour market. With The Insurance Institute’s Insurance
Practitioner Apprenticeship programme you can work as the practical part of your study which
means you’re set up to hit the ground running in the industry. It also means you can have a career
and make plans while your student mates are scrounging around down the back of the sofa for
beer money.

A more affordable alternative to a third level qualification

Third level education is expensive – fees, supplies, rent, expenses… most parents are saving for
the child’s college education while they’re still in nappies. While it’s not as bad in Ireland as
other countries, most students leave university under the weight of debt forcing them to do
whatever pays right now, putting off their careers, which dulls any advantage they may have had
from their studies in the first place. With the Insurance Practitioner Apprenticeship programme
you earn while you study. It’s simple arithmetic – money in to cover money out.

Forget the points race

We all know about the madness of the CAO points race. You need 20 A1s to study Veterinary,
Law or Medicine… The stress of filling out your subsequent third, fourth and fifth choices is
almost as bad of that of the Leaving Cert. With the Insurance Practitioner Apprenticeship you
require a minimum 2 honours in Leaving Cert, plus 4 additional passes including English/Irish
and Maths and pass an interview process with an insurance employer. You can sidestep the CAO
madness straight into an awesome career. For those over 23 on 1 January of the year of entry,
interviews and other selection tools may be used to assess, replacing Leaving Cert entry
requirements. Learn more about the programme and entry requirement here.

Opportunities abound

Insurance is actually one of the industries in Ireland that has a real skills shortage, that’s why the
Insurance Practitioner Apprenticeship programme was developed. It’s designed to attract young
talent to the industry and future-proof the sector. So there are plenty of jobs in a growing
industry. Now with Brexit on the cards and some of the major insurance company’s considering
relocating to Ireland, there may well be a whole new world of opportunity in the sector.

Insurance will always be needed

Insurance is a fact of life – it’s everywhere. People will always need it. There will always be risk,
there will always be a need to reduce that risk, so there will always be work for people in
insurance. It’s no coincidence that international insurance companies are so successful, they sell
something for which there is and always will be a very high demand.

A dynamic industry

You might have an image of insurance as a stuffy and bureaucratic industry but you’d be wrong.
In fact, insurance is a dynamic industry where innovation and development of new ideas and
products is highly appreciated. Technology and innovation are now at the very heart of the
industry and there is plenty of room for young people with a ‘can-do’ attitude to change the way
things are done.

Good earnings and benefits

Insurance is a profitable industry, so there is a good salary to be had. There is also security in
insurance and it is unique in that it can offer exceptional benefits to employees in the industry. In
any job, your insurance and pension benefits are a key consideration, but nobody can offer better
insurance than insurers. If you ever want to start a family, you’ll be glad you’re in insurance.

Plenty of room to grow

You can scale any heights you wish in the insurance industry. Why be hampered by a stifling
advancement structure when you can benefit from regular professional reviews and the
opportunity to shoot for the moon in your career?

You’re selling peace of mind

That is, in effect, what insurance provides. We live in a complex society with a lot of potential
risk factors. Insurance allows people and businesses to put aside their worries and concentrate on
the things that matter.

The good days are the best

Anyone in insurance will tell you, when you get to make that call to tell someone they’re covered
or they’ll be looked after in their time of need is just the greatest feeling in the world. That’s
what they’re really in insurance for - for days like those. All the other stuff is great though too!

. There’s a job for your skills.

The scope of the industry goes far beyond the roles of insurance agent and broker. For example,
if you have a degree in social science or a background in nursing, you could make an ideal
claims professional. Working as an adjuster, appraiser, examiner or investigator taps into these
learned skills of communication, empathy and deductive reasoning.

Are you in engineering? You could transfer your creativity, problem-solving, design and
scheduling proficiencies to work in loss control or as a risk manager in outside industries such as
the public sector, retail, hospitality or gaming. There’s a place for a variety of skills and interests.

2. Insurance careers are sustainable.

Like death and taxes, insurance has a long history — dating all the way back to 1347 in Genoa,
Italy — and its need is a sure thing. According to The Institutes, the insurance industry employs
more than 2.3 million individuals in America — that’s 115 times the number of jobs provided by
Google, Facebook, Apple, Twitter and Yahoo combined.

The industry also has a positive effect on the economy, contributing $450.3 billion to the
nation’s GDP in 2014, according to the Insurance Information Institute. Just as someone can’t
purchase a home without proof of insurance, business owners cannot build or obtain financing
for a commercial building without it. And without financing, businesses can’t develop, create
jobs or contribute to their communities.

3. Career advancement provides opportunities to learn.

Millennials can exercise their entrepreneurial attitudes in the insurance industry, especially in
jobs that require creative thinking, problem-solving and a desire to help others.

At CNA, for example, there’s a commitment to ensuring your professional development, whether
it’s through on-the-job learning, defined courses, self-study or educational reimbursement. We
also believe that millennials can further professional growth by volunteering or sitting on the
board of a favorite charity, because those learned leadership and communication skills carry over
to your career advancement.
4. Diversity is welcome.

At 87 million strong, millennials are the largest generational group in America, and also the most
diverse. Insurance roles entail communicating and collaborating with people from all different
backgrounds, and this experience will prove invaluable as the insurance industry expands to
writing policies in emerging markets.

5. Teamwork is unavoidable.

Millennials recognize that working together is more efficient than struggling alone. In the
insurance industry, successful collaboration identifies business opportunities and solves
problems. No matter your role, you will work closely with a range of professionals — inside and
outside of your own company.

6. The work is not boring.

Tech isn’t restricted to Silicon Valley. Now and for the foreseeable future, the insurance industry
needs you to manage risk related to driverless cars, drones, 3D printers, wearables and the
Internet of Things.

In addition, there’s no “typical day” for insurance jobs. Whether it’s a new client or business
risk, each day will bring its own challenges for you to solve.

7. You will shape what insurance looks like for years to come.

The industry isn’t immune to the pace of change, or consumer demands on commerce, retail and
technology. The insurance industry is looking at you — as true digital natives — to creatively
use technology to solve problems and deliver risk solutions. In turn, carriers are stepping up
innovation to meet the most rapid, large-scale change in our history.

8. Insurance offers a flexible work schedule.

Put it this way: It’s likely your insurance job won’t entail sitting behind a desk 24/7. Depending
on your position, you may be working in the field to conduct insurance business. The industry
respects millennials’ need to create their own lives, where family, friends, hobbies and work
come together in balance.

9. You’ll make a difference toward the common good.

Insurance is driven by service and is there for people in some of the worst moments of their
lives. You will play a role restoring their property or business when catastrophe strikes. After
Hurricane Katrina in 2006, insurance companies paid a combined $41 billion to policyholders to
help them rebuild.

The property & casualty insurance industry is also driven by charity, donating $575 million in
2014, with the top program areas focusing on education, health and social services, and
community needs, according to a report by the Insurance Industry Charitable Foundation and
McKinsey and Co.

10. Insurance is everywhere.

The backbones of the world’s economies are unable to exist without insurance. Every
construction site, connected device, hospital, shopping center, airport, electrical grid and car is
insurance at work — and you played a part in making that happen.

We want you to love working in the insurance industry, just as much as we do! There’s a place
for individuals with a variety of skills and backgrounds to lay down their career goals, develop
their skills and thrive to become one of tomorrow’s leaders in one of today’s most exciting
industries.
1. Career Opportunities in the Life Insurance Industry
Many think that a job in life insurance means just being a salesman or an agent. Yet, like any other
financial institution, life insurance companies offer a whole spectrum of job opportunities.
A career in life insurance is not only challenging, it also carries the satisfaction of helping others
secure their financial standing. You help people realize and fulfill their financial goals whilst you fulfill
yours along the way.
How is that so Read on…

2. Excellent prospects
Statistics have shown that the life insurance industry in Malaysia has grown over the years. Growth in
the industry is expected to continue. Therefore you should look at it as a long-term career rather than
just seeking a job. A career in life insurance provides the satisfaction of helping people to meet their
financial needs. Growing with an organisation, learning and acquiring technical skills as well as
grooming oneself professionally should be the main agenda rather than aiming for mere financial
rewards. You must be aware that you too, have a responsibility to help build great organisations, and
to build the workforce of the future.

3. Job security and satisfaction

With the Government’s emphasis on establishing Malaysia as a major insurance centre, there is high
demand for skilled personnel in life insurance industry. This is spelt out in the Government’s
Transformation Program announced last year. As part of a ten year government initiative, it certainly
will assure you of a long term job security. Life insurance companies are always keen to select
candidates who have completed or undergone a more holistic education. Besides getting their
degrees, graduates who possess a positive attitude, integrate well, independent, multilingual, flexible
and believe in personal development, will succeed better in their corporate life. These personal traits
will also help them to adapt and perform well in teams.

So if you have the above personal qualities within you, you’re on the high road to a promising career
in insurance.
4. Attractive salaries and employees benefits
Financial institutions are among the best paying employers. Remuneration for both junior and senior
staff within the life insurance industry are competitive. Employees will normally enjoy the benefits
which include medical, dental and life insurance; housing and renovation loans; sports and
recreational facilities. 5. Career prospects and training Life insurance companies do recognise the
importance of promoting and advancing staff from within, and hence provide comprehensive training
and development programmes. New entrants to the life insurance industry will normally be given
opportunities to attend a wide range of courses to improve their skills or obtain professional
qualifications through the examinations (link to the Certifications and Professional Programmes
….MII) conducted either by the Malaysian Insurance Institute (MII) or other recognized institutions.
Training added with a wide range of positions available, will ensure that you acquire and sustain the
flexibility in deciding your future career moves. To begin your career in life insurance, you need to
have some related qualifications of the industry.

Listed below are Certification and Professional Programmes offered by the Malaysian Insurance
Institute (MII) for your consideration.

Types of Positions
There are a number of options to choose from for a career in life insurance. As financial institutions,
life insurance companies will have openings in the marketing, distribution, actuarial, underwriting,
operations, claims, customer service, investing, human resource departments and many more.

Q: Necessity Of insurance training

The Importance of Training & Development for a Successful Business

by Jonathan Hart, Talent Development Manager

Training is an important component of running an effective business. In order for employees to

know how to operate technology, adhere to processes, and expand their knowledge on products
or services – training is the primary driver in building these functional competencies for
colleagues to succeed in his or her role. By providing formal learning opportunities you invest in
the success of your business and show you are committed to developing your staff. Many
employers think that offering training or development opportunities will be too expensive. They
often turn a blind eye to the organizational and workplace deficiencies that can often be fixed
through training solutions. But the reality is they end up spending more money through turnover
costs, decreased productivity, and low efficiency rates simply because they refuse to see
training’s return on investment potential. Despite the common excuses business leaders like to
use as potential drawbacks (time away from work, budgetary restrictions, etc.), training and
development provides both the company as a whole and the individual employee with benefits
that make the cost and time a worthwhile investment. Here are just a few ways that
implementing training and development for your organization can impact your bottom line:
Closing the Gaps

Most employees have opportunities for improvement when it comes to their skillset or
competency level. Implementing a specific training program or targeted learning solution allows
the employee the chance to strengthen those skills and help close the knowledge gap. Training
can bring each employee to a higher level of productivity, pushing their skills and knowledge to
equal ground with one another. This helps reduce any weak links and deficiencies within the
company, especially when you have to heavily rely on others to complete basic work tasks.
Providing necessary training creates an overall knowledgeable staff with employees who can
take over for one another as needed, fill in the gap, work on teams or work independently
without constant help and supervision.

Continuous Business Improvement

When an employee, who receives the necessary training, is better able to perform her job it
builds the employee’s confidence because he or she has a stronger understanding of the industry
they are working in and the responsibilities needed to be successful. This confidence ends up
driving discretionary performance, which is the willingness to do more because they want to, not
because they have to. When we are given the tools to excel, performing harder and faster, we
also try and think of ways to do things smarter or better. Continuous training can keep your
employees on the cutting edge of industry, technology, and operational developments.
Employees who are competent and empowered to help change the status quo, help your company
hold a position as a leader and strong competitor within the industry.

Consistency

Structured training and development programs ensure employees have a consistent experience
when it comes to learning about company expectations, services, products, processes, policies,
and procedures. This ultimately impacts the consistent experience you most likely are trying to
provide your customers. Putting all employees through regular training ensures that all staff
members at least have exposure to the information that is critical for your organization’s success.
Establishing consistent business and operating norms only strengthens your business’s chances
for long term success.

Employee Engagement

Employees who regularly have onsite access to training and development opportunities have an
increased advantage over employees who are left to seek training opportunities outside of their
business. The investment in training that a company makes shows the employees they are valued
and that they believe in his or her success within the organization. Offered training can create a
supportive and highly engaged workplace for employees. Research shows that employees who
feel appreciated and challenged through training opportunities feel more satisfaction in their
jobs. By creating an environment where employees feel appreciated and nurtured, employers
reduce the risk of high turnover and typically see higher levels of individual and team
productivity.
The Role of Training in Insurance and Risk Management Planning

Well-trained officers can be one of the most effective risk management tools for security firms.
Proper training can prevent accidents, improve performance and minimize the number of
incidents that can lead to costly lawsuits.

However, as the private security profession has grown over the past decade, training standards
and industry regulation have not improved at the same pace. As a result, many security
professionals find themselves under-trained and over-exposed to risk, liability and litigation –
exposures that can have significant impact on the cost and availability of insurance.

A Growing Need

The U.S. government estimates that the security guard industry has grown between seven and 12
percent a year, and that growth is expected to continue. Perhaps the most significant reason for
the anticipated growth is the recent budget cuts that have caused municipal and county police
agencies to downsize.

Though there is no single database with the total number of jobs that have been lost due to
budget cutbacks, a Department of Justice report titled “The Impact of the Economic Downturn
on American Police Agencies” published these statistics:

• The Fraternal Order of Police documents 4,000 layoffs, but estimates between 12,000 and
15,000 sworn officer positions have been lost.

• The International Association of Chiefs of Police estimates that 10,000 law enforcement
positions have been lost.

• COPS Hiring Program data for the last 18 months estimates that 5,738 state, local and tribal
law enforcement officers have been laid off. The actual number may be as high as 10,000.

• Major Cities Chiefs Association found that 52 percent of agencies surveyed had laid off
sworn officers.

Private, contracted security officers are needed to fill the gaps left by the cuts in both sworn and
unsworn officers among counties and municipalities. This need applies to many types of
facilities, including gated communities, malls and other venues that formerly enjoyed a police
presence or routine patrols.

Establishing Training Standards

As the need for private security officers grows, so does the need for training. And that training
should be held to high, consistent standards, explains Jeffrey A. Slotnick, PSP, CPP, president of
Setracon Inc., and chairman of the ASIS International Physical Security Council. He points out
that training standards vary from state to state, with some states lacking any training standards.

“What’s needed most is quality, fundamental training where everyone is trained to a standard,
and that just does not exist today,” he says. “The risks faced by security professionals have not
changed much over the years, but the public now has higher expectations and those expectations
include increased competence.”

Budgets sometimes restrict how much training security firms are willing to provide for their
guards, but Slotnick says there are new affordable alternatives. “Web-based, interactive learning
portals are definitely a cost-effective method of training officers and should be considered.”

Situational Training

Beyond training standards, there also needs to be situational training specific to the risk involved
in any given industry. Security firms must look at the position and ensure they hire officers who
are properly trained and equipped for the needs of the position.

Guards in a gated community clearly need a different set of skills than someone in a hospital.
Guards at a manufacturing facility have different responsibilities than those at a nuclear facility.
Guards on board ships with anti-piracy responsibilities should be trained differently than those
assigned to armored cars.

Situational training also helps ensure that guards can make quick decisions such as the proper
use of force. That issue was highlighted by the well-publicized 2010 Seattle bus station incident.
There, a young victim found herself in a life-threatening situation and received little to no help
from officers on duty, whose orders were to only “observe and report.”

The underlying problem was not that the officers couldn’t intervene physically. Rather, it was
that they were not trained properly. The officers should have been trained to respond with more
authority, communicate properly and act with speed.

Hands-on, situational training gives officers a chance to learn from practicing in situations that
apply directly to the facilities they protect. This is recognized by more companies, which now
are requiring that any security officers from contracted private firms have this type of training.

Documentation and Litigation Awareness

Education and training should also be provided to help security professionals understand and
prevent lawsuits. “Litigation awareness” should focus on several components, including acting
with professionalism and communicating respectfully and effectively. In short, guards should
understand how their actions can affect the likelihood of a lawsuit.

This type of education should cover how litigation works, teaching guards what happens in a
courtroom and how their words and actions can be used to affect a case. It should also cover the
importance of conducting themselves in a professional way throughout their work day.

Another important factor is communications: teaching guards what is appropriate and not
appropriate to say. For example, if someone slips and falls at a pool in a gated community, it
would not be wise for a guard to mention to the victim or witnesses that there had been similar
accidents. Such a statement could lead to a lawsuit and strengthen the case against the
organization.

Documentation is another key skill in a security officer’s training. When accidents or incidents
occur, proper documentation can go a long way in showing that the security firm acted
appropriately. Key issues include providing accurate and complete activity and incident reports,
including all relevant facts and record of all guard activity. These reports provide a detailed
record that officers are carrying out duties according to the firm’s contract and are responding
according to their orders.

Finally, report writing should be included in training, with an emphasis on proper spelling and
grammar. Incomplete or sloppy reports can reflect badly on a guard firm’s professionalism and
credibility, and weaken the firm’s case in the event of a lawsuit.

The Insurance Perspective

Insurers understand the importance of training on safety and risk management. When reviewing
insurance applications, insurers not only look at loss history, but also the type of training
provided to employees. They check to see if it covers just the state minimum or whether the
training is more comprehensive. These factors help determine insurance rate and premiums paid.

In recent years, some security firms may not have seen how safety, loss control or training has
affected their rates or eligibility. That’s because we are in what is called a “soft” insurance
market. In this type of market, it is easy to get coverage from a wide variety of insurance carriers
and rates are very low. In a soft market, good loss experience and training will not lower rates as
much.

However, safety will become more significant when the insurance cycle turns and we reach what
is called a “hard” market. In a hard market – which many experts believe is beginning in 2012 –
insurance rates rise and many insurance carriers withdraw from specialty markets like security.
With fewer carriers left writing insurance, eligibility standards and rate criteria become more
stringent.
Insurers know that better-trained security professionals have fewer accidents, handle incidents
more effectively and are a better risk. This is an important message, especially as the need for
private security and the demand for insurance is expected to grow. Security professionals should
examine their current training practices, identify areas for improvement and find training and
education programs that will make them an excellent insurance risk.

Insurance is the lifeblood of our capitalist society; without it commerce cannot function. A
vibrant insurance industry requires skilled and trained knowledgeable workers who can
understand the broad aspects of risk in a changing dynamic.

The economic climate continues to be difficult on a global scale and presents some long-term
structural problems that will not be easily remedied. The past decade has presented enormous
challenges, and unpondered “Black Swan” events. Major companies have disappeared entirely.

Insurance Carriers

Looking ahead, this industry is facing pressures to invest in emerging technologies and service
capabilities. Risk selection and claims efficiencies will be critical to help differentiate one
company from its competitors. Insurance education can be such a differentiator.

The return on investment from better educated and trained employees is often difficult to
calculate. However, what is the return of a bad risk that is not put on the books by better trained
underwriters? What is the value of a claim that is adjudicated with minimal leakage and
improved outcomes? What is the value of a trained workforce that understands the knock-on
effects of each and every activity and helps to enhance efficiencies overall? In this context,
insurance education is not just a cost — it is an investment that will pay dividends over time.

Agents and Brokers

Margins are increasingly under pressure at global, regional, and local agencies. Agencies face the
combination of depressed commission and fee income from a highly competitive market that is
increasingly commoditized, and a demand to deliver to clients increasing (and expensive)
analytical services. Every dollar of expense is closely scrutinized and insurance education dollars
need to be earmarked carefully.

The role of an agent has evolved to an increasing sales role and insurance education is often
tailored to a more narrow scope to support the specific coverages provided by the agent.

From a larger perspective, over time, more in depth generalist insurance education is extremely
helpful. Ultimately, an agent seeks to be an indispensable “most trusted business advisor” to their
clients — someone able to respond to a variety of risk challenges with prompt and thorough
expertise. Superior sales and support services provided by the agency also serves to mitigate the
risks they face from errors and omissions exposures. Better trained agents mitigate this exposure
and better served clients drive superior returns to the firm.

Benefits of our Insurance English Courses

A Communicaid Insurance English training course will provide you with the ability to:

 Demonstrate a greater understanding and accurate use of insurance English terms

 Speak with confidence in face-to-face and telephone situations
 Write effectively when using insurance English
 Draft clearer and more concise insurance and general documentation

The Importance of Training in Insurance Processing

ow your insurance organization services its clients and accounts is largely dependent on the
quality of output from your administrative processes. If you’ve got slow turn-around times,
mistakes and requests for more information and other inefficiencies, your organization is bound
for poor service – no matter how pleasant your staff may be.

The way your staff is trained plays a big role in how your insurance organization delivers
service. At ReSource Pro, we’ve optimized training to ensure that we deliver excellent service to
each of our clients consistently, enabling them to deliver superior service to their clients. Here
are several critical success factors that we’ve learned from our experience that you can use to
bolster your internal training.

GET STRATEGIC ABOUT TRAINING

Through our experience working with hundreds of insurance organizations, we’ve found that
lack of training is the most prevalent issue. It’s important to define a strategic approach to
training that ensures staff have the knowledge and skills to complete tasks accurately and
efficiently, at every level. This means creating training and development plans for every position
and then consistently executing on them throughout the organization. This will increase staff
contributions and lead to happier employees, managers and clients…and who doesn’t want that?

STANDARDIZATION

By standardizing procedures, you can ensure that everyone in the organization is doing things in
the most effective and efficient way possible. Standardization doesn’t mean that your
organization isn’t allowed to be flexible to adjust processes to fit your needs, on the contrary it
provides better insights into the processes and therefore increases the flexibility you have. The
documented standardization become your standard operating procedures (SOP) and is the
foundation for effective training, as it ensures the trainer and trainee are on the same page.
EFFECTIVE TRAINING DELIVERY

Many insurance organizations use ‘shadowing’ as their primary training method: a new
employee watches a veteran do the job they are expected to do. This simply isn’t very effective
when done in isolation. Let’s say that veteran does certain things inefficiently – now you have
two employees that adhere to poor, unproductive processes. Or maybe that new employee is
forced to create their own process to overcome a lack of effective training on how to do the same
thing according to your SOPs.

Training and developing staff effectively involves delivery methodologies that ensure new
employees have the skills to perform. A well-delivered training session includes setting clear
goals and expectations, monitoring and providing timely feedback, and the right combination of
teaching, mentoring and coaching.

PROVIDING THE NECESSARY TOOLS

For employees to do their jobs effectively, they need access to the right tools, information and
coaching. Certain background information, terms and glossaries, checklists, and ‘cheat sheets’
can be good on-the-job tools, if they are developed in accordance with the SOPs and provided as
part of the training.

THE BOTTOM LINE

We’ve experienced in our own business that the effective training and development of
employees leads to increased output of high-quality work, improved customer service and
greater employee satisfaction and retention. It also saves costs by eliminating re-work and
reducing exposure to risk through inaccuracy.

People are the greatest asset any company has and a critical aspect of creating a strong operations
foundation. It’s why we invest in training and development for our own employees and help our
clients with training their staff through on boarding and beyond.

Innovative Training Strategies For Insurance: Featuring mLearning,

Gamification, And Performance Support Tools

The industry can broadly be divided into two areas:

 Insurers who provide protection for the risks clients face.

 Insurance brokers who provide their expertise to ensure that their clients receive the best cover
for the risks they face.
What are the typical training areas? Broadly, the training needs of the Insurance sector fall into
the following categories:

 Industry-specific.
1. Insurance industry skills training.
2. Regulatory and technical training.
3. Board and senior management training (to enhance their risk-based decision making
skills).
 Generic.
1. Sales and marketing.
2. Business and people skills.
3. Financial skills.
4. Soft skills.
5. Induction and onboarding.

What Are The Industry-specific Challenges?

As mentioned earlier, while the Insurance needs continue to grow with increase in population,
infrastructure, and wealth, the Learning and Development teams in this sector have several
challenges that need to be addressed. I am outlining the key Industry-specific challenges here:

1. Regulated industry.
This mandates that the required trainings happen across the organization and within the
stipulated time. It also requires that attestation of completion and records for the same are
maintained meticulously.
2. Ongoing updates.
Similar to Finance and Healthcare, the need to ensure that the updates reach all users is very
high. Not only does the learning strategy need to have a provision for speedy update, it also
needs to ensure that these reach the users and get applied on the job.
3. High volumes of information.
4. Globally spread out workforce.

How Can These Be Offset Using Innovating Training Strategies?

I believe that going beyond the traditional approach to training is essential to successfully offset
the challenges and create a workforce that is agile and can respond effectively to the ever
changing industry dynamics.

I am listing 3 such aspects that I have seen work well in Insurance sector training:

1. Change the focus: From instructor-led training to blended and online to eLearning
and mLearning.
This is absolutely essential to mitigate the challenges of being regulated, having work-force that
is geographically spread out. It is also the only answer to ensure that the updation happens
swiftly and reaches the employees on time. Specifically, offering mLearning enables learners to
use eLearning on the device of their choice (tablets and/or smartphones) leading to better
completion rates and higher retention.
 2. Change the focus: Provide “learning as a continuum”.
This is often an ignored aspect in learning strategies. The Organizational Training Frameworks
definitely map to the gap areas of Training Needs Analysis (TNA) or skill enhancements, but tend
to rely largely on formal training. By definition, formal training happens for finite hours in a year
and is rarely enough to help learners gain the required mastery. Instead, a holistic approach that
uses a learning path that allows learners to create their own learning journey will lead to the
required goals.
3. Change the focus: Use learner-centric rather than content-centric approaches.
The learning strategy must focus on learner-centric approaches that create immersive learning
experiences. They ensure that the learners walk away with a feeling of time well spent and a
sense of accomplishment at the end of the session.

Are There Any Success Mantras?

Certainly, here are the 5 Innovative training strategies that we have used in the Insurance sector:

1. Opt for a "Learning and Performance Ecosystem".

Adopt a holistic approach to learning and performance. I am sharing a sample here. Particularly,
leverage on collaborative learning by adopting social learning. Here is an example of our
Learning and Performance Ecosystem solution that can be adapted for the Insurance sector
easily.

2. Adopt mLearning.
You will see mLearning's impact in improving your course completion rates. Also, learners will
spend more time on learning in contrast to traditional eLearning on laptops/desktops.

3. Opt for sticky learning approaches.

Use gamification, stories, and decision-making tools (branching scenarios and simulations)
instead of boring and predictable instructor-led training or traditional eLearning.

4. Use Performance Support Tools.

Supplement or complement your formal training like interactive PDFs, eBooks, and mobile apps
as “just-in-time” learning aids that are available to the learners precisely when they need them.
This would push them to use these Performance Support Tools to apply the knowledge at work.

5. Add zing to standard instructor-led training programs.

Blend it with eLearning/mLearning or interesting Performance Support Tools that engage
learners and more specifically push the knowledge acquisition to knowledge application.

I hope this article is useful in re-energizing your learning strategy. While I have dipped into my
experience in handling approaches for the Insurance sector, most of these innovative training
strategies can be applied successfully to other industries as well. Do reach out to me if you have
any questions.

1. Untrained Employees = Unhappy Employees

Employees who feel inadequate, underachieving, or unsupported are unhappy. They aren’t
satisfied in their work, which will cause them to underperform, make mistakes, and not care
about their work product. That costs the business in lost time and money.

2. Untrained Workers Have a Low Production Value

The quality of their work is lower and of less value. The quality in performance is lower than it
could (or should) be.

3. Untrained Workers Are Inefficient

More time (and therefore money) and effort is spent when employees aren’t fully or properly
trained to perform their tasks or to fulfill their responsibilities. It takes them longer to do the
work.

4. Lost Time/Money Due to Mistakes

When an untrained worker makes a mistake, the time and materials used are lost. The work then
has to be done again. Or worse, the inadequate product was delivered to the client.

5. An Increase in Miscellaneous Expenses

These are more difficult to track or attribute to untrained workers, but they are there. Creating a
CAD drawing incorrectly means reprinting the file. That means it takes more time to fix the
mistake, more materials cost in paper and ink, and more time rechecking the work. If it were
done correctly the first time, these costs wouldn’t be there.

6. Insufficient Staff Training Means Lost Customers

Untrained employees can cause many of the mistakes listed above, and those mistakes and
inefficiencies can cause your business to lose customers. That is the worst possible scenario, but
it can happen.

Training programs and costs have an easily measured up-front cost of time and money. Those
line items are difficult to handle on a tight budget. However, added costs of poorly trained staff
shows the importance of training employees. These costs do not come in the form of line items,
so they are often ignored or unseen.
Improved employee performance – the employee who receives the necessary training is more
able to perform in their job. The training will give the employee a greater understanding of their
responsibilities within their role, and in turn build their confidence. This confidence will enhance
their overall performance and this can only benefit the company. Employees who are competent
and on top of changing industry standards help your company hold a position as a leader and
strong competitor within the industry.

Improved employee satisfaction and morale – the investment in training that a company
makes shows employees that they are valued. The training creates a supportive workplace.
Employees may gain access to training they wouldn’t have otherwise known about or sought out
themselves. Employees who feel appreciated and challenged through training opportunities may
feel more satisfaction toward their jobs.

Addressing weaknesses – Most employees will have some weaknesses in their workplace skills.
A training program allows you to strengthen those skills that each employee needs to improve. A
development program brings all employees to a higher level so they all have similar skills and
knowledge. This helps reduce any weak links within the company who rely heavily on others to
complete basic work tasks. Providing the necessary training creates an overall knowledgeable
staff with employees who can take over for one another as needed, work on teams or work
independently without constant help and supervision from others.

Consistency – A robust training and development program ensures that employees have a
consistent experience and background knowledge. The consistency is particularly relevant for the
company’s basic policies and procedures. All employees need to be aware of the expectations
and procedures within the company. Increased efficiencies in processes results in financial gain
for the company.

Increased productivity and adherence to quality standards – Productivity usually increases

when a company implements training courses. Increased efficiency in processes will ensure
project success which in turn will improve the company turnover and potential market share.

Increased innovation in new strategies and products – Ongoing training and upskilling of the
workforce can encourage creativity. New ideas can be formed as a direct result of training and
development.

Reduced employee turnover – staff are more likely to feel valued if they are invested in and
therefore, less likely to change employers. Training and development is seen as an additional
company benefit. Recruitment costs therefore go down due to staff retention.

Enhances company reputation and profile – Having a strong and successful training strategy
helps to develop your employer brand and make your company a prime consideration for
graduates and mid-career changes. Training also makes a company more attractive to potential
new recruits who seek to improve their skills and the opportunities associated with those new
skills.
Training can be of any kind relevant to the work or responsibilities of the individual, and can be
delivered by any appropriate method.

For example, it could include:

 On-the-job learning
 Mentoring schemes
 In-house training
 Individual study
Blended learning is becoming more and more popular and as a company we have seen a definite
increase in this method of training over the last year. Blended Learning is the effective
combination of online learning and classroom learning. Many of 20|20’s clients prefer their staff
to learn on-site rather than attend off-site training programmes – especially in industries like oil
and gas where it is often very impractical to attend off-site courses. On-site learning programmes
like the blended learning approach, allow 20|20 to train more people working across a larger
international footprint than just the UK. This makes it much more cost-effective and allows for
greater process consistency.

Training of employees takes place after orientation takes place. Training is the process of
enhancing the skills, capabilities and knowledge of employees for doing a particular job.
Training process moulds the thinking of employees and leads to quality performance of
employees. It is continuous and never ending in nature.

Importance of Training

Training is crucial for organizational development and success. It is fruitful to both employers
and employees of an organization. An employee will become more efficient and productive if he
is trained well.

Training is given on four basic grounds:

1. New candidates who join an organization are given training. This training familiarize them with
the organizational mission, vision, rules and regulations and the working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any updations and amendments take place in technology, training is given to cope up with
those changes. For instance, purchasing a new equipment, changes in technique of production,
computer implantment. The employees are trained about use of new equipments and work
methods.
4. When promotion and career growth becomes important. Training is given so that employees are
prepared to share the responsibilities of the higher level job.

The benefits of training can be summed up as:

1. Improves morale of employees- Training helps the employee to get job security and job
satisfaction. The more satisfied the employee is and the greater is his morale, the more he will
contribute to organizational success and the lesser will be employee absenteeism and turnover.
2. Less supervision- A well trained employee will be well acquainted with the job and will need less
of supervision. Thus, there will be less wastage of time and efforts.
3. Fewer accidents- Errors are likely to occur if the employees lack knowledge and skills required
for doing a particular job. The more trained an employee is, the less are the chances of
committing accidents in job and the more proficient the employee becomes.
 4. Chances of promotion- Employees acquire skills and efficiency during training. They become
more eligible for promotion. They become an asset for the organization.
5. Increased productivity- Training improves efficiency and productivity of employees. Well
trained employees show both quantity and quality performance. There is less wastage of time,
money and resources if employees are properly trained.

Ways/Methods of Training

Training is generally imparted in two ways:

1. On the job training- On the job training methods are those which are given to the employees
within the everyday working of a concern. It is a simple and cost-effective training method. The
inproficient as well as semi- proficient employees can be well trained by using such training
method. The employees are trained in actual working scenario. The motto of such training is
“learning by doing.” Instances of such on-job training methods are job-rotation, coaching,
temporary promotions, etc.
2. Off the job training- Off the job training methods are those in which training is provided away
from the actual working condition. It is generally used in case of new employees. Instances of off
the job training methods are workshops, seminars, conferences, etc. Such method is costly and
is effective if and only if large number of employees have to be trained within a short time
period. Off the job training is also called as vestibule training,i.e., the employees are trained in a
separate area( may be a hall, entrance, reception area,etc. known as a vestibule) where the
actual working conditions are duplicated.

5 benefits of life insurance for children

We get it: No one likes to talk about life insurance. The reason for needing it is not an upbeat
conversation starter. Top that with the thought of needing it for your precious child or
grandchild, and you’ve got a major ick factor going.

But permanent life insurance for children can be a valuable investment. Here are some reasons to
consider it:

1. It’ll never be more affordable. The younger children are when their coverage starts, the
lower the rate. In fact, nearly half of those who purchase juvenile life insurance do so to lock in a
low rate, according to LIMRA’s 2015 Insurance Barometer Study.

2. It protects their insurability. Buying whole life for a child protects him or her against the
chance an unexpected accident or illness could make life insurance more expensive — or even
unavailable — later on.

3. It can help provide a financial safety net. Permanent life insurance such as whole life
accumulates cash value at a guaranteed rate as long as the policy is in effect. The policyholder
can take out a loan against the cash value if needed for unexpected expenses or even to pay the
premiums.
“No one likes talking about the need for life insurance, especially when it’s about needing it for a
child,” said Annise Henson, life insurance product manager at Unum. “But it’s an important
coverage to have because it helps play a role in providing a financial safety net, now and in the
future.”

4. It’s stable. Interest rates have been low for years, and that’s likely to continue. Whole life’s
premiums and cash value don’t depend on current interest rates as much as universal life or
variable life, so it offers more stability.

5. It could keep your family out of serious debt. The average funeral costs $8,000-$10,000. At
the same time, nearly half of American families say they don’t have even $400 on hand for an
emergency. That may be one reason crowdfunding for funeral expenses has become one of the
most common online fundraising causes, according to the website Nerdwallet. But as social
media becomes more saturated with requests for help funding funerals, the availability of donors
could become more questionable.

“Life insurance is protection nearly everyone is going to need at some point in his or her life,”
Henson says. “Buying it as a gift for a child can be an affordable way to meet many needs.”

The Benefits of Having Life Insurance Coverage on Your Child

Although it’s terrible to think about, the truth is that the unimaginable — losing a child — can
happen. A parent may never fully recover from it emotionally.

A child’s death also raises financial issues. Is that a reason to purchase life insurance on someone
so young?

Many opponents of purchasing life insurance on children say doing so is unnecessary, primarily
because parents aren’t likely depending on their child for financial support. They also argue that
the money spent on premiums for this coverage could be better spent if it were used
for additional protection on a parent or put into a college savings plan for the child.

In many cases, this reasoning is sound. However, even though most children don’t have an
income to replace, there are still several benefits to purchasing life insurance coverage on a child.

Final expenses

Certainly, no amount of money could ever make a parent whole after the loss of a child. But
should the unthinkable occur, life insurance proceeds can help pay for funeral costs and other
final expenses that would need to be addressed. Today, funerals can cost over $7,000, an amount
that many families simply do not have readily available. Coverage on the life of your child can
provide the proceeds that you need during a difficult time.

Although putting money into an emergency fund can also be another option for funding final
expenses, a life insurance policy can guarantee that you will have a certain amount of
money from the day the policy is purchased. And because the premium cost for children is
typically quite low, usually just a few dollars per month, many families are able to buy life
insurance coverage and also funnel money into an emergency fund.

Medical expenses

In addition to funeral costs, there may be medical expenses due to an accident or illness your
child suffered before his or her death that are not covered by health insurance. Life insurance
policy proceeds can also help pay these obligations.

Future protection

Having life insurance coverage on a young child can also help ensure protection when he or she
gets older. This can be especially beneficial if your child develops various health issues over
time and has trouble getting life insurance.

If, for instance, the child is insured with a permanent life insurance policy, the coverage can
remain in force throughout his or her lifetime, provided that the premium continues to be paid.
And, with a permanent life insurance policy, the amount of the premium is guaranteed to remain
the same. Regardless of age or adverse health issues, the insured will pay the same amount of
premium that was charged at the policy’s inception.

Tax-deferred savings

A permanent life insurance policy can also help the child to build tax-deferred savings in the
cash value component of the plan. Because no taxes are due on the growth of the cash until the
time funds are withdrawn, the money can grow and compound throughout the years.

Although tax-deferred savings are also allowed in IRAs and qualified retirement accounts like a
401(k), people may face taxes and penalties if they withdraw funds from these types of accounts
before age 59½. If, however, life insurance policyholders wish to borrow against the policy, they
can often do so tax-free at a low interest rate, and if they wish to withdraw their funds, they can
often avoid surrender charges once a certain amount of time has elapsed.

Having a cash value life insurance policy can also provide a place for additional savings if the
parents have already contributed the maximum amount to their IRA or 401(k) and still have
more funds to invest.

Types of coverage

If you decide that purchasing such a policy makes sense for you, you have several options for
covering your child. One way is to simply add an additional insured rider to the life insurance
policy of a parent. This is often less expensive than purchasing a separate policy for the child,
provided that the rider is allowed on the parent’s existing coverage.
A child could also be covered with his or her own individual life insurance policy. Typically,
children may be insured using either term or permanent life insurance coverage. Similar to adult
coverage, a term insurance policy will likely be cheaper than a permanent policy.

But remember that a permanent policy will allow the child to have cash value build up within the
policy, as well as offer the possibility for permanent insurance coverage throughout the child’s
entire life.

Purchasing a life insurance policy on a child can be a wise choice to ensure that family finances
stay intact in the event of a child’s death. But there are many variables to consider when buying
such a policy. Before moving forward, think through how much coverage your family
needs, which type of coverage seems best for your situation and how a policy fits into your
overall financial plan. You can also work with an insurance professional or advisor to help assess
your coverage needs.

Health Insurance Coverage Improves Child Well-Being

One remarkable social achievement in recent decades has been the expansion of health insurance
coverage for U.S. children. The coverage rate for this group was 95 percent in 2015,[1] an all-
time high. Coverage for Latino children (whose rates have historically lagged behind those of
white or black children) reached a record high as well—93 percent in 2015.[2]

While the majority of U.S. children (52 percent, as of 2015) are covered by private insurance
plans, 43 percent—primarily those in low-income families—are covered by government-
sponsored programs, the largest of which are Medicaid and the Children’s Health Insurance
Program (CHIP).[3] (For state-level breakdowns, see the map below, and the appendix.)
Medicaid care for children is a relative bargain: per-child costs are about three quarters of what
they are for non-disabled adults.[4] In fact, children comprise about 40 percent of the Medicaid
population, but account for less than one fifth of all Medicaid expenditures.[5]

Children with health insurance are more likely than those who are not covered to receive early
care for health problems, and they are at lower risk for hospitalization.[6] However, insurance
coverage by itself does not guarantee that children will receive appropriate and timely care.
Based on their knowledge and attitudes, families make decisions about when and from where to
seek formal care for their children. Multiple barriers may inhibit access to care, including time
constraints, out-of-pocket costs, possible lost wages, transportation availability, the supply of
providers who accept a child’s insurance plan, and actual or perceived prejudice (on the basis of
race/ethnicity or income, for example).[7]

There is growing evidence that when children (particularly those eligible for public health care
insurance[a]) have coverage, they are not only more likely to get care[b] but also more likely to
have improved outcomes—in health, of course, and in other important areas of life as well.
The benefits of insuring children

The benefits of health insurance to children, highlighted below, were primarily drawn from the
findings of “natural experiments”—studies of cohorts of children who became newly eligible for
Medicaid under states’ expansion programs.[c]

Health outcomes

Health insurance begins benefiting children prenatally and, according to several studies, has
positive health effects into adulthood. For instance, in one study, children of mothers who were
included in a Medicaid eligibility expansion (which included prenatal as well as post-birth infant
care) were followed into adulthood. In early adulthood, they had lower body mass index (BMI)
and lower rates of obesity. Those whose coverage began prenatally had fewer preventable
hospitalizations and fewer hospitalizations related to endocrine, nutritional, and metabolic
diseases, and immune-system disorders.[8] Among black children whose mothers became
Medicaid-eligible in pregnancy or during the child’s first year, there were lasting improvements
in children’s oral health.[9]

Medicaid coverage in childhood has been shown to have positive effects on a number of
adolescent health outcomes: decreased reports of mental health problems, reduced likelihood of
eating disorders, reduced BMI, lower likelihood of risky sexual activity, and less smoking and
marijuana and alcohol use.[10] Among black children, Medicaid expansion experienced during
their childhood was associated with reduced mortality from preventable causes at ages 15 to
18.[11] Among unmarried, low-income adolescent girls, those who had health insurance
coverage were less likely to become teen parents.[12]

Another study found that Medicaid coverage in early childhood (birth to age 5) was associated
with improvements in health from ages 25 to 54. These improved outcomes included lower
likelihood of high blood pressure, heart disease/heart attack, adult-onset diabetes, and obesity.
Researchers presented evidence for two possible explanations of the connection between
Medicaid coverage and the positive outcomes: children used more health care services, and
families had reduced medical debt, presumably giving them access to a healthier lifestyle.[13]

Lastly, childhood Medicaid eligibility has been linked with reduced mortality in adulthood,[14]
with particularly strong effects for black children.[15]

Educational outcomes

A child’s health directly affects his or her ability to learn,[16] and the converse is also true:
children who have high-quality learning experiences are more likely to enjoy good health as they
grow up.[17] Thus, it is not surprising that research finds many associations between health
insurance coverage and academic outcomes.

For example, one study found that children who were born in states that recently expanded
Medicaid and CHIP had better reading scores. The researchers linked increases in eligibility with
better health status at birth, which in turn was linked with improved academic outcomes.[18]
In another study, an expansion in health insurance for low-income children increased their rate of
high school and college completion, probably by contributing to better health in their teen
years.[19]

Economic outcomes

Children who are healthier and who have greater educational opportunity are more likely to be
economically secure and contribute to their communities (through volunteering and other forms
of civic engagement, for example) as adults.[20]

Furthermore, low-income families with children who are covered by Medicaid gain a measure of
financial security, and have more to spend on food and housing. In fact, a 2010 analysis
determined that Medicaid was the third-largest anti-poverty program, responsible for raising 2 to
3 million people out of poverty.[21] Additional evidence for childhood Medicaid’s role in
promoting family economic security is provided by studies that find coverage is associated with
reduced medical debt and fewer bankruptcies.[22]

According to one recent study, expansions to Medicaid and CHIP were also associated with
long-term economic benefits when children reached adulthood. They paid more in taxes and
collected less in Earned Income Tax Credit payments. Women (though not men) had higher
wages.[23]

In sum, Medicaid for children generates considerable financial returns to society. Several studies
have examined its return on investment, including one that found that, for each dollar spent on
childhood Medicaid, the government recouped 32 cents in increased income tax payments.[24]

Recommendations

Given the evidence that children’s health insurance coverage is associated with multiple benefits
that accrue into adulthood, it would be a sound investment to sustain programs that have
increased coverage rates, while also addressing remaining barriers and inequities.

1. Maintain and expand government initiatives that have raised rates of coverage among
children to record levels.

Initiatives including the Affordable Care Act (“Obamacare,” or the ACA), Medicaid expansions,
and CHIP, have resulted in unprecedented numbers of children receiving coverage. These gains
would be threatened by efforts to repeal their provisions.[25]

2. Address gaps in continuity of coverage.

Government regulators and insurance plans should collaborate in developing policies that ensure
children have continuous coverage even as family circumstances change. A similar model has
recently been adopted for a family’s eligibility for the federal child care subsidy, where states
must provide 12-month periods of child care assistance before they reassess eligibility.[26]
When children are not covered at all by health insurance, or when they experience gaps in
coverage, they are less likely than those with continuous insurance coverage to have a regular
source of health care. They are also more likely than continuously insured children to have their
medical care delayed or unmet and to have prescriptions unfilled.[27],[28]

Gaps in coverage can be particularly detrimental for children with chronic health conditions
(such as asthma) that require frequent, consistent preventive monitoring by health care
providers.[29] In 2015, 8 percent of children were uninsured for at least part of the previous 12
months, and 2 percent were uninsured for more than a year.[30]

3. Reduce barriers to essential services.

States should act to reduce barriers to essential children’s health services. While rates of
insurance coverage for children are at an all-time high, these data can be misleading, for they
ignore that significant barriers inhibit access to care even when children have insurance. One
recent comprehensive report notes that 50 years after the creation of Medicaid, and
approximately 2 decades since the start of CHIP, nearly 30 percent of U.S. children still lack full
access to essential health services. These include children who are uninsured or incompletely
insured (lacking coverage for some portion of the year), as well as some who have insurance.[31]

Children may have insurance but their families may still have great difficulty accessing essential
subspecialty services (for example, dentistry, pediatric cardiology, or endocrinology),
particularly in rural areas or other federally designated Health Professional Shortage Areas.[32]
States could enact policies that increase access to subspecialty providers, particularly in rural and
other underserved areas.

Children who are insured might also miss primary care visits due to challenges of affordability,
an insufficient number of providers, transportation problems, parents’ work schedules, and
cultural and language barriers.[33]

4. Address issues of affordability.

The determination of out-of-pocket costs for families should be fair and consistent across states,
so that children have equitable access to essential health care regardless of where they live.

Although many states have streamlined eligibility determination and enrollment systems for
children, 30 states charge premiums or enrollment fees to families whose children receive
Medicaid or CHIP coverage, and 25 states require some form of cost-sharing. For example, in
Utah, which imposes the greatest cost burden, the poorest families (with incomes below 150
percent of the poverty level) pay premiums and enrollment fees of $300 annually, and cost-
sharing of $25 for a routine office visit for a child’s sick care.[34]

A related provision of the ACA that should be addressed is known as the “family glitch”; it
denies participation in the health insurance marketplace if parents have employer-sponsored
health coverage that is “affordable.” The problem arises because affordability is determined by
the cost of employee-only coverage, not by the cost of a family plan, leaving some moderate-
income families with no financially viable option. In addition to its impact on parents, the
“family glitch” is estimated to affect nearly half a million U.S. children.[35]

5. Address gaps in health insurance coverage for parents.

Ensuring more parents have adequate health insurance is a logical strategy for improving child
well-being. Children’s well-being is closely tied to the well-being of their parents.[36] When
parents are physically or mentally ill or suffer from substance abuse, or when they experience
severe financial strain, children are affected—sometimes to the point of developing chronic
symptoms associated with toxic stress.[37] Parents facing these conditions may be unable to
focus on getting their children needed care.

In addition, when health coverage eligibility is expanded and more parents gain insurance, they
tend to insure their children as well.[38] The ACA offers incentives to states that expand
Medicaid eligibility to cover poor uninsured adults (including those who are parents). However,
as of January, 2017, 19 states had still not done so, claiming it would jeopardize future state
budgets. In these states, low-income parents are not likely to qualify for Medicaid, nor are they
likely to be able to afford insurance in the private marketplace. It is estimated that a quarter-
million uninsured children have parents in this situation. Extending coverage to these children
will likely continue to be more difficult as long as their parents are ineligible.[39] States that are
reluctant to take on a broader Medicaid expansion should be encouraged to at least extend
coverage to low-income adults with minor children.

6. Increase outreach to underserved groups.

Specialized outreach efforts may be necessary for underserved groups. Efforts might include
innovative mobile phone applications,[d],[40] expanded availability of culturally-responsive
health navigators,[e],[41] and continued efforts to reduce structural and interpersonal racism and
other forms of bias within the health care system.[42]

Such efforts would help address disparities in health insurance coverage for Latinos, for
example. Rates of coverage for Hispanic children continue to lag behind those of black and white
children.[43] Recent research suggests there are multiple reasons for this disparity. A 2015
analysis of Hispanic families found that, even among those with low incomes, 1 in 4 reported
they were not aware they could apply for public assistance, including Medicaid.[44] A similar
proportion of those families who already receive one or more forms of assistance were not aware
they could apply for additional assistance. Many Hispanic immigrant parents, even those with
legal permanent resident status, erroneously believe their immigration status makes them
ineligible for public assistance. Additional barriers likely include language, literacy, and cultural
factors related to seeking care.[45]

Other groups for which rates of insurance are disproportionately low are children in single-parent
families[46] and U.S.-citizen children of noncitizen parents.[47]

7. Strengthen state data systems for health services.

We recommend that states make investments to strengthen their data systems so they can answer
basic questions pertaining to equity of access to children’s health services as well as the quality
of the outcomes associated with that care. One challenge to understanding whether and how
children access the care they need is the lack of consistent data within and across public and
private insurance payers, as well as across states. The 2009 Children’s Health Insurance Program
Reauthorization Act created a set of child health measures states could report voluntarily. While
most states report at least one measure, reporting is inconsistent.[48]

Evidence shows that, particularly for low-income children, having health insurance is associated
with a broad array of positive outcomes. Insurance, by providing an anchor within the health care
system, gives children access to vital preventive services, helps protect families’ economic
security, and pays dividends that last into adulthood.

[a] More than one third of U.S. children up to age 19 are covered by Medicaid (Georgetown
University Health Policy Institute, Center for Children and Families. [2017]. Medicaid’s role for
children). Public insurance coverage is more often studied than is private coverage, because of
difficulty accessing data from private plans.

[b] A wealth of evidence finds that Medicaid-insured children receive care that, in many
respects, is as good (or better) than care received by children with private insurance.
(Wagnerman, K. [2017]. Medicaid provides needed access to care for children and families.
Georgetown University Health Policy Institute.)

[c] These studies presume that the alternative to children’s Medicaid coverage is lack of
insurance. These studies provide a conservative estimate of the effects of coverage, because not
everyone who is eligible actually takes up coverage. Researchers could not track actual receipt of
Medicaid-paid services (or whether children were covered), because people go on and off
Medicaid frequently as their circumstances change.

[d] Mobile health interventions (“apps”) use a variety of strategies (prompts, activity trackers,
and so on) to increase awareness of health-related issues and encourage behavior change.

[e] Health navigators assist individuals or families with eligibility determination, enrollment,
identifying health care providers, and coordinating complex care needs, among other things.

Acknowledgments

We are grateful to the Doris Duke Charitable Foundation for its generous funding of this work.
The author is grateful for reviews provided by Elizabeth Jordan, Rachel Gooze, Ann Segal,
August Aldebot-Green, and Jody Franklin. In addition, Elisabeth Burak of Georgetown
University’s Health Policy Institute offered numerous helpful comments and suggestions of
further resources.
Endnotes

The Children's Health Insurance Program (CHIP)

If your children need health coverage, they may be eligible for the Children's Health Insurance
Program (CHIP).

CHIP provides low-cost health coverage to children in families that earn too much money to
qualify for Medicaid. In some states, CHIP covers pregnant women. Each state offers CHIP
coverage, and works closely with its state Medicaid program.

See if your children qualify and apply for CHIP

Each state program has its own rules about who qualifies for CHIP. You can apply right now,
any time of year, and find out if you qualify. If you apply for Medicaid coverage to your state
agency, you’ll also find out if your children qualify for CHIP. If they qualify, you won't have to
buy an insurance plan to cover them.

What CHIP covers

CHIP benefits are different in each state. But all states provide comprehensive coverage,
including:

 Routine check-ups
 Immunizations
 Doctor visits
 Prescriptions
 Dental and vision care
 Inpatient and outpatient hospital care
 Laboratory and X-ray services
 Emergency services

Life Insurance For Children [the Best Policy for Kids]

https://www.insuranceandestates.com/life-insurance-for-
children-the-best-policy-for-kids/
nd the good news is kids qualify for no exam life insurance, so your children do not have to
undergo a life insurance blood test.

Here is the basic premise of this article: life insurance for children is not so much about a death
benefit as it is about a properly designed cash value life insurance policy which creates
incredible LIVING benefits presently and down the road for your child.
Yes, there is also a death benefit, but that is not the primary reason to get life insurance for kids.
We are talking about financial benefits that are brought about with strategically structured
dividend paying whole life insurance from a mutual insurance company.

Have we got your attention? We hope so. Please read on as we make our case for getting life
insurance for children.

Best life insurance policy for children

Let’s clear the air real quick. I am not advocating that you should consider life insurance for the
standard reasons that most people believe. You see, most people fail to understand the benefits of
whole life insurance when used as a strategic wealth building tool and get fixated on the wrong
things.

What Life Insurance for Children is Not

Life insurance for children is not for the death benefit. If tragedy strikes and your child dies
prematurely, the death benefit may help your properly grieve by providing needed support and
eliminating distractions. However, it is a sad replacement in exchange for your child’s life. This
is NOT why we are advocating life insurance coverage for your child.

Best life insurance policy for kids

There are many types of life insurance policies available. Two of the most popular for kids are
the Gerber Grow Up Plan and Child Term Rider.

Most grandparents choose the Gerber Grow Up Plan for their grandchildren simply because that
is how they are marketed. And the majority of parents buy life insurance on their kids as a term
life child rider. The reasoning is, if my kid dies at least I can pay for the funeral.

Many parents thinking about why to buy life insurance for children will discover that the two
main reasons given are either having some money to pay for a funeral or to protect the child’s
future insurability. The good news is both the Gerber Grow Up Plan and Child Term Rider will
meet these objectives.

Child Term Rider vs Gerber Grow-Up Plan

Child Term Rider

A child term rider is an optional add on to a parent’s policy that offers many benefits, including:

 Available for children ages 15 days to 18-25 years old

 Child rider is attached to a parents life insurance policy
 The policy owner pays one flat fee to insure the children, no matter how many kids he or she
has
  A few basic health questions
 No exam needed for the children
 May be convertible to permanent life insurance up to a multiple of the existing face amount

Quick tip:

If you are going to add a child rider, consider choosing a mutual company AND the company
you are choosing will be able to convert your child’s life insurance to the appropriate
permanent life insurance for maximum cash value growth.

Gerber Grow-Up Plan

Another popular form of children’s life insurance is a policy from Gerber called the Gerber
Grow-Up Plan. This is a whole life policy that builds some cash value.

Gerber Grow-Up Plan Features:

 Ages 14 days to 14 years old

 Choose from $5,000 to $50,000 of coverage
 Fixed insurance premiums
 Coverage doubles automatically at age 18
 Cash value accumulation
 Note: Policy loans are a whopping 8%!

Is the Gerber Grow-Up Plan a good investment?

Is the Gerber Grow-Up Plan is a good option for your kids? The policy acts as a forced savings
plan. Your child can use the cash value down the road by either withdrawing the cash or taking
out a life insurance loan. The bottom line is it is alright but probably not the best.

We Do NOT Advocate Gerber Insurance or Child Term Rider as Viable Options

So you know where we stand, we do not advocate anyone considering life insurance for children
to choose either the Gerber Grow Up Plan or Child Term Rider.

The Gerber Grow Up Plan lacks many of the benefits that can be found in a properly designed
cash value policy, where the focus is on maximizing cash value growth over the lifetime of the
child. In addition, Gerber’s 8% loan charge when you borrow against the cash value is too high
compared to other more competitive insurance providers.

A child term rider also lacks when it comes to life insurance for kids because the rider is
designed for death benefit only, with no cash value accumulation. However, the one primary
benefit to a child term rider is future insurability.
 Future Insurability
The primary reason for adding kids to a parent’s policy as a child term rider is to protect the
child’s future insurability. This way, if your child gets suffers an injury or disease down the
road, he or she will still have some coverage in place that can be converted to permanent life
insurance coverage.
No Debts, No Income, No Coverage

Those against life insurance for children will argue that life insurance is only for replacing lost
income or covering debts, and since a child has no income or debts, he or she does not need
coverage.

This is typically your uneducated life agent who has bought into the buy term and invest the
difference mantra, who does not realize there are many more benefits to cash value life insurance
apart from replacing lost wages or covering debts.
Buy Life Insurance “ON” vs Invest in Life Insurance “For”

Many people buy life insurance ON their kids AND do not invest in life insurance FOR their
kids.

Read that sentence again until it sinks in.

There is a BIG difference between these two different courses of action. However, we need to
unpack what it means to invest in the best life insurance for children.

Whole life insurance for children

Have you ever heard the phrase, “It’s in the name”? Well, when it comes to a properly structured
participating whole life policy, it definitely is in the name.
Let’s break it down-

Whole Life: Yes, this refers to the duration of the policy. It will last your child’s whole life.
However, it also refers to a deeper level of understanding, in that it will also contribute to a
WHOLE life. That is, it will help create a richer, fuller, more holistic life.

Whole Life Insurance Quotes for Children

Below are sample whole life insurance quotes for kids. The whole life insurance rates are for
informational purposes and must be qualified for.
 Children’s Whole Life Insurance Illustrations
In this first example illustration provided from an A+ rated carrier, we will be looking at how
much $6,000 total premiums would generate over the first 30 years on a 10 pay whole life policy
that the owner can continue to make base premium payments on after the initial 10 years.

We chose $6,000 annual premiums for a reason as a parent might be able to hire a child and pay
him an income without incurring a tax liability. After 10 years, the policy’s dividend should be
more than enough to cover any premium due.

Whole life insurance for Kids

We work with many of the best life insurance companies. However, when we at I&E talk about
the best whole life insurance for children, we are talking about a policy that is designed to act as
a banking policy utilizing the concept of infinite banking.

When using whole life as a banking policy AND utilizing the infinite banking concept®, the
policy becomes a wealth building storehouse. Thanks to compound interest, the cash value in the
policy continues to grow and grow, regardless if you choose to borrow against the cash value.

You see, when a life insurance loan is taken out against the policy’s cash value, the cash account
continues to earn interest and dividends on the entire principle balance.

This allows for a true compound interest environment, which avoids taxation on two fronts. One,
the cash value growth is not taxed while it remains inside the policy. Two, you can access the
cash value tax free by taking out life insurance loans.
Essentially, the policy will be life insurance for your child made up of the following:

 Guaranteed Cash Value Accumulation

 Guaranteed Level Premiums
 Guaranteed Death Benefit
 Tax Deferred Cash Value Growth
  Income Tax Free Dividends
 Increasing Death Benefit Protection

Guaranteed Cash Value Accumulation

A properly structured policy will accumulate cash value. The life insurance is an asset that will
become more and more efficient as time goes on. Therefore, the younger you are when you get
the policy, the more amazing the policy will be long term.

This is one of the main reasons the wealthy buy life insurance policies for their children. There
is simply NO other vehicle that can guarantee a continuous compounding return, in a safe, risk
free environment, backed by the financial strength of the mutual insurance company.

Guaranteed Level Premiums

Your child’s life insurance premiums are level, i.e. fixed. The premium will not change
regardless of health or lifestyle. The premium can also be designed as limited pay life insurance,
so that the insurance premium payments last for a number of years, at which time the policy is
paid-up. Once the policy is paid-up, no more insurance premium payments are due.

Guaranteed Death Benefit

The death benefit face amount is guaranteed when the insured dies. With a properly structured
policy, the death benefit face amount will increase as your child ages, providing your child with
the ability to create a future legacy for your children’s children’s children.

In other words, the policy is designed to increase the death benefit over time, so that your child’s
life insurance policy will actually become more and more valuable as time passes.

Low Fees

One of the major knocks against whole life insurance is the fees. Granted, this objection is
usually brought to light by financial professionals who are pushing their own fee based products
(can you say conflict of interest?) However, put a properly designed whole life policy head to
head with any other financial vehicles out there are you will begin to see that this objection may
by many financial pundits does not hold water.

It is sad that many stockbrokers and pundits in the financial community criticize whole life
insurance for young people based upon various suggestions such as “high fees” OR the time
needed to realize value. They instead recommend that a young person place money in a number
of the market based (tax preferred) investments touted by the financial community.

First, startup costs are a necessary part of purchasing any asset such as real estate or funding
the startup of a business.
Second, tax deferred is arguably NOT tax preferred because your growing asset will pay taxes
on the harvest later rather than the seed now.

Third, however misguided these objections are for everyone, they are particularly flawed when it
comes to kids, whose policy will have ample time to establish itself AND WILL GROW
exponentially over 20+ years, making this the most powerful wealth building asset you can
create for their future.

Don’t take my word for it, you need to see some life insurance illustrations in action.

Taxed Advantaged Compounding Policy Growth

The policy’s cash value grows every year tax deferred based on IRC 7702. Due to the beauty of
compound interest, the principle and interest of the cash account in the policy grows at an
internal rate of return which factors in a guaranteed return plus dividends.

And on a properly structured life insurance policy for children, the policy’s cash value continues
to earn interest and dividends, even if you or your child borrows money from the policy. That
way, the compounding effect is never reduced and the cash value continues to grow and grow
exponentially year in and year out!

Dividend Payments

We strongly recommend using mutual companies when designing the right whole life insurance
policy for children. These mutual insurance companies offer participating life insurance. That
means the policyholders get a return of premium in the form of dividends. These dividends can
be used to purchase more paid up life insurance.

Paid Up Additions

With the use of paid up additions, the death benefit and cash value in the policy are supercharged
for maximum growth. This allows the policy to be maximized right up to the allowable limit
before it becomes a modified endowment contract (MEC).

Guaranteed Future Insurability Rider

Once you have obtained life insurance for your children the policy will allow your child to
increase coverage periodically, with no proof of insurability. This is done via the guaranteed
insurability rider. This optional rider allows your kid to opt for more life insurance at specific
ages and after certain life events, such as marriage and having a child of their own.

Benefits of whole life insurance for children

Starting a policy for your child at a young age allows the cash value in the policy to grow so that
by the time your child is out of the house he or she will have a sizeable “personal bank” to use.
Now, as any good parent desires, you need to be involved in your kids financial education and
teach your kids about how to properly use their banking policy. This education alone will reap
massive benefits for your child’s WHOLE life, that is, completeness in every area of life,
including an intimate understanding of money and how it works.
Your child can borrow against the cash value in the policy for purchases such as:

 Education/Student Loans
 Vehicles
 Starting a Business
 Paying for a Wedding
 Avoiding Credit Cards
 Retirement
 Down Payment on a House
 Investments
 Etc.

The sky is truly the limit on what the policy can be used to fund. However, with a properly
funded whole life insurance policy and the proper education about money and finances, buying
life insurance for children is one of the best gifts a parent can buy for their kids.

Recapture the Debt

One of the primary principals of infinite banking is that you need to pay back your policy loan. It
is important for parents who buy their kids this type of life insurance as a savings vehicle to
familiarize themselves with the concept of recapturing debt.

Recapturing debt refers to the idea that all money has value. If you borrow from a bank, pay
cash, or borrow from your policy, the money has value, which is determined by the owner of the
money.

If you borrow from a bank, the bank will charge interest on the money. The bank values that
money with interest so that it can recoup the principal plus additional interest, because that is the
future value of that money to the bank.

When you pay cash for a purchase and you do not pay yourself back, you are actually
devaluing your own money. You are not valuing money the same way a bank does. If a bank
charges interest, you should value your own money more and charge yourself even more interest
than a bank would. This is the concept of economic value added.

Finally, if you borrow from your policy (technically the company), you need to pay your policy
back. And you should pay your policy back, with interest. Why? Because you value your money.
How much do you value it? That’s for you to decide, but 5% seems to be a good starting point.
 Conclusion

Life insurance for children, along with the requisite financial education on money and how to
grow it, will provide your child with a whole life of blessings most kids never have the luxury to
experience. Don’t wait any longer, get your child started on their own personal road to financial
freedom today. Give us a call for a complimentary strategy session and discover the powerful
benefits of life insurance for children.

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Great Benefits

All CHIP health insurance covers:

 Doctor visits, including routine checkups and immunizations. Find a doctor here.
 Diagnostic tests
 Prescriptions and some over-the-counter medications. Find out more about your coverage here.
Or, search for a pharmacy near you.
 Dental care, including orthodontia (braces, not for cosmetic reasons, only when medically
necessary). Find a dentist here.
 Vision and eye care. Find an eye care provider here.
 Emergency care
 Maternity care
 Mental health and substance abuse services. Search for a behavioral health provider here.
 Hospital care
 Durable medical equipment
 Physical, occupational, and speech therapy
 Home health care
 Tobacco cessation
 Nutritional counseling
 Medical nutritional therapy

For more details on UPMC for Kids benefits, see these documents:

Life Insurance on a Child with Special Needs: Benefits and Challenges

Parents with a special needs child often insure themselves to provide for their child when they
have died. A more complicated issue is whether the parents should consider purchasing life
insurance on the life of their child to address the possibility that they will outlive their child.
Purchasing a life insurance policy on the life of a child with disabilities can provide several
benefits for family caregivers. The purpose of this article is to explain these benefits, provide an
overview of the application process and describe the types of policies that may be available,
while highlighting some of the special considerations that family caregivers should understand.
The information here expands on suggestions offered on Life Insurance and Children with a
Disability in an earlier article in The Voice.

Benefits of Life Insurance

For caregivers who have foregone career development to provide care to a child with special
needs, retirement savings, pension amounts and even Social Security benefits may be adversely
affected. A life insurance policy on the life of the child may help to replace the caregiver’s lost
wages and retirement accounts at the child’s death. In most cases, when the insured person dies,
insurance proceeds will be paid to the designated beneficiaries free of any income tax.

Although it is not pleasant to think about, having a life insurance policy may help cover funeral
expenses and make up for lost income opportunities. Before you purchase life insurance on the
child with disabilities, you should know something about the process of purchasing a policy and
the available options.

Process of Purchasing a Life Insurance Policy

First, you should contact a reputable advisor. The insurance industry can be driven by
commissions, so find an advisor who will put your family needs ahead of personal gain and who
understands the guidelines for writing policies on a person with disabilities. Some advisors may
suggest that a child with special needs may not be insurable due to pre-existing conditions or
disabilities. Do not accept this response as a final denial of coverage. Despite such conditions,
there may still be options to obtain insurance, such as requesting a rating, a graded life benefit, or
a policy based on the functional level of your child (explained in more detail below).

One of the important considerations when applying for insurance is to present the medical and
psychological issues in a light most favorable for issuance of the policy. The details about any
medical or psychological issues must be completed accurately and honestly, but there is usually
no requirement to volunteer additional information. If the company wishes to request further
explanation about test results or details surrounding the capacity of a person to perform certain
tasks, it may do so at a later date.

Another important consideration is to determine the amount of coverage to request, which

depends on your reasons for purchasing a policy. If the proceeds are intended to cover only
funeral and related expenses, there is probably no need for a substantial death benefit. If the
proceeds will be used to support dependents or to replace a caregiver’s lost wages, a larger death
benefit may be appropriate.

When the application is complete, the advisor will send it, along with required medical
information, to the underwriter. After underwriter review of the application and the requested
death benefit, the company then determines whether to decline the application or to approve it
with a standard benefit, a rated benefit, or with lower coverage than requested.
Since the child is often a minor or is receiving Medicaid or other means-tested government
benefits, the child should not own the policy. The cash value of the policy is a countable asset of
the owner for purposes of Medicaid and SSI, programs which have very low asset limits. Loss of
these critical benefits could be catastrophic for the child. You may be the owner, as long as you
do not have long-term care or estate tax issues, which could cause complications for you. An
alternative could be to have another child own the policy, or, for a larger policy, to have an
appropriate type of trust as the owner and the beneficiary.

After the details of the policy have been arranged, it is time to start making payments. The
premiums, of course, will also be a factor for determining how much insurance to request. It is
interesting to note that sometimes, a person who is younger will have a higher cost of insurance
than that of an older person. For instance, a person who is only 10 years old may have a premium
greater than that of a 20 year old since a 20 year old has already lived to the age of 20 whereas
the 10 year old has 10 more years to obtain that age.

On the other hand, some companies do charge more if the insured person is older. For instance,
the sample analysis by one company for a male age 10 with a death benefit of $25,000 will cost
$179 per year whereas a 20-year-old male would pay $202 per year for the same coverage.

The cost of premiums will also vary depending upon whether the policy is “term” insurance or
“whole life” insurance. Term insurance is guaranteed for a set number of years such as 20 years.
When the term ends, the insurance company may or may not agree to renew the policy for an
additional term. There is no accumulated cash value to a term insurance policy.

Whole life insurance, on the other hand, is typically for the lifetime of the insured with a
guaranteed death benefit regardless of the age at death so long as the proposed premium schedule
is maintained. The insurance company cannot refuse to renew the policy as long as premiums are
paid. Whole life insurance typically accumulates a value over time referred to as the cash
surrender value. Term life insurance is cheaper than whole life insurance as it does not provide
any cash value.

Note that there are also “hybrid” policies that combine aspects of term and whole life insurance.
These policies are a little more difficult to understand, and an explanation here would
unnecessarily bog us down — ask your insurance advisor for an explanation and comparison of
the different types of policies.

The above steps and considerations highlight the process of purchasing an insurance policy on
the life of a person with special needs. The following summarizes in more detail the types of
policies that may be available.

Insurance Policies for People with Special Needs

Even though premiums may be higher, a whole life policy that guarantees coverage for the
lifetime of your child will ensure continued coverage if health conditions deteriorate over time. If
your child’s health is stable and not likely to deteriorate over time, then term insurance may be
less risky.
Due to the inherent risk of insuring a person with special health care needs, many companies
establish guidelines for writing policies on individuals with disabilities and have separate
allocations, referred to as the “tables,” regarding the cost of insurance. The company may rate
certain conditions or possibly assign an insured person what is known as a “graded life benefit.”

A rating or a graded life benefit is not a denial of coverage, but rather is an adjustment the
insurance company makes about how or when benefits will be paid. Instead of paying a fixed
amount upon the death of the insured party, a graded life benefit may schedule various benefit
amounts based on the number of years of survival after the application. For instance, if the
insured dies in the first year, the premium will merely be returned without interest. If the insured
dies in the second year, the death benefit may be 50% of the face amount of the policy, death in
the third year being 75% of the face amount, and in the fourth year and thereafter, the death
benefit will be the full amount. However, if the insured dies as a result of an accident and not
from natural causes, then the full face amount may be paid.

Other policies may be issued as well as charged based on the level of functioning of the insured.
Thus the amount of insurance for which a high functioning person can qualify may exceed the
amount issued to a person with more severe impairments. For illustration purposes, the following
summarizes how at least one insurance company describes certain levels of functioning:

 High functioning autism is comparable to an IQ of 70. The insured should have no or only
minimal impairment in sensory motor ability and should have well developed language skills.
 Mild functioning autism is comparable to an IQ range between 50 and 70. To qualify under this
description, an insured should have minimal impairment in sensory motor ability and be able to
acquire grade school academic skills. The insured should be able to achieve vocational skills for
self-support, even with assistance or guidance, but may also be able to live independently or
with limited supervision.
 Moderate functioning autism is comparable to an IQ range between 35 and 49. To qualify under
this description, an insured should be able to acquire some communication and personal care
skills through training. The insured may have academic skills limited to the early grade school
level, and social skills are significantly impaired, but the insured may be able to perform
unskilled or semi-skilled labor under supervision.
 Severe functioning autism is comparable to an IQ range between 20 and 34. Insured parties in
this description show poor motor development, minimal speech, and little to no communication
skills.
 Profound functioning autism is comparable to an IQ of about 20 or less. Insured parties in this
description have minimal speech development and self-care ability, may need to live in a closely
supervised setting, and may be able to perform only a few simple tasks with training.

In each of the above descriptions, the underwriting decision of a company will depend on various
issues such as the diagnosis, the presence of co-morbid disorder such as depression, anxiety and
obsessive compulsive disorders, any history of seizures and epilepsy, level of intellectual
functioning, IQ, and the ability to work and live independently.

The mere fact that a person has a disability of any type may affect the premiums or terms of the
life insurance policy, but is not necessarily a cause for denial. In addition, since there is no cost
to applying for a policy, there is really nothing to lose in an attempt to obtain coverage. It may be
that if a person has not been fully diagnosed when the application is denied, an application may
be resubmitted a few years later when a person may have been sufficiently trained in self-
sufficiency tasks to allow a policy to be issued.

Whether you would benefit from purchasing insurance on your child is complicated and, sadly, is
premised on the possibility that you could outlive your child. The cost of any policy must be
weighed against the potential benefits to you. Having a knowledgeable insurance advisor review
options can help you make an informed decision.

About this Newsletter: We hope you find this newsletter useful and informative, but it is not the
same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on
it at your own risk. Good legal advice includes a review of all of the facts of your situation,
including many that may at first blush seem to you not to matter. The plan it generates is
sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and
practices, many not published. That is what The Special Needs Alliance is all about. Contact
information for a member in your state may be obtained by calling toll-free (877) 572-8472, or
by visiting the Special Needs Alliance online.

Health-Care Benefit Programs and Insurance for Children with

Disabilities

Health-care coverage is a very important part of getting our children the care they need. Keeping
up with medical records and making sure that health insurance is covering your child’s claims
are big tasks, especially while you’re busy finding the best possible medical care for your child.
Don’t give up! Having health coverage is usually the best way to help with expensive medical
costs. And programs like Medicaid, Health Insurance Premium Payment (HIPP) program,
Children’s Health Insurance Program (CHIP), and others are there to help.

Different Health-Care Benefits for Children with Disabilities

There are 2 main types of health coverage: private insurance that you or your employer can
purchase and government programs. Keep in mind that health insurance itself and federal
programs such as Medicaid and CHIP are different, though many parents might refer to them
both as insurance. Health insurance has changed quite a bit in the last few years, and there are
some things you need to know.

How Does the Affordable Care Act Affect My Child’s Insurance Coverage?

 If your job doesn’t offer health insurance plans, you can purchase one from the Health Insurance
Marketplace.
 You can sign up for insurance on the Health Insurance Marketplace during an “open enrollment
period,” which lasts for a few months each year. If you lose your insurance, get married, have a
child, or some other major life event takes place, your family might still be able to sign up at
another time of the year. Other insurances have enrollment periods as well. Check with your
employer or insurance company about when you can sign up.
  Health insurance companies can’t refuse to cover your family because of a pre-existing
condition, which includes your child’s disability or special health-care needs as well as any
mental health conditions.
 Insurance plans must now cover mental health care.
 Insurance plans must cover prescription medications.
 Your insurance covers your child until they turn 26 years old, or maybe even longer depending
on their disability or special health-care needs.

Learn more about the Health Insurance Marketplace and the Affordable Care Act.

When Your Child Turns 26 Years Old

Some adult children who “age out” of their parents’ health insurance plans can still be covered.
If your child’s mental health or physical disability prevents them from working and living
independently, you might be able to keep them on your policy by submitting proof of their
disability to your insurance. Talk to your insurance company to learn more.

ABCs of Child Disability Insurance

Most parents feel like navigating health care is a big, complicated job. You see terms you’ve
never seen before or can’t always remember what the abbreviations stand for. Many of us feel
this way, so here is a cheat sheet of common terms you are likely to see. We hope this glossary
helps you along the way.

 Managed Care Plan: A type of insurance that works with certain providers (doctors, specialists,
and therapists) to make health care cheaper for their clients. HMOs, PPOs, POS plans, and EPOs
are all types of managed care plans.
 Health Maintenance Organizations (HMOs): Your child can only see certain doctors covered by
your insurance, and you might need your child’s primary doctor to give you referrals to
specialists.
 Preferred Provider Organizations (PPOs): Your child can see in-network as well as out-of-
network providers, but there are cost benefits to staying within the network. Be sure to ask your
provider. Your child does not need a referral to see specialists.
 Point of Service (POS): These combine some of the features of HMOs and PPOs. Your child needs
to have a primary doctor, and you can see out-of-network providers too.
 Exclusive Provider Organizations (EPOs): Your child can only see providers within your insurance
company’s network, but doesn’t need a primary care doctor or a referral to see specialists.
 Referral: When your doctor gives your child approval to see a specialist, this is called a
“referral.” A referral is often something in writing that you or the doctor must give to your
insurance before they will pay for your visit to a specialist.
 Copayment: Also known as a “copay,” this is a payment you make any time you or your child
uses your insurance. You usually pay a set amount for things like doctor’s visits or prescriptions.
 Deductible: For some medical services, you will usually have to pay a certain amount on your
own before your insurance benefits start paying. This is called “meeting your deductible.”
 Premium: The fee that you, your employer, or both pay for your insurance each year.
 Coinsurance: A percentage of your medical fees you must still pay for once you meet your
deductible.
Government Health Benefits and Insurance Programs

Government health benefits and insurance programs might help your family get health coverage
or insurance at little or no cost or pay for care your other health insurance might not cover. Read
about the different types of programs below, and see if they might be able to help your family.

 Medicaid: Medicaid is a government program that provides medical services for people who
meet certain income or disability requirements. See our Medicaid page to learn more about the
different types of Medicaid programs offered in Texas.
 Children’s Health Insurance Program (CHIP): A program that offers coverage to children age 18
and younger at low cost. The fees depend on family income levels.
 Children with Special Health Care Needs (CSHCN): A state program that offers extra health-care
benefits for children under the age of 21 who have disabilities, children who have special health-
care needs, and people of any age who have cystic fibrosis. You can learn more about CSHCN on
our Texas Department of State Health Services (DSHS) page or by visiting the CSHCN program’s
website.
 Medicare: A government insurance program for people age 65 and older, and if they meet the
requirements, for people age 18 and older with disabilities or special health-care needs.
 Health Insurance Premium Payment (HIPP): A program that helps families pay for health
insurance if someone in their family gets Medicaid and if someone in their family can get private
health insurance through their job.
 Supplemental Security Income (SSI): A government program that is based on financial need and
helps pay for living and health-care expenses for children with disabilities and special health-
care needs. If you are approved to get Medicaid, you also can be approved to get SSI.
 Social Security Disability Insurance (SSDI): A benefit for your adult child where they get a
monthly payment based on their own or their parents’ earnings if they (or you) have paid
enough Social Security taxes.
 Waivers: Waivers let states use Medicaid funds to offer long-term home and community-based
services to people with disabilities and special health-care needs – and people who are elderly –
in order to help them live in the community. Waivers are not a kind of insurance. Unlike other
programs, many waivers are based on your child’s, not your family’s, income. You might have to
wait a very long time to get waivers, so it’s best to sign up as soon as you can.

Top Tips for Any Health-Care Benefits

 Know your family’s insurance or benefits policy inside and out. This is your road map to paying
for services. Your policy is a document that explains what is covered and what is not. You can
usually get this document online from your health insurance company or when you sign up.
Reviewing this before your child needs to see their doctor can make things easier.
 Health insurance and coverage is tricky, but case managers can help. Check with your insurance
plan or health-care benefits program to see if they have case management. That way, you will
have an advocate to help you navigate and give you tips. Even without a case manager, you can
still call and ask your insurance company any questions you have about your plan. Sometimes,
your job will have someone who can help you too.
 Explore all the choices. Before enrolling, ask yourself: Will this plan cover the doctors,
prescriptions, therapies, or services my child needs? If you have more than 1 health insurance or
coverage plan to pick from, compare the benefits of each plan before signing up.
  Don’t be afraid to appeal a decision if your insurance or Medicaid plan won’t approve a service
your child needs. This is your right, and many denials are overturned when a parent appeals.
 You can call the Texas Department of Insurance (TDI) for help and advice at 1-800-252-3439 or
512-463-6515 in Austin. You can also visit TDI’s website to ask questions or file a complaint
against your insurance program.
Q: Insurance and Communication Skills
What Communication Skills Do Your Insurance Employees Need?

Insurance Employees Need to Juggle

It's can be hard to prioritize communication, but that is one of the key skills insurance agents and
other insurance professionals must acquire. According to Talent Egg, "As an insurance
professional, you will be managing multiple relationships and priorities." You may have an
internal report due, need to connect with a client about a claim, and need to connect with a
potential new client who has questions about your insurance product. Your insurance employees
need to be able to juggle all of these different priorities and communicate well with these
different audiences.

Insurance Employees Have High Standards of Communication

While casual communication might work at some companies, your insurance clients rely on your
agency to keep their homes, businesses, vehicles, and health safe. They expect a high level of
professionalism in their communication with their insurance company. When hiring new
insurance employees, you need to make sure that not only can they communicate well, but that
they can communicate in the right professional language for your clients.

Insurance Communication Should Be Simple

While they must be professional, at the same time, insurance employees also need to
communicate in a way that is simple enough for your clients to understand. While you are
experts in the insurance industry, most people are not. They need to understand what you cover,
any exclusions, extra insurance that they may need to purchase, and the details of how to make a
claim. When you're working with clients, you're not working with industry experts.Your
insurance employees must be able to use simple language to explain your products and how they
work.

Written Communication is Just as Important as Oral Communication

While we often consider oral communication skills during the interview process, written
communication skills are just as important for your insurance employees. In this era of
computer-mediated communication and social media, your insurance employees must be able to
write social media posts, create insurance marketing copy, and send an email to a client. They
need to be able to do this without grammatical or spelling errors, and they must communicate
clearly and professionally in written form.
Insurance Employees Communicate Nonverbally

If you're working with clients in person, nonverbal communication is also a critical skill for your
insurance employees. If an employee has welcoming words but does not have welcoming
actions, then this does not instill confidence in your clients. Your insurance employees should be
strong overall communicators, and this also involves nonverbal communication cues.

At American Agents Alliance, we not only understand insurance, we support insurance

companies. If you're an independent insurance agency, we're here to work with you make it
easier to run your agency, conduct insurance marketing, and find and train new employees.
Contact us today and learn about our many membership benefits.

Five Key Communication Skills for Successful Insurance Agents

Getting your message across isn’t always easy—especially when you’re selling insurance.
Insurance products are complicated, and customers often come in with their own strongly-held
expectations, assumptions, and biases. But the product is complicated—and the consequences for
misunderstanding a policy are high. Customers who don’t understand their policy well may file
claims they’re not entitled to.

Successful insurance agents need to be able to communicate well—to make sure their customers
buy the right coverage and understand their policies. Communicating well builds trust and
empathy, as well—which increases account expansion and customer retention. Here are a few
communication skills insurance agents need to have.

Verbal skills. First, you need to be able to explain your policies to clients in a clear, accessible
way. Insurance policies can be complicated, and many customers don’t take the time to read the
fine print. You’ll need to tell them exactly what types of insurance they need and why—in a
compelling manner.

Sometimes it’s difficult to break down complicated concepts into easily-understood sentences on
the spot. To get around this, write down the things your customers need to know about each
policy you sell—in one sentence each. Run the sentences by a friend or family member who isn’t
in the insurance industry before you use them on customers, just to make sure they’re easily
understood. You don’t need to read from the list when you talk to your customers, but writing it
down can help focus your thoughts—and reduce the complexity in your own mind before you
say it.

Nonverbal skills. Over 90% of communication comes from nonverbal, not verbal, cues. The
speed, cadence, and tone of your speech can send a message—sometimes a different one than
what you intend. Be aware of how your appearance, gestures, and posture affect your customers’
perceptions of you—and be prepared to work hard to change what you need to. Nonverbal cues
are often given out subconsciously, and you may be undermining your customers’ trust in you
without realizing it.
Written skills. Written communication skills can be invaluable for anyone running their own
business. With strong written communication skills, you can easily boil down your company’s
selling points to one compelling phrase. You can write effective postcard, brochure, and letter
mailings to customers—and you can develop the copy on your own website. Strong
communication skills make your marketing tasks much easier—and more effective.

Listening skills. You need to be able to hear what your customers are telling you—and offer
them the right insurance for their needs. Some agents will go into a meeting with a customer with
a pre-conceived idea about the type of insurance they need—and stick with it, even if the
customer is telling them something different. Always listen to your customers with an open
mind—and look for opportunities to up-sell when you can. If you do, you’re likely to get more
business—and your customers will get the insurance they need.

Rapport-building. Rapport is hard to define. It’s not being nice or sympathetic—and it’s not
being liked. It’s more about building trust, confidence, and a sense of ease and connection with
your customers. It’s the ability to bring your customers around to your way of thinking—and
help them see an issue the way you do. The stronger rapport you build with your customers, the
easier it will be to communicate—even the most complicated policy concepts.

Strong communication skills are the key to building a successful insurance business. Always
listen actively, and be able to break down important policy concepts into concise, simple
sentences. Understand your policies inside and out—and be able to explain them to customers in
easily-accessible language. Written skills are key as well—the better you explain your
company’s value in writing, the more business you can generate through your marketing efforts.

For further reading on active listening and communication skills, check out this article on active
listening, the Agent’s Journal’s tips for insurance agents, and this article on key skills for
insurance agents.

Three Communication Skills Vital to Every Insurance Producer

Studies have shown that effective leadership and influence, whether it’s with your team, your
clients, or your company partners is 87% people knowledge and only 13% product knowledge.

Reflect on that statistic for a minute, almost 90% of our ultimate success is not determined by
what we know, but how we can relate what we know with the people we want to influence.

What does this mean? Well, I believe it means several things, but ultimately it begs the question,
are we developing producers who can effectively communicate, and more importantly connect,
with their clients and future clients?

Even in today’s world of digital disruption and insure tech, building high-level relationships will
ultimately determine your success.
Let me state right up front, this doesn’t minimize understanding the technical side of the
insurance business. Every producer needs to be fully equipped to understand insurance terms,
definitions, exclusions, endorsements, and more.

But here’s where I want to focus your attention. Simply understanding insurance products better
than your competitors will not differentiate you from them. None of your technical knowledge
matters unless you can effectively transfer knowledge to your intended audience.

Becoming a world-class communicator takes time and effort. While some people have a knack
for getting along with people, I truly believe that communication is a skill that can and must be
developed.

So, what are some of the skills insurance producers can begin to develop today to become a
world-class communicator and grow their book of business? Let me share 3 that you can begin
to implement immediately.

Confidence

I have never seen an insurance producer that didn’t have confidence in four key areas.

Confidence may seem more like an attitude and less like a skill, but confidence requires courage.
It also requires hard work to develop the confidence necessary to become a successful producer.

Insurance producer confidence requires four main beliefs.

1. Confidence and belief in their agency

No independent insurance agency is perfect, but if you don’t believe you work for the best
agency in your marketplace, you will lack confidence.

2. Confidence and belief in their products and services

You represent many insurance carriers and products. You must have full confidence in their
ability to serve and protect your clients.

3. Confidence and belief in the value they provide

What is the value you bring to the marketplace? What sets you apart? If you can’t clearly
identify how the client is better off after doing business with you, you will lack confidence and
your client will see right through you.

4. Confidence and belief in themselves

I have seen many agents fake it and make it in the first two areas. Some even on the third area,
but this last area can’t be faked.

The most important sale you will ever make will be the one you make to yourself.

Confidence comes from knowing you are worthy and provide exceptional value.

Confidence comes from belief, but also by investing in your growth and development. Where do
you need to grow? How are you improving every day?

I love this quote from leadership expert John Maxwell who states, “If you don’t place a high
value on yourself, rest assured, the world will not raise the price.”

So, what’s the value of you? Confidence begins by investing in yourself.

Authenticity

Great insurance producers are not robots. Every producer has a unique skill set, background, and
passions that drive them.

As an agency leader, you must “coach” your producers differently. Yes, it’s important to
implement an agency culture and sales process, but to maximize your talent, every producer
needs to be authentic.

Successful insurance producers don’t try to pretend they are something they are not. This is a
challenging skill as it requires every producer to develop a higher level of self-awareness.

While some producers may be extroverted and take over a room, others succeed by being a
perceptive listener. It requires every producer to ask themselves, “Where am I at my best?”

This is also true in finding market niches that allow producers to shine. Every industry has a
different culture and there is power in aligning the right producers to match these specific
cultures.
While it’s important for insurance producers to find and connect with mentors, it’s also
important that they have their own voice, style, and mannerisms. It may take a while for a
producer to “find their voice,” but being authentic is a skill they can develop.

To connect with people, producers need to be comfortable with themselves. What are some of
their unique strengths and abilities. Where do they stand out? Focus on their strengths and
authenticity vs. trying to fix weaknesses that do not put them in the best position to win.

Preparation

There is no excuse for a lack of preparation. You play like you prepare. Too often insurance
producers show up to the big game with little to no practice.

I learned a great lesson as a 17-year-old kid on the importance of proper preparation.

In high school I was a successful basketball player, at least for a small town. My best attribute
was shooting the ball. The summer before my senior season, I was invited to a prestigious
basketball shooting camp. I was excited to maximize my best basketball skill.

After a long first day of practice and drills, we were finishing dinner when my coach stated that
we needed to head back to the gym to shoot another 150 shots before we called it a day.

Grudgingly, I headed back to the gym and started my 150 jump shots. I was tired and ready to
go home so although I got through all 150 shots, my form and intensity was less than 100%.

As I finished the last of my 150 shots, I walked over to my coach and told him I was done. He
looked at me puzzled and asked me a question that I have since asked myself and others many
times. He said, “Were those game shots, or practice shots?” I didn’t even have to answer and I
headed back to the court to shoot 150 “game shots.”

I see this over and over with insurance producers. They show up to the game without game
practice. The best communicators are prepared for every situation. They work as hard (if not
harder) in preparation as they do in real situations.

Most insurance producers never fully prepare, at least intentionally, for the next team meeting,
sales appointment, phone call, or email. Instead, they show up hoping that they are prepared.

Preparation is a skill that must be mastered for any insurance producer to have success.
Relentless preparation separates the high achievers from everyone else.

Would you rather dribble the ball off your foot during practice or when the game is tied with a
minute to go?
Bottom Line

Former President Gerald Ford stated, “If I went back to college again, I’d concentrate on two
areas: learning to write and speak before an audience. Nothing in life is more important than the
ability to communicate effectively.”

As I stated at the beginning of this post, almost 90% of producer influence comes from the
ability to connect with people and build relationships.

How much time are your producers working on developing their communication skills?

Becoming a better communicator takes initiative, courage, and skills. No one gets better by
accident. It takes desire and intentionality.

That starts with developing these three basic skills of communication. Producers need to gain
confidence, exhibit authenticity, and relentlessly prepare.

The results will be deeper pipelines, higher closing ratios, happier clients, and satisfied
producers.

Brent Kelly is an executive coach with The Sitkins Network. The Sitkins Network is a territorial
exclusive community of high achieving insurance agencies that help agencies attract, train, and
maximize talent to become a category of one in their marketplace.

The Best Communication Skills to Have as an Insurance Producer

Having great communication skills can help establish you as a well-known and trusted insurance
producer. When your communication skills are lacking it’s important to understand how you can
improve and what actions you need to take. These are simple and easy skills that you can start
developing today.

Friendliness

Have you ever enjoyed talking to a grumpy person? I didn’t think so. With that being said, make
it a point to be friendly whenever you’re engaging in a conversation. Coming across as a friendly
person will help to build trust within your relationship.

Picking the Right Medium

Choosing how you’re going to communicate is essential to building relationships. If you only
reach out to someone via email you’re not forming a well-developed and trusted relationship.
Engage Pro prompts you to use different mediums of contact – in addition to using SMART
technology and automatic reminders. It’s the perfect fit for a busy lifestyle.
Listening & Feedback

Don’t spend the entirety of your conversation speaking. It’s important to listen when your
counterpart is talking. Hear out what they have to say and be thoughtful in your response. Also,
try to ask open-ended questions – straying away from yes/no responses. This will help to keep
the conversation moving forward.

Respect & Open-Mindedness

In addition to listening, it’s important to keep an open mind. Be respectful of what the other
person has to say. Have you ever been in a situation where you’re opening up about something
you’re passionate about and the other person says something negative or unappreciative? It’s not
a great feeling and can leave a stale taste to the relationship. Try to be understanding and
uplifting when someone brings forth a new idea.

Confidence

Bring forth confidence in your conversations! By displaying confidence you’ll be presumed as

knowledgeable and trustworthy. The person you’re talking to will also feed off your confidence
— helping the conversation to grow into a meaningful discussion that you’ll both remember
well.

By implementing these skills into your daily conversations you will start to see stronger
relationships blossoming. You can easily start working on developing these skills now! Take
advantage of the tool I mentioned (Engage Pro), talk to someone new today, and notice how you
currently communicate so you can make subtle changes. By becoming a better communicator
you’ll also become a better insurance producer that’s trusted by many.

Top 7 Skills You Need To Get Into Insurance

. Customer service

Whether as a broker, claims manager, loss adjuster or underwriter, you’ll be negotiating with
clients or on their behalf – and the key to your success is providing excellent customer service.
While actuaries have less direct customer contact, these same skills will help you interact with
your colleagues.

Gathering examples

If you have a part time job in a customer service role, such as retail or working on a customer
helpline, ask your boss for feedback. Also make a note of any time you feel you offered excellent
service.

Volunteer to help on campus tours for prospective students. Put in extra effort to research the
information they’re likely to need.
During the application process

Smile at your interviewer and use open, friendly body language.

Come prepared and informed about the industry.

Show your ability to connect with people. Find common ground with your interviewer or ask
what they like about working at the company.

2. Numeracy

Some insurance roles are more mathematically demanding than others. Actuaries work with
statistics and computer modelling, while claims handlers just need to be comfortable with
numbers.

Gathering examples

Luckily, you use numeracy all the time in daily life. For students, the big one is budgeting food,
rent and bills, especially if these are split with other housemates.

You can also volunteer as a treasurer of a club or society.

During the application process

Don’t be afraid to use prosaic examples on your CV or at interview. If you can explain your
successful budgeting techniques, that’s plenty.

If you’re faced with a numerical question, take a deep breath and think through how to approach
it before you dive in.

3. Organisation

Because you’re likely to be dealing with a large number of customers or clients, it’s important
that you keep organised, accurate records.

Gathering examples

Everyday examples of organisation often involve technology. Think about the apps you use to
keep yourself organised. How did you select them and what do they allow you to do?

Take on managerial responsibilities at a job, such as setting up shift rotas or allocating tasks.

Get involved in organising an event for a student society.

During the application process

Don’t be afraid to think aloud. When you’re asked to solve a problem at interview, explain your
thought processes. Even if your answer isn’t perfect, your interviewer can see your methodical
approach.

4. Problem-solving

In any insurance role, you’ll come across problems that need a creative solution. As a broker,
you might have to find cover for a client with unusual insurance needs. As an actuary, you could
be faced with calculating a new and unpredictable risk.

Gathering examples

You solve problems all the time in your everyday life. Think about times when you’ve hit a snag
– maybe a funding shortfall for a trip, a member of a project group who called in sick at the last
minute or two staff members at your job who wouldn’t stop arguing. What did you do to fix it?

The more you try to do, the more problems you’ll run across! Get involved in anything where
you have to take on responsibility. Problem-solving examples are guaranteed.

During the application process

At some interviews you’ll be given tasks and problems to solve and be watched as you work.
Don’t let it fluster you. Think carefully, take your time and be creative.

5. Attention to detail

As with any job involving payments and calculations, attention to detail is vital. The ability to
pick up on little errors can save you from a disaster caused by a misplaced decimal point.

Gathering examples

Science students have it easy here – experimental techniques and computer programming require
attention to detail and give evidence of your success.

Take on tasks such as proofreading for the college newspaper or keeping records for a student
society.

During the application process

Proofread your application thoroughly – weed out every tiny spelling or punctuation error.

When your interviewer asks you a question, make sure you’re clear what you need to do. If
you’re not, ask for more detail.
6. Analytical skills

Analysing information is an important part of insurance, whether you’re looking at the risks a
client faces or analysing different insurance options to find the best policy for your customer.

Gathering examples

If you’re a business student, social scientist or statistician you should have experience analysing
statistical data. Look back on challenging assignments and describe how you succeeded.

Analysis doesn’t have to include numbers. Any essay where you analyse the evidence to choose
and support a conclusion is a valid example for your CV.

Volunteer for tasks where a decision needs to be made based on evidence – for example,
choosing a venue for an event based on factors like location, suitability and price.

During the application process

You may need to do online tests to demonstrate your analytical skills. Find sample tests online
and in careers advice books to help you understand the types of question you might face.

7. Communication

When you work in insurance, you’re the expert – your clients and customers know much less
about the topic. You need to be a strong communicator to get key information across in a simple,
jargon-free way.

Gathering examples

Telephone jobs, such as calling alumni for donations or volunteering for a peer support line,
develop your verbal communication skills and grow your confidence.

Join a debating society, a student council or even an improv group.

Join a student magazine or take responsibility for a society website. Successfully advertising an
event online is a great example of your written skills.

During the application process

Don’t rush your application questions. Make sure your answers are clear and well-structured.
The same goes for your CV. Use the STAR method – Situation, Task, Activity, Result.

In your interview, speak clearly and confidently and connect with your interviewer through open,
relaxed body language and eye contact.
And finally…

Remember that you have to work your way up through the company. As with any business role,
in your first year or two you’ll need patience and determination while you progress.

1. Communication

In an insurance role, you’ll be required to communicate with internal and external stakeholders.
This is why employers seek candidates who stand out when it comes to their communication
skills.

When applying for an insurance role, be sure to showcase any experiences, courses, or volunteer
work that have developed your communication skills and be sure to highlight them in your
application.

2. Customer service

As an insurance professional, you will be managing multiple relationships and

priorities. Ensuring that you are understanding your customers’ needs, professionalism,
managing your time and their expectations effectively and delivering what you promise can play
a key role in a successful insurance career.

Any experience that helps you demonstrate your ability to respond to inquiries, manage a high
volume of traffic, deliver some ‘tough messages’ or your commitment to go above and beyond
are great selling points for your application and interview.

3. Teamwork

Though there may be times when you are working independently, you will ultimately be working
as part of a team to achieve your unit or organization-wide objectives. Working collaboratively
to identify new business opportunities, generate a solution to a problem or emerging issue, or
develop a strategy to manage a potential risk effectively are just a few examples of ways you
may find yourself working with your colleagues.

Think about school projects, jobs you have had, committees you were a part of or extracurricular
activities that had you as a part of a team (for example: band, sports teams, debate clubs,
etc.). How did you go about achieving success? What role did you play? How did you
capitalize on each other’s strengths? Overcome challenges?

These are all great examples to showcase your ability to work as part of a team.

4. Professionalism

Insurance is all about peace of mind.

It is important that those working in the sector are seen as the professional they are.
Demonstrating due diligence, paying attention to detail, wearing appropriate business attire,
maintaining ethical standards and confidentiality, staying up to date on current trends/products
and exercising sound judgment are all qualities that make up the package of the professional
people are entrusting to help them to protect the things they hold most dear.

If you have the opportunity to engage an employer in-person or are brought in for an interview,
be sure to take steps to put your best foot forward and convey that you are the professional the
employer is looking for to join their team.

5. Results-oriented

On virtually any career path, success is not just based on doing the job.

Rather, it is often judged by the results you have achieved. Whether you are bringing on a new
client, reducing the degree of risk associated with a particular client’s needs, developing a new
product or settling a claim fairly and efficiently, there are lots of ways to achieve a positive result
in your career as an insurance professional.

In the application process, be sure to focus in on not just what you did, but the results and
outcomes from each of your previous roles.

6. Curiousity/quick learning

It’s important to employers that you’re eager to stay on top of industry developments, news,
trends and information. Since insurance affects virtually everything we do in life and in business,
there is a lot of information to keep on top of in an insurance role and it’s crucial that you be in
the know.

Be ready to commit some time to continuous learning in different forums, including networking,
research and professional development.
Q: necessity of english for insurance professional

English for Insurance Professionals

Company Courses

Suitable for all insurance professionals who need to improve their ability to communicate
effectively in this rapidly changing sector. It is ideal for students who need to learn the language
of more specialised business English. The course is suitable for learners at CEF level B1/B2 and
upwards.
Main areas of focus:

 Risk & Reward – Main types and key principles of insurance

 Underwriting & Claims – Claims management/non-disclosure/fraud
 Intermediaries & Distribution – Customers`needs/advice/sales
 Life Insurance & Pensions – Options/strategies
 Private Medical & Health Insurance – Preventive services/PMI policies
 Buliding, Household & Car insurance – Types/ complaints/handling claims

On completion:

 Ability to show greater fluency in a number of face-to-face business situations

 Ability to draft clearer and more concise business documents
 Ability to discuss and deal with modern insurance topics with confidence using up- to-
date business terms
 Ability to accurately describe company products
 Broad range of new vocabulary and grammar skills

Are you interested in our course? Then get in touch with us, our team will be happy to help
you.

English for the Insurance Industry

Business English for the Insurance Industry

Duration: 5 days Monday – Friday 09.00 – 17.15

Location: Linguarama London - Non-residential Hotel and Host Family

Accommodation available

Address: 101 Finsbury Pavement, London EC2A 1RS

Why should you attend?

With the recent consolidation of the insurance industry, it is a more international sector than
ever. This means that those who wish to excel in insurance fields need to have English language
skills of the highest quality in order to meet client expectations.
This highly practical Insurance English course is designed to meet your insurance language and
communication needs. The course will give you the language and the confidence to operate
more effectively in your specific role in English as well as allowing you to develop your
insurance specific vocabulary, ability to deliver presentations and effectively meet the needs of
your English speaking clients.
Turning Theory into Practice

This course encourages participants from the Insurance Industry to develop their communication
skills in relevant situations and contexts. The programme will be based around the needs of the
participants, developing language skills through discussion, role-plays, case studies,
presentations, vocabulary development and language analysis in contexts relevant to the
Insurance Industry.
The programme is flexible and tailored to the specific personal/ organisational needs of each
client. However, core subject areas for the Insurance English course will include:

 Key insurance language and terminology

 Business communication skills specific to your position
 Tools for effective written communication
 Discussion of current and relevant insurance topics and issues to build fluency and confidence in
speaking
 Strategies for developing effective listening skills
 Review and consolidation of grammatical accuracy
 Vocal clarity and impact input
 A broader knowledge of the workings of the London market

You will prepare a presentation on your role and your company’s role in the insurance industry
as a pre-course task, which will allow you to demonstrate the level of English you already have
and prepare you to study. Relevant learning and continuing to learn strategies are introduced
throughout the course, allowing you to maximise your progress before, during and after your
course. Suitable tailored and published materials will be used throughout your course, with
recommendations for self-study material.

Benefits to you:

 Increasing your understanding and accurate use of insurance English terms

 Improving your English language skills in contexts relevant to your role
 Developing your ability to draft clearer and more concise reports and other documents
 Practising work-related language through relevant role plays
 Increasing your confidence when dealing with clients and colleagues in English in face-to-face
and telephone situations
 Benchmarking your knowledge against other insurance industry professionals
 Fast tracking the development in your overall language ability
 Improving your self-correction techniques

The importance of Learning English

The importance of learning English cannot be overstated in an increasingly interconnected and

globalized world. For the millions of immigrants who travel the world from non-English-
speaking countries every year, learning to communicate in English is important to enter and
ultimately succeed in mainstream English speaking countries. Working knowledge of the English
language can create many opportunities in international markets and regions.

International Language

English is the fourth most widely spoken native language in the world, and in terms of sheer
number of speakers, it is the most spoken official language in the world. It is the primary
language used in international affairs. The English language has official status even in nations
where it is not the primary spoken language. English is indisputably the primary language of
global trade and commerce. In many countries, most tourism authorities and other officials in
contact with the public speak English to interact and engage with tourists and immigrants.

Digital Age

While progress has been made in language-translation software and allied technologies, the
primary language of the ubiquitous and all-influential World Wide Web is English. English is
typically the language of latest-version applications and programs and new freeware, shareware,
peer-to-peer, social media networks and websites. Software manuals, hardware-installation
guides and product fact sheets of popular consumer electronics and entertainment devices usually
are available in English first before being made available in other languages.

Higher Learning

In universities and colleges in Great Britain, the Unites States, Canada, Australia, New Zealand
and Singapore, which attract the most number of international students, the primary language of
instruction is English. Most of the top business schools, medical centers and advanced-study
institutes are located in North America and Great Britain, and English is the language used in
every activity at these institutions of higher learning. Most peer-to-peer journals and technical
periodicals that give international acclaim to scientists, engineers, technologists, and technocrats
are printed in English.

Anglo-Saxon Influence

The influence of the United States and Great Britain on political affairs and international
relations for the past 100 years has ensured the proliferation and acceptance of English as the
primary spoken language in many countries. The widespread acceptance of American pop
culture also has contributed to the primacy of the English language. A working knowledge of
English is important for diplomats and high-ranking officials in such major countries as
Germany, Japan, France, South Korea, Brazil, Italy, and Russia so they can better understand the
nuance and craft of global affairs and international diplomacy.

Job Opportunities

Knowing English opens job and employment opportunities in many countries and markets.
Multilateral institutions and agencies in the four United Nation cities of New York, Vienna, The
Hague and Geneva recruit professionals with multilingual skills but also expect the candidates to
have good English-speaking skills. The Commonwealth of Nations, made up of 50-plus countries
that were former British colonies or dependencies, also offers numerous employment
opportunities to those who understand and communicate in English.
Q:Insurance Ethics
Insurance Ethical Principles

(unofficial translation)

Objectives of Ethical Principles

The objective of the Ethical Principles of the Association of the Insurance, Reinsurance and
Pension Companies of Turkey is to set forth the ethical principles to be followed by
insurance,reinsurance and pension companies in their relations with each other and with their
clients, employees and public bodies and to enhance existing public confidence towards the
sector within this framework.

I. General Principles

Insurance, Reinsurance and Pension Companies shall respect the below mentioned ethical
principles in their activities and operations;

Integrity

Insurance, Reinsurance and Pension Companies shall be committed to the principle of integrity
principle in their activities.

Neutrality

Insurance, Reinsurance and Pension Companies shall avoid any discrimination between and bias
against their employees and clients.

Reliability

Insurance, Reinsurance and Pension Companies shall provide their clients open, comprehensible
and accurate information in adherence to mutual confidence and deliver services in a timely and
complete manner.
Transparency

Insurance, Reinsurance and Pension Companies shall adhere to simplicity and lucidity in
informing their clients and uphold the maximum possible level of transparency in their activities.

Respect for Human Rights

Insurance, Reinsurance and Pension Companies shall respect human rights in all their activities
with the understanding that human rights are as a prerequisite for a sustainable society.

Social Responsibility

Insurance, Reinsurance and Pension Companies shall be committed to supporting social and
cultural activities.

Respect to Environment

Insurance, Reinsurance and Pension Companies shall be committed to the preservation of the
environment and natural resources in all their activities.

II. Intercompany Relations

Insurance, Reinsurance and Pension Companies shall respect the below mentioned principles in
their relations with each other;

Exchange of Information

Insurance, Reinsurance and Pension Companies shall be engaged in an honest and systematic
exchange of information amongst themselves on the condition that this is in accordance with
legislative provisions and without violating confidential information of clients.

Employment and Insurance Intermediaries

Insurance, Reinsurance and Pension Companies shall avoid any practices that may lead to unfair
competition in staff employment and in relations with insurance intermediaries.

Insurance, Reinsurance and Pension Companies shall be objective in providing information

required by other insurance, reinsurance, pension companies about former employees and
insurance intermediaries.

Insurance, Reinsurance and Pension Companies shall provide information about the unethical
behaviours of former employees to companies requesting information in the employment
process.

Competition

Insurance, Reinsurance and Pension Companies shall try to make sure that a healthy and
constructive competitive environment is built and they avoid any practices that create unfair
competition.

They shall avoid disclosure of confidential information about other companies unless companies
consent to the disclosure; they also take preventive measures to make sure that employees
transferring from one company to the other do not use the internal and external connections they
obtained in their former company against this former company.

Announcements, Notices and Advertisements

In their announcements of financial situation and notices and advertisements relating to the
presentation and marketing of insurance products and services, Insurance, Reinsurance and
Pension Companies shall behave in accordance with public morality, in an honest and realistic
manner and shall avoid any behaviour that might be detrimental to professional integrity.

In their announcements, notices and advertisements, they shall avoid any statements or
expressions discrediting the products and services of other companies.

III. Relations with Customers

Insurance, Reinsurance and Pension Companies shall respect the below mentioned principles in
their customer relations;

Informing Customers
Before and during the implementation of the insurance contract, Insurance, Reinsurance and
Pension Companies shall provide timely and accurate information concerning their products and
services and avoid any misleading or inadequate information.

They shall recommend the most suitable products that meet customer needs and provide
information to the customers on the advantages and disadvantages of these products in
comparison with other products.

Customer Confidentiality and Security

Insurance, Reinsurance and Pension Companies shall avoid disclosure of confidential

information and documents relating to customers except for information and documents which
shall be legally provided to authorized people and authorities; information that is shared under
the relevant legislation and in cases where customers have express consent.

Insurance, Reinsurance and Pension Companies shall take necessary measures to ensure the
security of operation and avoid customer aggrievance.

Avoiding Discrimination, Service Quality

Insurance, Reinsurance and Pension Companies provide the same quality of service to all
customers avoiding any particular discrimination.

They perform any infrastructural activities to enhance service quality.

Setting the target market, differentiating product range and organizational structure in
accordance with the public audience or following different approaches towards risky categories
of customers shall not be interpreted as discrimination between customers.

Customer Complaints

Insurance, Reinsurance and Pension Companies shall constitute an in-house structure or shall be
involved within a structure that provides sectoral services to analyze, assess and conclude
customer complaints.

They shall also take precautions to correct inaccurate practices and avoid their recurrence.

IV. Relations with Employees and Insurance Intermediaries

Insurance, Reinsurance and Pension Companies shall respect the below mentioned ethical
principles in their relations with employees and insurance intermediaries

General Qualifications of Employees and Insurance Intermediaries

Insurance, Reinsurance and Pension Companies shall ensure that employees and intermediaries
work in such a way to observe the integrity of the profession in society and are people possessing
the necessary professional knowledge and responsibility.

Recruitment and Career Development

Insurance, Reinsurance and Pension Companies shall provide equal opportunities to everyone
and avoid any discrimination based on nationality, religion and gender in recruitment and career
development.

Following the principle of providing the best guidance to human resources, Insurance,
Reinsurance and Pension Companies shall support activities like training, courses, seminars and
other similar facilities aimed at enhancing their employees’ and intermediaries’ level of
knowledge necessitated by the insurance profession.

In assessing their employees’ performance and occupational promotion, Insurance, Reinsurance

and Pension Companies shall take into consideration their employees’ commitment to insurance
ethical principles and the diligence they bestow in the implementation of the mentioned
principles.

Principles of Presentation and Working Environment

Insurance, Reinsurance and Pension Companies shall be committed to the principle of integrity
principle in their activities.

They shall seek to create a healthy and safe working environment for employees, take measures
to enhance their motivation and ensure that they provide services in better conditions.

They shall employ adequate number of employees in accordance with workload, ensure that
within working hours the maximum level of performance is attained, employees have regular
holidays and overtime work is avoided.

They shall adopt internal measures to prevent employees to enter into unethical relations with
clients, to take gifts from existing or potential clients and to gain interests through the use of
either their own working environment or their clients’ work opportunities.
They shall ensure that employee rights arising from legal provisions are provided on time an in
full.

V. Relations with Public Institutions and Organizations

Insurance, Reinsurance and Pension Companies shall act in accordance with the principles of
honesty and transparency in their relations with public institutions and organizations and they
shall ensure that information, documents and registers required by law for purposes of
supervision and control are provided in full and on time.

VI. Development of Ethical Principles in Insurance

Insurance, Reinsurance and Pension Companies are always welcome to submit to the
Association of the Insurance ,Reinsurance and Pension Companies of Turkey their suggestions
regarding the development of ethical principles and making necessary modifications where
necessary.

Q: Uses of internet for developing insurance business

Key benefits of using internet in business

Your business can use internet to increase:

 profits
 visibility
 customer base
 customer support options
 opening hours (since the internet is 'on' 24 hours a day)
 cost savings
 networking opportunities
 research capabilities
 marketing options, including digital communications and automation
 workplace and business efficiency
 operational flexibility and productivity, eg remote working or outsourcing
 data storage and management capabilities, eg through cloud
 access to a diverse range of business tools and applications
+ File
Q: Prospects of insurance among university students
Q: Importance of training in professional development
Training isn’t just important to any company, it is vital.

Although there are many categories of training such as management training and or sales
training, employees with Project Management skills are an important asset to any organisation.

But what does training and development, mean to your organisation?

Training presents a prime opportunity to expand the knowledge base of all employees, but many
employers in the current climate find development opportunities expensive. Employees attending
training sessions also miss out on work time which may delay the completion of projects.
However despite these potential drawbacks, training and development provides both the
individual and organisations as a whole with benefits that make the cost and time a worthwhile
investment. The return on investment from training and development of employees is really a no
brainer.

So what are the benefits?

Improved employee performance – the employee who receives the necessary training is more
able to perform in their job. The training will give the employee a greater understanding of their
responsibilities within their role, and in turn build their confidence. This confidence will enhance
their overall performance and this can only benefit the company. Employees who are competent
and on top of changing industry standards help your company hold a position as a leader and
strong competitor within the industry.

Improved employee satisfaction and morale – the investment in training that a company
makes shows employees that they are valued. The training creates a supportive workplace.
Employees may gain access to training they wouldn’t have otherwise known about or sought out
themselves. Employees who feel appreciated and challenged through training opportunities may
feel more satisfaction toward their jobs.

Addressing weaknesses – Most employees will have some weaknesses in their workplace skills.
A training program allows you to strengthen those skills that each employee needs to improve. A
development program brings all employees to a higher level so they all have similar skills and
knowledge. This helps reduce any weak links within the company who rely heavily on others to
complete basic work tasks. Providing the necessary training creates an overall knowledgeable
staff with employees who can take over for one another as needed, work on teams or work
independently without constant help and supervision from others.

Consistency – A robust training and development program ensures that employees have a
consistent experience and background knowledge. The consistency is particularly relevant for the
company’s basic policies and procedures. All employees need to be aware of the expectations
and procedures within the company. Increased efficiencies in processes results in financial gain
for the company.

Increased productivity and adherence to quality standards – Productivity usually increases

when a company implements training courses. Increased efficiency in processes will ensure
project success which in turn will improve the company turnover and potential market share.

Increased innovation in new strategies and products – Ongoing training and upskilling of the
workforce can encourage creativity. New ideas can be formed as a direct result of training and
development.

Reduced employee turnover – staff are more likely to feel valued if they are invested in and
therefore, less likely to change employers. Training and development is seen as an additional
company benefit. Recruitment costs therefore go down due to staff retention.

Enhances company reputation and profile – Having a strong and successful training strategy
helps to develop your employer brand and make your company a prime consideration for
graduates and mid-career changes. Training also makes a company more attractive to potential
new recruits who seek to improve their skills and the opportunities associated with those new
skills.
Training can be of any kind relevant to the work or responsibilities of the individual, and can be
delivered by any appropriate method.

For example, it could include:

 On-the-job learning
 Mentoring schemes
 In-house training
 Individual study

Blended learning is becoming more and more popular and as a company we have seen a
definite increase in this method of training over the last year. Blended Learning is the
effective combination of online learning and classroom learning. Many of 20|20’s clients
prefer their staff to learn on-site rather than attend off-site training programmes –
especially in industries like oil and gas where it is often very impractical to attend off-site
courses. On-site learning programmes like the blended learning approach, allow 20|20 to
train more people working across a larger international footprint than just the UK. This
makes it much more cost-effective and allows for greater process consistency. Addressing
Weaknesses

Most employees have some weaknesses in their workplace skills. A training program allows you
to strengthen those skills that each employee needs to improve. A development program brings
all employees to a higher level so they all have similar skills and knowledge. This helps reduce
any weak links within the company who rely heavily on others to complete basic work tasks.
Providing the necessary training creates an overall knowledgeable staff with employees who can
take over for one another as needed, work on teams or work independently without constant help
and supervision from others.

Improved Employee Performance

An employee who receives the necessary training is better able to perform her job. She becomes
more aware of safety practices and proper procedures for basic tasks. The training may also build
the employee's confidence because she has a stronger understanding of the industry and the
responsibilities of her job. This confidence may push her to perform even better and think of new
ideas that help her excel. Continuous training also keeps your employees on the cutting edge of
industry developments. Employees who are competent and on top of changing industry standards
help your company hold a position as a leader and strong competitor within the industry.

Consistency

A structured training and development program ensures that employees have a consistent
experience and background knowledge. The consistency is particularly relevant for the
company's basic policies and procedures. All employees need to be aware of the expectations
and procedures within the company. This includes safety, discrimination and administrative
tasks. Putting all employees through regular training in these areas ensures that all staff members
at least have exposure to the information.

Employee Satisfaction

Employees with access to training and development programs have the advantage over
employees in other companies who are left to seek out training opportunities on their own. The
investment in training that a company makes shows the employees they are valued. The training
creates a supportive workplace. Employees may gain access to training they wouldn't have
otherwise known about or sought out themselves. Employees who feel appreciated and
challenged through training opportunities may feel more satisfaction toward their jobs.

1. You increase the collective knowledge of your team

Encouraging your employees to train in relevant subjects and applications — an advanced course
in a software program they use daily, for example — can have an immediate effect on
productivity. Professional development can also help raise overall staff expertise when
employees with vastly different backgrounds and levels of experience are encouraged to share
information.

2. You boost employees’ job satisfaction

When staff members can do their jobs more effectively, they become more confident. This leads
to greater job satisfaction and improved employee retention. There are a range of low-cost
professional development training options to choose from, including mentorships, job shadowing
and cross training.
3. You make your company more appealing

When you offer training and development opportunities, you’re building a positive reputation as
an employer that cares about its workforce and strives to employ only the best. Your customers
and clients will benefit, too, from the high level of efficient service they receive. And keep in
mind that your employees are your brand ambassadors. When they attend conferences and
seminars, they represent and reflect all that’s good about your organization.

4. You attract the right kind of in-demand candidates

Do you want to attract the most highly driven and career-focused candidates when you post a job
opening? Offer them more than just a competitive salary and benefits; paint an enticing picture
of how they can grow professionally or expand the career avenues available to them if they come
to work for you.

5. You aid your retention strategy

Your workers want to feel like they’re appreciated and making a difference. But they also want
to feel like they’re gaining expertise and becoming more well-rounded. If your team members
don’t feel challenged, or they sense stagnation in their careers, they'll look for advancement
opportunities elsewhere. Lifelong learning exposes your employees to new experiences and
keeps them engaged in their work. Professional development training helps build and maintain
enthusiasm, but it also inspires loyalty.

6. You make succession planning easier

Do you feel like some employees clearly fall into the management material category? Leadership
development programs are tools for grooming future leaders for your organization. If you’d like
to be able to promote staff to managerial positions in the future, targeted training now can help
you ensure your best and brightest are prepared to move up.

Subscribe to the Robert Half newsletter for articles and resources to help you build and
manage a winning team — all sent directly to your inbox.

 Keep up with industry changes

Industries are constantly changing and so it is important for a business to develop to avoid being
left behind. It’s also important to make sure your business is complying with any industry
regulations, which can be achieved through ongoing training, making sure your staff’s skills and
knowledge are up-to-date.
 Be in touch with all the latest technology developments
New technology is being developed all the time and so it is not sufficient to run a one-off
training session. Regular training needs to take place to ensure that staff are using all the latest
technology comfortably and to its full potential. This can be achieved through implementing a
customised staff IT training program, and by integrating employee training with IT support.
 Stay ahead of competitors
Standing still can kill your business, so by making sure your staff are constantly advancing, you
will continue to move forward are remain competitive within the marketplace.
 Be able to see weaknesses and skill gaps
With regular training, a business can more easily identify any gaps in the market and skill gaps
within the existing workforce. By identifying these gaps early, there is time to train staff in these
required areas so they can fulfil the role effectively.
 Maintain knowledge and skill
Although one off training may be provided to new starters, or other employees, it’s important
that training schemes are put in place to help develop skills throughout their job. To retain
knowledge, skills need to be practiced and refreshed on a regular basis so elements aren’t
forgotten.
 Advance employee skills
Once a business has spent money on providing basic level skills, these can easily be built upon
and improved to provide much more benefit to the business. Staff that know more can bring
more to the table, and your business will reap the rewards.
 Provide an incentive to learn
If training is provided as part of a longer development pathway, employees will have much more
incentive to learn, participate in the session and put their new skills into practice.
 Increase job satisfaction levels
Through continued investment from the business, staff can have a much higher sense of job
satisfaction, which can improve their motivation towards their work. This reduces employee
turnover and increases productivity, which directly improves the profitability. It also prevents
competitors from taking away your best employees by offering training incentives.
 Provide internal promotion opportunities
Employing new staff involves high recruitment costs and hiring fees. However, with ongoing
training, your existing staff can become more eligible for internal promotions. Unlike new staff,
you can guarantee they have a complete knowledge of your business, the correct skill set and
are people that you know and trust.
 Attract new talent
All businesses want to have the best employees and so with ongoing training, this will not only
mean better staff retention, but the business may also attract better talent from the start, as
this gives the business a good image and is a key feature many people look for within their job
search.
 . Untrained Employees = Unhappy Employees
 Employees who feel inadequate, underachieving, or unsupported are unhappy. They
aren’t satisfied in their work, which will cause them to underperform, make mistakes, and
not care about their work product. That costs the business in lost time and money.
 2. Untrained Workers Have a Low Production Value
 The quality of their work is lower and of less value. The quality in performance is lower
than it could (or should) be.
 3. Untrained Workers Are Inefficient
 More time (and therefore money) and effort is spent when employees aren’t fully or
properly trained to perform their tasks or to fulfill their responsibilities. It takes them
longer to do the work.
 4. Lost Time/Money Due to Mistakes
  When an untrained worker makes a mistake, the time and materials used are lost. The
work then has to be done again. Or worse, the inadequate product was delivered to the
client.
 5. An Increase in Miscellaneous Expenses
 These are more difficult to track or attribute to untrained workers, but they are there.
Creating a CAD drawing incorrectly means reprinting the file. That means it takes more
time to fix the mistake, more materials cost in paper and ink, and more time rechecking
the work. If it were done correctly the first time, these costs wouldn’t be there.
PPPPPPPPPPP
Typical Reasons for Employee Training and Development

Training and development can be initiated for a variety of reasons for an employee or group of
employees, e.g.,:

 When a performance appraisal indicates performance improvement is needed

 To "benchmark" the status of improvement so far in a performance improvement effort
 As part of an overall professional development program
 As part of succession planning to help an employee be eligible for a planned change in role in
the organization
 To "pilot", or test, the operation of a new performance management system
 To train about a specific topic (see below)

Typical Topics of Employee Training

1. Communications: The increasing diversity of today's workforce brings a wide variety of

languages and customs.
2. Computer skills: Computer skills are becoming a necessity for conducting administrative and
office tasks.
3. Customer service: Increased competition in today's global marketplace makes it critical that
employees understand and meet the needs of customers.
4. Diversity: Diversity training usually includes explanation about how people have different
perspectives and views, and includes techniques to value diversity
5. Ethics: Today's society has increasing expectations about corporate social responsibility. Also,
today's diverse workforce brings a wide variety of values and morals to the workplace.
6. Human relations: The increased stresses of today's workplace can include misunderstandings
and conflict. Training can people to get along in the workplace.
7. Quality initiatives: Initiatives such as Total Quality Management, Quality Circles, benchmarking,
etc., require basic training about quality concepts, guidelines and standards for quality, etc.
8. Safety: Safety training is critical where working with heavy equipment , hazardous chemicals,
repetitive activities, etc., but can also be useful with practical advice for avoiding assaults, etc.
9. Sexual harassment: Sexual harassment training usually includes careful description of the
organization's policies about sexual harassment, especially about what are inappropriate
behaviors.
General Benefits from Employee Training and Development

There are numerous sources of online information about training and development. Several of
these sites (they're listed later on in this library) suggest reasons for supervisors to conduct
training among employees. These reasons include:

 Increased job satisfaction and morale among employees

 Increased employee motivation
 Increased efficiencies in processes, resulting in financial gain
 Increased capacity to adopt new technologies and methods
 Increased innovation in strategies and products
 Reduced employee turnover
 Enhanced company image, e.g., conducting ethics training (not a good reason for ethics
training!)
 Risk management, e.g., training about sexual harassment, diversity training

Q: Impact of modern technology insurance business

Rather than merely adding value to the insurance sector, technology and technical innovations
are now determining its very growth and evolution. The last few years have seen mobile devices,
GPS functionality and social media engagement impact hugely as to how insurance claims are
processed by companies and policies assessed by insurance agents. Analysis of data and the
value of legitimate customer interactions is more important than ever and have helped insurance
companies to maximize profits while keeping the customers happy.

The impact of technology

While e-commerce giants like Texas Farmers Insurance Company, Allstate Texas Lloyd's,
Liberty Insurance Corporation and ASI Lloyds to name a few are challenging traditional ways of
buying insurance, new, fast and more reliable ways of insuring self, goods, properties and
commodities are being set up to enhance end user experiences and settling insurance claims. The
market trends are evolving from traditional broker based scenarios to a more subtle direct-to-
market approach where middlemen are cut off and the brokerage benefits are passed directly to
the consumer. Also, considering how insurance policies were underwritten previously, today
companies are able to transform the data provided by potential customers into actionable insights
and directly assess individual risks rather than rely upon customers to answer a set of standard
questions to evaluate them.

Technology, considering the ongoing market trends and customer preferences as on today, is no
longer a "nice to have" notion but a crucial differentiator clearly spelling out success and failure -
Insurance companies have to keep pace with cutting edge technologies and constantly enhance
end user experiences to challenge competitors and remain competitive.

Benefits of technology
While using technology as an enabler for generating growth, the future of a company depends
heavily upon what type of technology it uses and how well it uses it. The better and more
effective technology you use, greater will be the growth.

Generating new business

Unlike FMCG businesses which a large variety of products to offer, insurance companies have
fewer policy products to sell. So acquisition of new customer is always an important issue and
companies are forced to increase their sales team to reach out to new buyers. To sustain growth
and generate profit on a continual basis, online or digital marketing processes can aid insurance
providers to reach out directly to the vast magnitude of online buyers. Traditional advertising
methods such as hoardings, banner promotions, signage and TV commercial ads incurred
substantial promotional expenses whereas the same objectives can be availed through online PPC
advertising campaigns which are easily afforded and cost significantly less. Moreover, it's much
easier to target new buyer audiences online rather than reaching out to them physically as was
the case in the past. Technology helps to reduce customer acquisition cost.

Reduced operational overheads

For any company it's always fruitful to save a few dollars and reduce expenses whenever
possible to save for a rainy day. Operational overheads are a major concern to organizations and
demand a large chunk of working capital to support business processes and operational activities.
More and more fortune 500 companies now have in-house departments which oversee
operational overheads and find innovative ways to reduce expenditure while expediting the
organization's business processes. Process automation can go a long way in reducing workforce
and employee cost by substituting humans for technology enabled processes and devices. It's
more reliable and cheaper to store, retrieve and process documents electronically using PC
networks and limited human intervention rather than employing a huge team of clerical
personnel to physically move files and folders to different places in cabinets and storages
situated in different parts of the building. In addition, you don't need several branch offices in
different parts of the country and maintain staff for all of them. Technology helps to reduce
operational cost.

Making policy underwriting easier and quicker

The heart of any insurance company, policy underwriting policies and efforts put in by the
evaluation agents directly decide how well the insurance business will grow and whether the
company shall make a good profit through the premiums or not. Insurance agents need to
communicate and ask a lot many questions before they can give a clearance. One of the biggest
hurdles faced by agents in the past was meeting a client at a particular location, or at a particular
time and explaining the nitty-gritty of the policy. This consumed a lot of time and agents had to
travel a lot to "close" customers and meet target deadlines. Nowadays, policies are clearly
explained on portals and interested visitors can communicate directly with the agents using
online chats tools and video conferencing facilities to inquire about eligibility aspects, answer
queries and facilitate the agent in deciding the underwriting process. That way agents can
respond to many customers in a day and decide which customer should be given the policy and
which shouldn't. Technology helps to make the underwriting process easier and quicker.

Target ideal customers to enhance brand value

MNCs spend billions of dollars to create and build powerful brands. As per market research the
cost of branding activities in the U.S. rose to 5.5 percent in 2015 to reach more than $560 billion.
It gives an idea how much important branding is how much big MNCs are ready to spend for it.
Branding is always expensive as it takes years to build a brand and a lot of advertising capital.
The social media plays an important part in branding and insurance companies now don't have to
spend exorbitant sums to create and maintain their brands - they use a fraction of the budget they
used in the past to achieve the same objectives by promoting and advertising their brands on
Facebook, Twitter, Instagram, Pinterest and other social media venues. The biggest advantage is
you can target prime customers very effectively using marketing insights facilities and analytics
tools which are often provided by the media portals. Moreover you can submit videos and
adverts to cover all types of audiences as and when required. Technology helps to target ideal
customers and enhance brand value since you can do more over social media by spending less of
advertising and branding budget.

Achieve higher ROI

All businesses strive to achieve high ROIs to increase profits. Businesses generally borrow
capital from banks and investors at high interest rates or raise the money through public limited
issues and incorporations. Technology helps to drastically reduce working capital and offer a
tremendous opportunity for insurance companies to churn out higher profit margins through
online activities, electronic funds transfer and process automation which are all made possible
using reliable technologies.

There are many other significant advantages of using technology to boost sales by making it
easier for consumers to avail insurance policies and expediting the underwriting process.
Reputed insurance companies provide affordable insurance packages to consumers worldwide
and even help them in their dire times. The Impact of Technology

With e-commerce giants impacting the way consumers shop for insurance, one of the biggest
trends has been the adoption of multiple channels by insurers to market and sell their policies.
Technology now allows insurers to move from the traditional broker scenario towards a direct-
to-market approach -- cutting out the middleman and going straight to the customer.

Underpinned by mobile and internet-based offerings, this model is only set to accelerate with 45
percent of C-level executives within the insurance industry expecting "distribution destruction",
where customers buy direct and even form groups to negotiate bulk purchases. Favoured by new
entrants, this model has the potential to shake-up the market further by bringing down premiums
and improving claims processing as well as disruptively changing the customer experience
criteria.

When it comes to policy underwriting, firms are now able to transform customer data into
actionable insights to make more informed individual risk assessments, rather than relying on
responses to standard questions. This is demonstrated with the advent of black box car insurance,
where premiums are based on the quality and quantum of driving by the policy holder.

This level of "big data" collection and analysis has become possible only through advances in
software and hardware and is fast becoming integral to increasing revenues and improving the
customer experience.

Add to this, constantly changing industry regulations and high customer expectations, insurers
need to stay on their toes when it comes to technology as an enabler, by making it a central and
successful part of their operation. How well the technology performs for both staff and
customers is vital for future reputation and growth, as insurers vie for business amidst an online
price and policy war.

Technology is no longer a nice to have but a differentiator -- keeping up with the pace of change
and future proofing the technology is key to making it work. With aging legacy systems rife
among the insurance industry, modernization is a necessity to ensure they are fit for purpose.
Whatever upgrade approach is taken -- be it extending existing systems or a full transformation
project involving customization of an off-the-shelf system -- the same core best practice
guidelines apply, to ensure the technology is ultimately meeting the business need.

1. Understand Demand and Business Requirements

By having a grasp on current systems and the demands placed on them now and in the future,
insurers can assess whether a complete transformation is needed or if an existing system can be
updated. It also gives insurers the opportunity to assess the efficiency of business processes and
update if necessary. Can your CRM system provide 360 degree view of customers? Can your
fraud management system flag transactions based on a set of business rules? Can your website be
optimized for mobile devices? Failure to understand this could result in gaps being uncovered
during implementation and testing stage, causing lengthy and costly delays.

2. Create a Strategic Roadmap and Business Case

Be realistic about limitations, complexities, effort and associated costs of the project.
Underestimation here can be the downfall of any transformation. Involvement of the quality
assurance team can result in more realistic timescales, tailored to meet project and quality
objectives. This can also help to determine if the current systems would support the new
demands placed on it without having to invest in new infrastructure.

3. Analyze Applications and Business Capabilities

Extensive analysis of current and potential applications, along with the examination of business
and technical capabilities is vital in arriving at the best solution. Integration with existing
solutions must be assessed and a detailed quality management and test strategy drawn up to
ensure a smooth transition.

4. Adopt a Risk-Based Testing Approach to Implementation

To overcome the complexities of an upgrade or overhaul and ensure reasonable ROI, legacy
transformation projects need to adopt a risk based testing approach. Business priorities identified
earlier in the process need to be the primary drivers for testing, with skilled, quality assessment
teams needed to ensure effective implementation.

5. Take an Agile Approach

An Agile approach enables early and iterative validation of the business requirements through
business acceptance and Retrospective sessions. Taking an agile, iterative approach is key to
ensuring that any changes take place smoothly and successfully. This will also ensure that testing
becomes a key part of the process, by becoming integral as the project is broken down into bite-
sized chunks and quality assessed at each stage.

Technology will continue to evolve, so it is imperative that insurers don’t stand still and have
solid and robust procedures in place to deal with the next trend. Whilst the technologies will
change, the processes that underpin their success will stand the test of time and by putting a
quality assurance framework at its heart, the industry will be ready and well placed to take
advantage of the next big change to come its way.

5 technologies that made major impact on insurance industry

In this post, let’s look at a few instances of the impact of technology on the insurance industry is
driving the growth and evolution of the sector.

 Blockchain
 IOT
 Artificial Intelligence
 Big Data
 Augmented Reality

Blockchain and its impact on the insurance industry

Along with cutting down operational costs and ensuring fast, reliable, and secure applications,
blockchain has the potential to disrupt existing business models in several ways.

 With blockchain, the distributed ledger technology (DLT) which ensures that digital data is safe,
there are fewer chances of identity theft or fraud (e.g. Everledger, BlockVerify). In the US,
insurance fraud is estimated to be over $80 million and, in the UK, it is around £2.1 billion!

 This is the surest way to better customer experience, especially to deal with irritated customers
expected to submit some zillion documents (say, KYC) many times. Automating processes such
as validating identity, health and police records, etc. not only reduces admin costs but also
improves customer engagement.

 Decentralized blockchain makes it easier to authenticate transactions, policies, and customers.

Companies such as Nephila Capital and Allianz are using smart contract technology (Also read –
 What is a smart contract and how does it work) to process claims and fast. With blockchain, they
can ensure underwriting and catastrophe risk trading are more efficient.

 Insurance companies are leveraging bitcoin as loyalty and reward programs. For both the
providers and the customers who do not want to compromise competitiveness or privacy,
respectively, such systems enabled by blockchain make it a seamless, cost-effective, and
rewarding experience.

In October 2016, Aegon, Allianz, Munich Re, Swiss Re, and Zurich launched B3i, a Blockchain
Insurance Industry Initiative keen on building “trading platforms across the whole insurance
value chain.”

IoT

IoT devices, sensors, and telematics have been fast gaining adoption in the insurance sector.
Several data streams and sources (wearables, sensors embedded in vehicles, location-based
sensors, GIS) coupled with advanced analytics can help insurers improve risk assessment, price
policies based on real data in real time, and proactively encourage customers to buy policies for
loss prevention.

 More usage-based insurance models for connected vehicles and precise actuarial models are
expected with the huge amounts of data (or touchpoints) available thanks to today’s amazingly
connected world. In the auto insurance sector, for example, the data (speed, time, braking
patterns, distance) gives buyers more say in their premiums; risky driving patterns can serve as
warning signs.
 Blockchain can be the “network connecting and ordering data from the multiple devices and
apps involved in a multidimensional process.” (EY, 2016) It can help manage the huge volumes
by ensuring P2P device communication.
 Companies such as Aviva and State Farm urge customers to invest in home sensors (others such
as FitSense deal with fit tech to help insurers), incentivizing them to help prevent risk to self
(e.g. elderly care) and property. For example, Neos Ventures, UK’s first connected home
insurance specialist, provides preventative smart technology as part of the policy.

Artificial Intelligence and Automation in the insurance industry

Automation and AI have transformed almost every sector across the world, and the insurance
industry is no exception.

According to Accenture’s Technology Vision for Insurance 2017, 94% of “insurance executives
agree that adopting a platform-based business model and engaging in ecosystems with digital
partners are critical to their business.” In 2016, 35% of insurers reported over 15% in cost
savings from automating systems and processes in the last two years.

 Automation of more complex tasks (other than compliance checks or data entry) such as
property assessment and personalized consumer interactions over the years has brought
frictionless experiences and cut down redundancy.
  Employing AI in the claims process has brought better quality and lesser time for handling (e.g.
RightIndem, Shift Technology). AI algorithms can save millions lost to fraudulent claims by
scouring data and identify errors and trends. The future is definitely touchless!
 Machine learning can be useful in evaluating risk and identifying cross-selling opportunities.
ZhongAn, China’s first online-only insurance technology company, uses AI, machine learning,
and big data to “simplify insurance, price risk more finely and distribute cheaply to a mass
market via the internet.”
 For automated claims processing and property assessment, P&C insurance providers (e.g. AIG,
USAA) are using drones for more accurate information and faster processing.
 Chatbots (e.g. Cognicor) is transforming the insurance sector by personalizing customer
interactions via human-like interfaces. How many use chatbots in the insurance industry?
68% of respondents replied in the affirmative reports an Accenture survey. They settle
claims— Lemonade’s AI Jim and Geico’s Kate. Next sells small business insurance and
Trov sells on-demand property coverage (accidental damage, theft, loss) to individuals.
 Advanced recognition is also bringing out new business models in tech. For instance,
Lapetus lets you buy a policy with a selfie!

Big Data and Predictive Analytics in insurance

Although seemingly unmanageable amounts of data are churned out every day, advanced
analytics has been helping insurers manage risk, drive profitability, settle claims, and price
premiums better and faster. Extracting value from data using powerful analytics and data
warehousing platforms have enabled evidence-based decision making.

 According to a Willis Towers Watson survey, big data and predictive analysis will expand
customer relationships, improve internal performance management, and enhance customer
value proposition by about 20 to 30%.
 In the claims cycle, using exception reporting, text mining, rules, and database searches, the
predictive analysis identifies fraud more effectively. Claims and fraud analytics will better
insurer profitability.
 Identifying subrogation opportunities sooner using text analytics, loss expenses can be
minimized, and loss recovery can be maximized.

New technologies will impact Insurance

With a prosperous and yet challenging year behind us, it’s no surprise that consumers and
brokers alike are questioning the future of South Africa’s insurance industry in terms of
technological advancements that are slowly starting to show face within the industry.

With many technological changes predicted in the near future, there is likely to be a slower
impact as a result of South Africa being slightly behind in the technological growth curve.
Nonetheless, the following factors have already started becoming part of everyday insurance
options and will continue to become important factors in the insurance industry for the
foreseeable future:

1. Social networking
Although a beneficial tool in helping companies reach specific audiences and gain important
 consumer information, social networking remains a major threat to insurance companies, as
with any business. Consumers have free range to help businesses grow, often becoming brand
ambassadors, or could impact them adversely as social media increasingly becomes one of the
most trusted sources for useful information, and a platform to air bad service delivery.
2. Fraud detection
Investing in reliable Cyber Crime Insurance is becoming an increasingly important factor to add
to business insurance policies due to the high risk of data theft. Extortionists target ‘weak’
companies that fail to implement strong enough online security precautions; thinking that it’ll
never happen to them. Bitcoin is becoming an increasingly popular means of payment in return
for data, which in most cases are never returned to their rightful owners once payment has
been made.Will Bales, supervisory special agent for the FBI’s Cyber Division, stated, “People
have to remember that ransomware does not affect just one person or one business. It will
more than likely move on and affect somebody else. And for those who pay the ransom, it only
encourages them to extort the next person”.
3. Vehicle advancements
Although vehicle manufacturers have already implemented self-park, auto-brake, and adaptive
cruise control into their everyday vehicles, it won’t be too far into the future that self-drive
technology starts taking over. Google has already launched the ‘Google Car’ using Google Maps
to navigate through the United States, being licensed to legally drive in the state of
Nevada.South Africa may be slightly behind in the times, it won’t be too far off into the future
when self-drive technology becomes a real option; allowing insurance premiums to take
somewhat of a backseat. Currently, motor vehicle insurance premiums are mainly determined
by the driver’s profile, i.e. age, sex, insurance and accident history.

With the implementation of self-drive technology, improved fraud detection insurance options,
and social networking advancements, insurance premiums will have to be adapted to changing
times; focusing more on where technology is going and how insurance premiums can benefit the
modern-day consumers.

With plenty of speculation on the future of technology within the insurance industry and how
current insurance premiums will be adapted to suit the needs of future generations to come,
insurers will have to adopt a ‘wait and see’ approach in order to make sensible and realistic
changes to the industry as a whole.

USING MOBILE APPLICATIONS TO RUN YOUR INSURANCE BUSINESS

Have you heard that smartphone users are spending 90 percent of their time in apps? Insurance
agents are out and about in their communities, and technology such as smartphones and mobile
apps give them the opportunity to always have the information they need at their fingertips.

“Having this mobile technology is crucial to how I run by business,” stated Brandon Doke, a
Nebraska agent. “I can run a quote or look up information from anywhere, and I’m prepared for
any questions my client/members may have.”

Farm Bureau agents use mobile applications to:

 Reach out to new prospects

  Promptly respond to client/member requests
 Run auto and home insurance quotes
 Make changes to policies
 Create life illustrations to help client/members better understand what services are available
and where they might be missing coverage
 Access client information on any mobile phone or tablet

4. MARKETING AND ADVERTISING YOUR BUSINESS ONLINE

A major part of starting your own business is getting the word out about what you do. Whether
you’re just jumping into your career as an insurance agent, or you’ve been serving
client/members for years, marketing and advertising will likely play a role in your success.

Fortunately, you don’t have to be an advertising pro to raise awareness about your services as a
local insurance agent. Farm Bureau provides an online Marketing Toolkit for all of your
marketing and advertising needs. Our toolkit helps agents target high-quality prospects and
effectively market themselves in their communities. In our toolkit you’ll find:

 Business images and logos

 Advertising guidelines
 Corporate advertising and direct mail calendars
 And many more valuable resources!

“The Marketing Toolkit is a great asset to have because it’s user-friendly,” said Doke. “The new
improvements that were made show another way that Farm Bureau is committed to supporting
its agents.”

From social media to advertising in the newspaper, our Marketing Toolkit contains all the
materials you need to market yourself and your business. Agents don’t need to reinvent the
wheel when it comes to marketing – all of our materials are at their fingertips and just a few
clicks away!

5. ENGAGING WITH CUSTOMERS ON SOCIAL MEDIA

The number of consumers who use social media continues to increase each year, and the trend is
expected to continue upward. In the United States alone, 56 percent of Americans have a profile
on a social networking site, 22 percent use social media several times a day and 95 percent of
online adults between the age of 18-34 follow a brand or organization on social media. There is a
large, engaged audience on social media ready to hear about your local insurance agency.

Furthermore, social media is revolutionizing customer service. It’s been found that 78 percent of
those who tweet a question/comment/concern to a brand on Twitter, they expect a response
within an hour! It’s critical to engage via social media to receive notifications in real-time and
interact with your customers in a timely manner.

WHAT IS HEARSAY SOCIAL?

At Farm Bureau, we understand that social media is where a large portion of our current and
potential client/members are spending their time. Because of this, our agents have enrolled in
Hearsay Social, a social media tool, to help grow their online presence in a way that complies
with Farm Bureau regulations. With just a few clicks, agents can share a wide variety of pre-
approved and customized posts to their followers and track the engagement.

“Hearsay Social is a huge time-saver for me because you can schedule out numerous pre-
approved Facebook posts and customize them as well,” says Sievers. “It’s great content to share
with your followers.”

Farm Bureau agents can also use a digital coach to help set up a profile, train on Hearsay
Social’s functionality and provide ongoing support for the tool.

TECHNOLOGY IS CHANGING THE WORLD, AND WE’RE CHANGING WITH IT

At Farm Bureau, you’ll always have a helping hand to guide you through the changing
technologies, whether that’s websites or social media updates. We continually come up with
ways our agents can use technology to build successful businesses and provide unmatched
service for their client/members. If you’re ready to jump into a career with a team that sets you
up for success, click “Get Started” today!

Takeaways for Insurance Businesses

 In a competitive industry, reliable service can give you an advantage. After price and coverage
options, 56 percent of insurance buyers say reliable service is the most important factor when
choosing an insurance provider.

 Offering online self-service capabilities is a must. More than a third (38 percent) of insurance
buyers say online self-service is “very important” when deciding which insurer to do business
with.

 What software you use can matter to insurance buyers. Thirty-one percent of insurance buyers
say an insurer’s use of dedicated insurance software over other types of software would impact
their decision to use that insurer’s services.

 Direct insurers are impacted most, but agents and brokers matter too. Nearly two-thirds (64
percent) of insurance buyers made their most recent insurance purchase directly through an
insurance company, while 30 percent used an agency or brokerage.

If You Can’t Differentiate on Price or Coverage, Market Reliable Service

One of the most significant challenges facing insurance companies today is differentiation. With
coverage options and pricing largely dictated by the market—especially so for small
businesses—how can you stand out from the crowd? To find out, we asked survey respondents to
rank five critical factors in terms of importance when choosing an insurance provider:

1. Price
 2. Coverage options
3. Reliability of service (i.e., minimal mistakes)
4. Security measures to protect private information
5. Transparency regarding coverage/policy details

The results reveal that reliability can have a major impact on buyers:

The 10 technologies that Gartner says have the greatest impact on the P/C insurance industry are
(in no particular order):

1. Modern Policy and Claims Management Systems: Modern policy and claims
management systems have been developed that are componentized (sold independently,
rather than in a suite), with enhanced workflow and business process management (BPM)
capabilities, with rules that are separate from the source code for easy configuration, that
support industry standards and that are built on newer technology platforms. The
adoption of these systems by personal and commercial P/C insurers can provide
significant value, including reducing the total cost of ownership when legacy systems are
decommissioned, faster rules and workflow changes, easier integration with surrounding
systems and improved long-term maintenance.
2. Web Services and SOA Tools: P/C insurers operate a large ecosystem of systems and
applications that integrate for seamless processing. In the past, companies had to hard-
code integration between systems, which was costly, time-consuming, created challenges
when applications were replaced and integration had to be redone, and was often difficult
to overall due to technology incompatibility. The use of Web services/service-oriented
architecture (SOA) enables companies to deploy services instead of using one-to-one
integration. These technologies will help insurers improve their straight-through
processing (STP) capabilities and reduce integration costs.
3. Business Intelligence and Analytics: In 2010, P/C insurers are increasing their focus on
improving how data is used and the value derived from past investments in data
warehousing. The outcome will be improved risk management, compliance/reporting and
customer intelligence that can be used for personalization as well as decisions regarding
channels and products, and insight into performance and process problems.
4. Predictive Modeling Tools: Traditional data analysis processes are typically historical
(analysis and reporting of the past) or current day (analysis and reporting of current-day
positions). Using predictive-modeling technologies, insurers can analyze data and create
models that will enable them to predict future behaviors or outcomes. This will allow
companies to look into the future and make predictions based on historical data analysis,
pattern recognition and modeling. This insight will help companies avoid risks,
understand future customer behavior (so that they can intervene as needed), offer
proactive customer service, project losses due to catastrophes and improve underwriting
profitability.
5. Advanced Fraud Detection Solutions: It is key that insurers reduce losses and leakage
to retain profitability. Better control of fraud is essential in accomplishing these goals.
Advanced tools analyze data (structured and unstructured) to identify fraudulent claims in
real time at point of data entry. This will assist P/C insurers in reducing losses that result
in driving up operational costs and may result in companies having to increase insurance
premiums based on these losses.
6. Web 2.0 and Social Networking Technology: Driven by the increasing use of social
networking among consumers and policyholders, leading-edge insurers quickly began to
set up their own communities, monitor social-networking conversations and create
content for the network. Social networking may have a disruptive impact on the industry
as it increasingly becomes a trusted source of advice among consumers. When used by
P/C insurers, however, it can help organizations gain knowledge regarding consumer
behavior and opinions, improve competitive intelligence, generate leads and strengthen
the brand with younger consumers.
7. Product Development and Configuration Solutions: One of the top business priorities
among P/C insurers is improving speed to market for new products. Legacy environments
make this task difficult, if not impossible. New systems will help drive down product
development cost but, more importantly, will allow insurers to get products to market
faster than their peers that continue to rely on legacy systems. Furthermore, it will allow
leading-edge companies to be product leaders that can create niche products in a cost-
effective manner, respond quickly to emerging product needs, and support on-demand
customization of products. All of this is linked to revenue generation and customer
attrition.
8. BPM Solutions Including Workflow and Rule Engines: BPM holds promise for
insurance, because it enables companies to model, analyze and test business processes
independent of core systems. Process problems can be easily identified, and companies
can manage process variety (offering various processes for a single task for different user
groups). The use of BPM suites will result in insurers being more customer-centric,
driving improved user experiences through the Web channel, faster transaction
processing, staffing productivity improvements, lower cost of transaction processing,
more-consistent decisioning, improved risk management and improved customer service.
9. Portal and Internet Technologies: The Internet has become a core component of
operations for personal and commercial lines P/C insurers. It is a tool to interact with
agents, consumers and policyholders. The use of portal technologies for agents and
policyholders is critical as a means to offer access to sales/customer service systems,
corporate information, and data. Using portals for self-service for both constituencies will
help companies drive down costs when there is adequate user adoption, while
empowering users to conduct transactions themselves. In addition to the portal,
interactive Web technologies are also needed to improve the user experience. This will
result in cost savings, attract online shoppers wanting to buy new products and help
prevent customer turnover.
10. Mobile Devices/Technologies: P/C insurers are being confronted with the growing need
to offer more services to agents and consumers through mobile devices — and demand
will intensify during the next five years. Users expect websites to be accessible via
handheld devices and that certain transactions can be supported on mobile devices as
well. Mobile technologies also will provide P/C insurers with a great tool to equip their
agents with real-time information and contacts. Launching mobile applications is
becoming popular, especially in the U.S., for P/C insurers that want to generate a new
brand image and offer customers tools for finding an agent or submitting a claim.
11. 1: Digital channels will replace and augment physical channels. A 2015 Bain survey
of insurance companies projected that digital channels will continue to significantly
replace physical channels in the next 3 to 5 years. The survey found that 20-40% of
 physical activities in insurance will be transitioned to digital. Specifically, pre-purchase,
purchase, servicing, renewals, claims handling and management, payments, and customer
feedback and resolution will become digital first, followed by other functions later. This
transition will require incremental IT and integration transformation, which is the topic of
4 of our 8 trends below.
12. 2: The millennial effect on the modern application design. If the success of insurance
companies depends on millennials, and millennials only want to interface with the firm
digitally, what does that mean for IT systems? Insurance companies must turn the IT in
their user experience departments upside down. Legacy systems were designed for
human worker workflow, assumed the use of phones and postal mail, and assumed
customers were willing to wait for a response. These assumptions are no longer true, and
the new insurance customer demands information and service on mobile devices and the
web, which are completely different design philosophies for application user experience
experts
13. 3: Embrace and extend legacy insurance IT infrastructure. With this brave, new,
looming technology world, can insurance companies afford to simply dump their systems
from the past? Of course not! The techniques to embrace and extend the decades of
technology debt require innovation in and of itself. Technologies now exist to extend the
life of legacy IT assets and increase the return on investments. There is no longer a need
to pursue very high risk, costly, resource distracting, and multi-year journeys to replace
these systems in order to benefit from digital transformation. For example, one hot
technology trend is the use of in-memory data grid to move and cache back office data
for new, innovative, digital applications. Data grids reduce load on existing systems and
can save tens of millions of dollars in some cases, at the same time reducing the need to
buy additional storage.
14. 4: The rise of digital customer relationship management and digital integration.
Customer relationship used to be a purely human practice, but moving forward,
relationship management must be digital. For example, modern insurance call centers
must have a seamless, real-time, 360-degree view of social media engagement, mobile
application interaction, and geo-awareness from IoT sensors. This relationship
management scenario is hard to accomplish with legacy systems. Modernized integration
infrastructure with up-to-date web API, cloud-based services, IoT aware connectivity, as
well as traditional integration infrastructure and data integration is required.
15. 5: IoT increases the need for streaming analytics to innovate. Insurance companies
are now capturing new data from the “Internet of Everything.” For example, wearable
device data allow insurers to offer discounts for healthy behavior, based on activity. But
activity-based products require activity-based data and systems, and require the ability to
process massive amounts of streaming information from devices. New technical
challenges arise. How can streaming data be efficiently analyzed? Which streams must be
archived? How will privacy be maintained? How will insurance companies deal with the
volume of data streaming from these devices? These technology challenges didn’t exist in
the last era of insurance, and pose formidable challenges on how to apply streaming
analytics technology, historical analytics, security, and big data fabrics.
16. 6: Increased focus on algorithmic risk assessment. Digital insurance data is fast
moving—like streaming market data in the capital markets. In 2016, insurance companies
will increasingly apply real-time algorithmic computing technologies born on Wall Street
 to the onslaught of streaming data from GPS, mobile, and wearable devices in order to
make algorithmic decisions about subscriber conditions. But unlike Wall Street,
insurance companies are not building low-latency automation. Instead, they’re using
continuous algorithmic analysis to continuously monitor streaming data to manage risk,
continuously manage subscriber loyalty, and continuously search for sales opportunities.
17. 7: Driverless cars pose new forms of risk. As Elon Musk and Google continue to
lead driverless car innovation, the insurance industry must respond. Risk management
will not be the same in the digital era—not only in terms of forecasting risk, but also in
managing and mitigating risk in real-time. That is, if an automated driver feature in your
car causes an accident, who is at fault? The Tesla software engineer who wrote the bug in
the software? The “driver” who didn’t touch the wheel? The driver of the vehicle that
may be have been hit by the autonomic car, but was also partially at fault? And, relatedly,
what is the obligation of all insurance companies to gather and analyze massive amounts
of streaming forensic data from insured, automated assets in order to decide? How can
risk be mitigated in real-time by monitoring streaming data? The digital insurance
company must invest in capturing these new forms of data, and in data science to analyze
it for forensics, patterns, and predictive actions to decide how to respond to these
regulatory pressures.
18. 8: The new digital Data Scientist steps to the forefront. Data Scientist used to be
synonymous with actuary in the insurance industry. But in the new digital insurance era,
data science is being applied to IoT data for forensics, history for predictive analytics,
and location awareness for risk mitigation. These are new forms of data science that will
rise to the forefront of the modern insurance firm.
19. In TIBCO field engineering, we’ve developed a reference architecture, which delivers a
solution that considers these looming insurance industry trends that we call the TIBCO
Digital Insurance Solution Architecture.

Q: Challenges of health insurance

Data/Information: Asymmetric Information
Adverse selection
Moral hazard
Legacy Challegne
Service providers
In-house systems
Competitors
Can also from other industries
Regulations
 Tighter and tighter
1. Health Care Reform

Health care reform (aka the Affordable Care Act, PPACA, ObamaCare), ranks as the number
one challenge for many health insurance professionals. At the core of this challenge is
uncertainty about the role of producers and understanding all of the shifting deadlines and
requirements.

How can you overcome this challenge? Understand health care reform, educate and service
clients, and recommend products to help your clients in this new market. This may include
shifting into a "consultant" role in addition to policy sales.

2. Balancing Sales vs. Relationships

The pressure to sell and the pressure to develop long-term client relationships is another big
challenge we hear from health insurance professionals.

How can you overcome this challenge? Successful agents and brokers balance short term
production goals with long-term business development activities to meet sales expectations
today, and grow the business into the future.

3. Lack of Demand

There's no doubt the market is shifting and this can be frustrating. Businesses aren't buying the
same products in the same way. At the same time, new markets are opening up.

For example, while more small and medium sized employers are terminating group health
insurance to send employees to the individual market, many are not dropping health benefits
altogether. Rather, they are using defined contribution health plans to reimburse for individual
health insurance. Brokers can thrive off of this shift by dusting off their individual policy lines,
and partnering with a defined contribution software provider to offer this solution.

The trend toward defined contribution also opens up a huge market for health insurance
professionals: small businesses who could not afford health insurance in the past. There are over
2.3 million U.S. small businesses in this situation and are adopting new products such as defined
contribution.

How can you overcome this challenge? Successful agents and brokers are taking advantage of
these opportunities, and selling the right solutions to the right prospects.

4. Technology is Replacing Health Insurance Professionals

In the past, prospects would reach out to sales professionals as they were researching options and
learning. Now, prospects have usually done extensive research online before you even speak to
them. Some health insurance professionals fear technology is replacing them.
This challenge is... challenging. The internet is here to stay, and companies of all sizes are using
internet and technologies to improve benefits and increase efficiency. On top of this, major
carriers, major online private exchanges, and the public exchanges are utilizing the internet to
reach consumers directly.

How can you overcome this challenge? Despite information at their fingertips, and new direct-to-
consumer models, businesses still need personal advisors.

See our reasons for why health insurance professionals become even more important in 2014.

5. Keeping Up With Diverse Communication and Marketing Channels

Similar to #4, it can be hard to get your message out there in a saturated market. Local producers
are competing for marketing space with large carriers, paid advertising, savvy SEO, and a sea of
competition.

How can you overcome this challenge? The most successful agents and brokers are overcoming
this challenge by using social media, e-newsletters, word-of-mouth campaigns, and other
creative forms of content to strengthen their efforts. They are also carving out a niche for
themselves to set them apart from the competition.

What challenges are you facing as a health insurance professional? What are you doing to
overcome them? Join the discussion below.

1. Develop actionable consumer insight

Consumers want to be treated like people, not policy numbers. They want their health insurer to
connect with them on a personal level. Many want their insurers to be a trusted advisor that can
educate, but not overwhelm them with information and choices. Where appropriate, health
insurers should work with individuals to find the right coverage and help them save money,
while also guiding them to improve their health and reward their behavior. Patient trust is
critical, and the way to earn that trust is to understand individual consumers.

Therefore, we recommend that companies invest in understanding the needs, behavior, and value
of groups within a company's consumer base. Needs analysis will uncover common consumer
attitudes, beliefs, and motivations, while behavioral analysis using transaction (claims) and
interaction (channel) data will show how consumers generate value. Additionally, predictive
customer lifetime value models can help a firm understand the current and future value of
individual consumers. This internal customer insight forms the basis for a relationship strategy
and interaction plan that can't be matched by competitors because they don't have the insight
used to create it. The plan should include prioritizing and customizing sales, marketing, and
service interactions with different customer groups in a way that benefits both the consumer and
the company.

2. Manage interactions with customers to deliver a satisfying customer experience

Consumers are offered myriad interaction choices. The experience within and across those
channels goes a long way to influencing customer satisfaction and loyalty, as well as improving
efficiency and effectiveness on the part of the organization. To further enhance their interaction
plan, insurers need to understand all the touchpoints and interactions consumers have with the
company, and then establish lifecycle-based interaction plans to optimize those interactions.

Once again this is where the importance of customer insight cannot be understated. We suggest
that companies map out every possible customer interaction point visually via a customer
touchmap, then develop a customer experience design program that includes lifecyclebased
interaction plans derived from needs, value, and behavior data. The program should include
value propositions, treatment strategies, and optimal customer experiences at every possible
interaction point.

3. Access consumer information and use external data to make decisions and
recommendations
The healthcare space is one driven by data. Whether it is electronic health records, drug
information, treatment histories, or other data, health insurers collect reams of potentially useful
information. Reconciliation and analytics are necessary to make sense of what could be an
overwhelming amount of data.

We recommend matching customer information, observed and acquired, with data from
transactional systems and outside industry data. Through data mining, modeling, and other
analysis, companies can gain additional insight and take action on the basis of in-depth
knowledge acquired through that mix of internal and external information.

Adding processes and systems like a centralized data warehouse and CRM program will allow
stakeholders to access customer data seamlessly across touchpoints and over time. For example,
an insurer may combine current data with predictive analytics and decision management tools to
build new campaigns and processes that enables the firm to make individual recommendations
based on facts, not hunches.

4. Communicate complex messages to create a clear and productive dialogue

Much of the language used between health insurers and consumers is confusing, adding
complexity to an already complex relationship. As the adage goes, it's not what you say, but how
you say it that counts.

5. Be accountable
The world is becoming increasingly transparent as information is more widely available to more
people. This is true in the healthcare industry, as well. Consumers look for accountability and
will be vocal when they do not find it. Proactive companies embrace this new reality.
Accountability requires more than a mind-set shift. It requires internal change management and
investment in resources to enable accountability. Consequently, we recommend that companies
provide employee training and education on products and services, empower all employees to
resolve issues, and use incentives and measurements such as Net Promoter Score, customer
satisfaction, and Return on Customer to track success.

Customer centricity is an industry-wide imperative, but is not a sure source of competitive

advantage for everyone. A clear understanding of an organization's business model, along with
detailed short- and long-term goals, will help clarify whether this approach will benefit a firm's
specific circumstance. Competition among insurers will drive some of them to invest in different
business models. And other healthcare players, along with some currently from outside
healthcare like technology companies, will present new competitive challenges. The more
business leaders understand the needs of their organization and the individual consumer, the
better prepared they will be to face those challenges and succeed in the new healthcare
landscape.

If you are participating in an exchange plan either through an existing contract, an amended
contract or a new one:

 Ensure you have the staffing to accommodate many new patients. To keep premium costs
low, many plans to be offered on the exchanges have narrowed their networks, which, in
turn, will increase the volume of patients to be seen by in-network providers. Some
practices may have to extend office hours or hire additional medical personnel, including
physician assistants or nurse practitioners, as well as administrative staff. You may be
able to limit the number of new patients insured through the exchange and close your
panel if needed. Check your contract to ensure that you understand your legal obligations
in this regard.
 Train administrative staff, particularly the front desk staff collecting fees, about new
products offered. The Affordable Care Act defines platinum, gold, silver and bronze
categories for qualified health plans (QHPs). Each offers the same benefits at a different
level of cost-sharing. Under platinum plans, insurance covers 90 percent of the cost;
under bronze, only 60 percent.
 Prepare your practice for a higher risk of patients defaulting on payments. Many of the
new patients will have high deductibles – as much as $6,400 for an individual and
$12,800 for a family – before insurance kicks in. Review your provider contract to ensure
your ability to seek prepayment.
 Know that you may not get paid for some services rendered if enrollees in QHPs fail to
pay their premiums. Enrollees will have a three-month grace period to pay their
premiums before their insurance is canceled. However, the health plan can stop paying
claims after 30 days if premiums go unpaid. If the enrollee is canceled for nonpayment,
the insurance company is not obligated to pay the physician for services rendered during
the last two months of the grace period. The physician will be responsible for collecting
from the patient. Insurers should notify affected providers as soon as practicable when an
enrollee enters the grace period. In California, the state’s health benefit exchange has
included a requirement that plans notify providers at least 15 days prior to a patient’s
claims being pended. An individual who loses coverage can enroll in another plan.
 Be aware that patient “churning” could affect your bottom line. Churning occurs when
patients’ income levels change, affecting their eligibility for public programs like
Medicaid and forcing them to enroll in a different plan. Aside from the loss of continuity
of care for the patient, physicians – particularly those serving low-income populations –
may see their patient volume fluctuate as enrollees cycle in and out between plans and
networks.
 Third Party Administrators (TPAs)
The most important problem associated with them is the long turnaround time (TAT).
 The TAT for the payment of an insured patient's treatment in an affiliated hospital is 20
days for cashless treatment. Most TPAs fail to meet the deadline even if the insurance
company has made the payment to them. This is due to the logistics involved in handling
numerous hospitals and claims. Some hospitals become disgruntled with the delay and do
not offer cashless treatment facilities. Also, some TPAs do not work on Saturdays,
whereas most insurers do. This delays the processing of claims.
Solution: Insurance companies like Bajaj Allianz, Cholamandalam MS and Star Health
have opted for direct settlement of claims, eliminating TPAs.
 Hospitals
If you have a health cover, there is a 90 per cent chance that an empanelled hospital will
charge you more. Higher tariffs for insured patients lead to a higher payout for the
insurance companies which, in turn, leads to higher premiums. The increase is more than
the rise in the cost of medical care. Another issue is the misuse of group insurance by
hospitals and patients. Uninsured people are treated because the identity cards of many
group insurance schemes do not have photographs.
Solution: Insurers have begun visiting hospitals to meet patients for claims under group
insurance schemes. If found at fault, the group insurer refuses to renew the policy of the
originator company. Also, most insurers now go for pre-agreed rates for surgeries and
treatments. This prevents differential tariffs for the insured and uninsured patients. The
hospital bills extra charges directly to the patient.
 Customers
Many people are hospitalised for an illness that does not require it. Another issue is that
they take a policy after a disease has been diagnosed. Health insurance does not cover
pre-existing diseases. Also, patients do not read the policy document and expect all
expenses within the limit of the cover to be reimbursed.
Solution: Read the entire policy document before taking a policy. Ask your salesperson
for the 'policy wordings'. Do not make a false claim as you may not be able to make a
genuine second claim in the same year if the limit has been exhausted. Also, the insurer
may load future premiums in case of an abnormal claim.
 Companies
To ward off pressure from their superiors and get incentives, salesmen mis-sell products.
Sometimes, a wrong product is sold for a higher commission. As company Websites and
brochures do not reveal all the terms of the plans, clients fall prey to the salesperson and
do not buy the right policy.
Solution: Prospective clients should ask for more information. Irda's intervention in
making brochures and other promotional material more transparent will help.
 Karthikeyan Jawahar is a Certified Financial Planner

Q: Problems and prospects of micro insurance in Bangladesh

Problem of Insurance Business in Bangladesh

In a developing country like Bangladesh, insurance companies are playing a very important role
in the economy. Though insurance industry has very prospect in the economy but for some
reasons it’s totally failed to achieve its goal. If we want to know the reasons behind this hen we
should look forward the following according to Bangladesh General Insurance Company Ltd.In
this report the major problems in performing insurance business has been classified into some
major criteria which are social, economic, political, legal and other reasons.The actual problems
are discussed in detail within these criterion’s

Social Problems

Less Public awareness

A vast majority of people especially in rural areas are left outside the insurance coverage. This
mainly results from the unawareness among the people. Even a large portion of people don’t
have the minimum idea of insurance. People are not aware of the benefits from the insurance
policy and a great number of people believe that insurance business is nothing but cheating and
assume that insurance policy is quite unnecessary. This negative attitude from the people is
lessening the importance of absorbing insurance policy in a large extent.

Centralization

Most of the insurance companies in our country are located in urban areas and there are few
branches in rural areas. They think that they might have better scope for performing their
business as the economic condition of the urban is better than the rural areas. They don’t think
that the large number of our population reside in rural areas and if branches are expanded in rural
areas then the business can thrive if proper motivation policy is taken to aware the mass people
of the rural areas. Thus this centralization policy acts as an obstruction for the growth of
insurance business in our country.

Economic Problems

Poor economic conditions

Bangladesh is one of the poorest countries in the world and most of the people in this country
live under extreme poverty level. All of these people fight hard to earn their livelihood and are
marginal in relation to the expenditure with the income. It is quite impossible for them to save
some money for future need. Therefore they are quite unable to give the amount to the insurer
which is called as premium and regarded as safety or precautionary measures against any
accident. The number of people who can bear the premium to the insurance company is very few
in regard to those mentioned above. Therefore the overall poor economic condition is creating
obstacle to flourish the insurance business in Bangladesh

Poor financial position of the insurance companies

Most of the insurance companies of our country are facing financial problems. Recently
government is trying to take initiative to close some of the insurance companies because they are
not maintaining the minimum standards. They are investing their money in poor securities and
business which is vulnerable regarding getting back the money with profit. As a result most of
the insurance companies are suffering from loss years after years and for poor financial condition
the insurance companies are also unable to expand their branch which is a barrier for the growth
of insurance business in Bangladesh.

Higher cost of business

Growing cost of business is another problem that insurance companies are facing now a day.
They urge that government tax, house rent, utility, commission fee, stationeries are growing day
by day. But their businesses are not growing so fast with that rate.Besides this the policy holders
are not willing to pay too much premium with growing cost that is hampering the strategies of
insurance companies. So they are facing difficulties in running their business efficiently.

Problems of economic bases and effective principle

Before independence insurance business was control by private company. But after
independence maximum insurance company take over by the government. For that reason
government changed the company management, policy and applies new rules and regulations
which system was very tricky and uncomfortable for the mass people.

Political problems

Political instability

Political instability is a major problem in Bangladesh. For the instability in politics,many

disruptive situations are often created which are bad for any businesses. The people who operate
various businesses in our country often experience various types of inconvenience in running
their business. Insurance business is not an exception of this. Political instability and
inconsistency of political courses are a serious problem for the insurance business.

Lack of supervision from the government

Lack of surveillance from government ministry encourages many insurance companies to follow
some unethical practices like make harassment to policy holder and showing less in the financial
statement. This not only destroying the reputation of the well known insurance companies but
also creates negative impact in the mind of the people about insurance. Besides this government
sometimes impose some conflicting rules and regulation without discussing with insurance
companies governing body. It creates conflict among insurance companies with government and
act as one of the main hindrances of growing insurance business.

Problem of planning and administration

After the change of the government, the whole planning and administrative measures are
changed which is the main constraint for long term plans. Without long term planning any
permanent development or solution of existing problems are impossible

Legal Problems
Too much complexity

To take an insurance policy there are great number of rules and regulations which must be
compelled by the insured person. And into those rules a vast number of complexities is present
there. Therefore the people are discouraged to take insurance policy because they think that the
complexities will create extra pressure on their mind which may hamper other jobs.

Other problems

Lack of qualified officials

Insurance companies perform their activities by recruiting marketing agent and they try to
convince the people to take a policy. Most of the cases the agents are not properly trained and
they don’t know the right process to catch potential people to make their policy holders.
Therefore these field level agents are unable to fulfill their target and act as a constraint in the
insurance business.

Traditional method

Still Bangladesh insurance company using or follows traditional methods on insurance policy.
Where as foreign companies are using modern systems like computerized system. Our local
company does not want to change themselves.

Lack of training for the employees

Spread of insurance business in Bangladesh failed for lack of proper training by the employees
specially the field employees of insurance companies. Still there are not enough training center
to provide proper training regarding insurance activities for the officials of insurance company.
Though there is one insurance training center in Bangladesh it totally failed to achieve its target
in insurance field.

Lack of exposure

Another main problem in the country is that the media is unconcerned to send the right message
regarding insurance to the people. As a result a large portion of population is completely
unaware about the insurance policy. Another problem is that the insurance company does not
provide adequate information in the company’s websites which can fulfill the queries of their
potential customers and satisfy themselves to buy an insurance policy.

Absence of business ethics

Some insurance companies create harassment on the policy holders or sometimes on the
dependents of the policy holders when they want back their money after death or maturity. The
insurance companies show different causes in order to make delay to return back the money at
expected time. Sometimes they are eager to pay less than the desired amount by creating various
circumstances such as they try to say that the disaster of the subject matter of the policy is not
responsible due to their activities. Besides this some field officials also create some illegal acts.
They often try to give false information to the people for buying a policy. And these kind of
illegal acts create bad reputation to the insurance companies and hindrance the overall insurance
business. Those who are harassed by the insurance companies discourage other not to take an
insurance policy Lack of motivation program towards public

According to Green Delta Life Insurance Company the people of our country are not much
motivated by the company to take insurance policy for safeguarding them selves against any kind
of risk. Almost every time they failed to understand the people that insurance policy makes their
life risk free all time. For lack of motivation among the mass people insurance companies are
always lagging behind from their expected target.

Lack of information technology

Another problem is they do not use any web address, which is essential for a large leasing
company. They can provide more information to its client by using web site.

Insufficient service

In Bangladesh insurance company people failed to provide better service to the mass people
that’s why the people who want to take the insurance policy they loss their interest from
insurance. At same time in foreign country insurance workers goes to customer’s house and
offices regularly to aware themselves and influence them to take insurance policy. In that’s case
Bangladesh insurance company people are not that much expert.

Lack of marketing policy

One of the major problems in insurance company is lack of marketing policy. Management is not
taking initiative to increase their marketing expansion. They provide tiny amount advertisement,
which is not sufficient for increasing business development.

Prospects of insurance business in Bangladesh

As well as the problems mentioned above, there are many good signs for the insurance business
in Bangladesh. The factors that can facilitate the insurance business in our country are discussed
below. These facts can be measured as the prospective fields for insurance business in
Bangladesh.

Higher GDP

The GDP of our country is increasing than the previous years which results in increase of per
capital income. So this growing GDP and income holds bright prospects for insurance
companies. The major problem is the incapability of our people to pay the premium charged by
the insurance companies. With the growth in the income more and more people are now willing
to take an insurance policy for safeguarding themselves from any danger.
Increased population

There is a big opportunity lies ahead for the insurance companies as the population of our
country are increasing day by day. Although most of people of our country live under extreme
poverty level and want to avoid insurance policy number of potential policy holders in
Bangladesh is growing with growth of the population. There is some what relationship between
growing populations with the number of public vehicle. As we know all public vehicle must have
an insurance policy. So growing population also increase the motor insurance too. That is growth
in population opens greater scope for every kind of insurance business that results in growing
prospect for insurance companies.

New business’s individual insurance

There are so many new businesses starting every day and manufacturing sector is booming with
global demand. Every business is insured under an insurance company to protect its company
from any kind of accident. Therefore growing industry, mill,factories are creating better scope
for the insurance companies to flourish their business.

Developing mass awareness about insurance

People are now much more conscious about their safety. So they are encouraged to take an
insurance policy for making their life free from any unexpected occurrence. Increase in literacy
rate is helping predominantly to create awareness among the people regarding taking insurance
policy. Besides this insurance companies are also trying to eradicate the negative attitude of
people towards the insurance company by organizing various programs such as seminars,
programs including social responsibilities etc.

Micro insurance

Micro insurance can be a great prospective area for the insurance business in our country. Most
of the people of our country are unable to have costly and long term insurance policies. Micro
insurance can be provided to individual personnel or to small business owners against little
insurance premiums and with easy terms and conditions. When they will afford to minimize their
risks at a lower price, they will take that opportunity and they will become to get used to it. This
can cover a huge portion of the society who can be a prospective target market for this business.

Development of new policy

SBC has long been the sole reinsures in Bangladesh and private insurance companies were
statutorily compelled to place 100% of their reinsurance business with SBC. In 1990 the
government amended the relevant provisions of the insurance Act allowing 50% of all
reinsurance of general insurance business to be placed compulsorily with SBC and the rest to
private reinsurance companies. About 70% of premium in come from general insurance business
in Bangladesh is retained locally and the rest 30%goes to reinsures abroad.Permissions to private
insurance companies to act as reinsures will open up new opportunities to them. This will initiate
open competition between the SBC and the private reinsures within the country and will reduce
the reinsurance cost and increase efficiency. This amendment of the existing rules can be another
important policy making that will facilitate the insurance business in Bangladesh. The private
insurance companies can argue in favours of their capability to act as reinsures on the basis of
the fact that the total capital belonging to the government owned general insurance company’s is
Tk. 550 million while the private sector insurance companies own Tk.2500 million.

Scope in non-traditional sector

Nowadays, along with traditional insurance services, they can offer various non-traditional
insurance services to their customer. Target market of insurance company may expand and they
can offer different types of non-traditional insurance services such as health insurance, personal
accident insurance, travel insurance, burglary insurance and pension scheme.

Scope of investment

Insurance companies can usually make more profit from investment activities than from their
regular insurance business. The private insurance companies are realizing this fact and playing
role in the financial market. Insurance companies are making large investment in government
bonds, ICB projects and in private sector business.There are opportunities to enhance profit
through effective and efficient money management by employing capable and experienced
personnel. Scope of investment expansion persists in the areas leasing, housing, health and
money market.

Service diversification

Insurance is not just a tool of risk coverage. It is also an attractive instrument of savings. The
mixture of risk coverage with savings gives the opportunity for innovative product designing
which means service diversification. In a dynamic insurance market one can expect to see new
products being promoted at regular intervals. So far very little efforts have been taken to
innovative and introduce need oriented insurance services in response to existing threats. The
prospect of the insurance business in various sectors that affect our economy can be
differentiated in the following way.

Agriculture sector

The economy of Bangladesh is predominantly an agrarian one, with most people engage in
farming and fishing. The uncertainty of agriculture due to crop failure caused by climate
variation, drought, cyclone, flood and pests affects farmer income as well as government
revenue. Further more, in the last few years commercialization has occurred in some sections of
the agricultural sector. Increase in investment in the agricultural sector is creating a new
opportunity for insurance industry. Various agricultural insurance services are becoming
common these days. Demand for insurance protection against crop loans, livestock loans,
fisheries loans and equipment loans are also increasing day by day.

Business sector
Nowadays in Bangladesh the SME plays a important role in the economicdevelopment. But they
are deprived from taking loans from bank for large amount. If insurance business focuses this
section in Bangladesh they are able to contribute morein the economy. Thus insurance business
has a bright prospect in business sector in adeveloping country like Bangladesh

Education sector:

Insurance companies can provide different types of scheme to expand education planinsurance

Comments and suggestion

From the presiding discussions of the report, we can realize that the policy makerswithin the
government and the insurance company should adopt effective measures inorder to make good
use of the opportunities and to tackle the threats for ensuring ahealthy development of the
insurance industry. The following actions are suggested

The insurance companies of Bangladesh should practice marketing throughthe use of

promotional tools such as advertising, sales promotion, publicrelation and publicity, personal
selling and direct marketing.11

In order to create the growth of insurance business in our country, insurancecompanies should
expand their target market by providing responsive servicesand establish efficient departments to
perform such task.

Government must minimize the restrictions on premium so that insurancecompanies can fix their
premium according to their demand. This will increasethe profitability of the insurance
companies.

One of the basic requirements for the insurance industry to have sustainedgrowth is to enhance
training facilities. Bangladesh Insurance Academy is providing training facilities and
professional education to those engaged ininsurance business in the country. The syllabus,
curriculam and training programs of the academy need to be modified to meet the modern needs
of theinsurance industry..

To regain and maintain a positive public image the insurance companiesshould overcome the
dissatisfaction in regards to services and claimsettlements and should maintain a service
standard.

The collected premium should be invested in large and beneficial sectors sothat insurance
companies can return their clients expected return in timely.

Government should have a regulatory body for the surveillance on insurancecompanies so that
they must perform their business maintaing the ethicalissues properly.
Insurance companies need to modify their recruitment strategies withincreased focus on the
marketing and sales training because, insurance being aservice marketing industry it requires
special attention.

In response to the opportunity of growing market the insurance companies canexpand their target
market by identifying and providing responsive services. Inorder to do so each company should
established and effectively operateresearch and development department.

Conclusion

In present insurance is too much important to the business and individual sector. Most of the
companies provide more or less same services. For this reason the competition is increasing day
by day between the insurance companies. On the other hand some new insurance companies are
going to start businesses in the competent market. BGIC need to develop their some productive
sectors. In present, a company cannot establish properly without developing information
technology. People search their desires requirement through Internet so, insurance companies
need to develop Web address to increase both foreign and local investors. So we have discussed
about both the problem and prospects of insurance business in Bangladesh. The progress of
insurance business depends on the progress of economic condition. Insurance business also faces
many problem. So if we develop economic condition as well as overcome the problems, it will
help a lot to flourish this business in our country

Q: Problems and prospects of agriculture insurance in

Bangladesh
Crop insurance is an insurance package designed for farmers to protect them from crop losses
due to natural disaster such as floods, droughts, cyclone, hailstorm, lightning storm, typhoon,
pest, disease and many more such similar disasters. Crop insurance is a type of insurance
coverage that is purchased by crop farmers in order to insure against losses. There are several
different types of crop insurance that is available like multiple peril crop, actual production
history, group risk plan, and crop revenue coverage, etc. The main objectives of crop insurance
are to protect the farmers against the loss of their crops due to natural disasters, to encourage the
farmers to use the modern agricultural strategies, to use advance technologies with good
agricultural practices and to stabilise the income of the farmers in the years' of natural
calamities.

The pros of crop insurance are recognised on all hands where it provides protection to farmers
against losses caused by crop failure and thereby ensures stability in farm income. It also
strengthens the position of financial institutions that finance agriculture to the extent it enables
the farmers to repay their loans in years' of crop failure, by protecting the economic interest of
the farmers against possible risk or loss and it accelerate adoption of new agricultural practices.

It minimises the rural indebtedness, which is traceable to the frequent failure of crops. It also
reduces, to some extent, government expenditure incurred on relief measures extended to meet
the havoc caused by natural calamities. It also may act as anti-inflationary measure by locking up
part of the resources in rural areas.

Bangladesh is ranked as the world's fifth most exposed country to natural disasters, including
floods, cyclones and droughts. In recent years, natural disasters, particularly climate related ones,
have increased both in frequency and magnitude in Bangladesh.
In Bangladesh, on an estimate, the agriculture sector contributes around 14.7 per cent to the
GDP; any change in the same can have multiple effects in the economy. The agricultural growth
and the economic growth are inevitably linked with each other. Nowadays, the Bangladesh
Government also has been showing great concern about the risks and uncertainty related to
agriculture particularly the food crop production.

Better crop insurance practices are highly needed in the different districts of the country as
agriculture is to some extend rain fed and drought is a regular phenomenon. Comprehensive
policies for insuring not just crops but a package policy must be designed as is being made
available in other countries which are tailored to the local economic and social context of
Bangladesh.

Crop insurance is the primary risk management tool, farmers use to financially recover from
natural disasters and volatile market fluctuations ; pay their bankers, input suppliers particularly
the seeds and fertiliser suppliers , equipment providers and landlords; purchase their production
inputs for the next season; and give them the confidence to make long term investments that will
increase their production efficiency.

Without effective and affordable crop insurance, catastrophic production losses would sap the
rural economy by setting in motion a series of harmful events -- farm failures and consolidation,
job losses, farm related small business failures, financial stress on rural banks and reduced
investment in agriculture. A financially healthy rural economy requires a financially healthy
farm-crop production sector.

Crop insurance has become more of a necessity for our farmers today, especially after the total
crop failures in the haor and baor areas in 2017. Agricultural insurance, mainly the crop
insurance is looking to be reintroducing in Bangladesh. It is mentioned that first crop insurance
was introduced in 1977 by Sadharan Bima Corporation but it was closed down because of
inadequate planning and lack of government intervention. So, a crop insurance plan could be
proved a life saver by providing financial assistance when it is required the most.

In Bangladesh, there are around twelve million farmers who work diligently and still seem to
suffer the most. Their work is full of risk as it is dependent on the unexpected climatic pattern
which is unpredictable. It becomes the duty of the government to consider about the well being
of farmers and reduce the risks, related to agricultural activities in Bangladesh. Farmers around
the world are at the mercy of the weather, but those in Bangladesh are more vulnerable than most
with the low lying country highly susceptible to the increasing monsoon floods and tropical
cyclones brought by climate change.
This also means they are in huge need of ways to protect their precarious livelihoods. According
to a report from FAO agriculture is the single most affected sector by droughts, absorbing on
average about 84 per cent of all economic impact. This situation is predicted to worsen unless
effective measures are taken to protect the agriculture sector. In the case of Bangladesh, with the
increase in population, there is immense pressure to increase crop production, boost food
security and protect farms.

Crop insurance process should be made easy and understandable to the different concerned
stakeholders as well as more attractive to the farmers. One crop insurance policy alone might not
be enough but a multi-level approach, so that the system becomes more robust that is crop
insurance in the form of a package rather than just one policy. And it will make linkage between
crop insurance and government bank loan. At the same time NGOs practicing micro-finance
alone can offer micro insurance as well, which may be more sustainable approach.
Crop insurance scheme may envisage voluntary, mandatory or compulsory. In the case of the
voluntary approach, participation is optional for a farmer who is eligible to be ensured. In
compulsory approach, all farmers, who grow the insurable crops over more than a minimum
prescribed area may be included. In Bangladesh, crop insurance may be compulsory for farmers
who borrow from banks and other financial institutions as well as subsidy from government
level. The compulsory approach has many fold advantages. The problem of adverse selection is
reduced significantly, and there is reduction in the cost of sale of insurance.

There may be, however, dissatisfaction among low-risk farmers who will have to cross subsidise
high risk farmer. To run crop insurance program/scheme smoothly, it requires grassroots level
monitoring and network for this purpose; different stake holders may be engaged with the help of
crop insurance where farmers will be benefitted by becoming self sufficient. They will also be
able to raise their investment in crops to get better quality produce for the necessity and sake of
the country.
Q: Problems and prospects of takaful insurance in Bangladesh
Problems of Islamic insurance in Bangladesh

Islamic insurance throughout the world has been facing a lot of problems (Bekkin 2007).
Similarly, Islamic insurance in Bangladesh has been facing numerous problems (ARTIIL 2012,
p. 14). The nature of the problems is as follows:

Lack of separate regulation, shariah-based deposit and Islamic capital market

for Islamic insurance

In 2000, Bangladesh Islamic insurance companies were licensed under the Insurance Act 1938
which was not equipped to deal with Islamic insurance (Khan 2010). This is because, Islamic
insurance is based on shariah rules and regulations (Foster 2007), while conventional insurance
is based on conventional regulations (Schwarcz and Schwarcz 2014). Although a committee was
formed by the government of Bangladesh to draft separate insurance laws for Islamic and
conventional insurance in 2007, the outcome of the effort has yet to materialise. In 2008, the
caretaker government of Bangladesh promulgated the Insurance Ordinance 2008 and the
Insurance Regulatory Ordinance 2008. These were ignored by the present government (Ali
2012). Furthermore, two insurance laws were passed in the parliament of Bangladesh on March
3, 2010 which came into effect as an Insurance Act on March 18, 2010. However, it only
mentioned rules for investment assets of Islamic insurance (IDRAB: Insurance Development and
Regulatory Authority Bangladesh 2013). The lack of a legal and regulatory framework has
stifled the Islamic insurance industry.

Islamic insurance has to deposit a large amount of money with the Central Bank of Bangladesh
as security to operate whereas the Bangladesh Bank operates based on interest (Riba).
Bangladesh Bank provides interest against this deposit, but Islamic insurance cannot receive this
kind of money as a profit (Kalil 2011, pp. 218–220). Another obstacle of Islamic insurance is
lack of Islamic capital market (Azad et al. 2013). Islamic insurance companies do not have any
alternative for investment as without Islamic banks all bonds and certificates are based on
interest. Islamic insurance companies cannot participate in this kind of investment or capital
market. As a result, Islamic insurance companies lag behind conventional insurance (Kalil 2011,
pp. 218–220).

Unexpected competitions, lack of skilled people, qualified field workers and desk
officers

Conventional non-government insurance companies gain illegal business through discounting or

returning the premium to the policy holder. Policy holders are encouraged to dealing with
conventional non-government insurance companies expecting profit or bonus at the end of the
year while Islamic insurance companies do not offer any discount or return the premium to the
policy holder. This is why they are less interested in an Islamic insurance policy. This kind of
competition is considered a big challenge not only for Islamic insurance but also for
conventional government insurance companies. Some conventional non-government insurance
companies accept cheques on credit to sell policies in debt (Kalil 2011, p. 218–220). Moreover,
there is a lack for skilful and experienced people in conventional insurance in Bangladesh (Reza
and Iqbal 2007). In Islamic insurance, this number is even more shocking. Although 90 % of the
total Bangladesh population are Muslim, there is a lack of qualified human resource in Islamic
insurance (Bhuiyan et al. 2012). Furthermore, field workers and most desk officers in Islamic
insurance do not enough training and Islamic education required to serve Islamic banking and
insurance. This inhibits their ability to work professionally and inform the public of the benefits
of their products and services (Khalid 2007, pp. 27–28).

Lack of Islamic re-insurance and training institutions

There is no Islamic re-insurance company in Bangladesh (TJCSCIIB 2012, p. 5). Islamic

insurance companies are forced to re-insure their money through conventional re-insurance.
From the premium derived from these re-insurance companies at the end of the year, the
conventional insurance companies distribute one part of this profit to the policy holders of the
different companies as an original profit, while Islamic insurance companies cannot accept
interest-based profit (Kalil 2011, pp. 218–220).

Insurance companies in Bangladesh lack training institutions for their employees. There are
seven fully fledged Islamic Banks in Bangladesh. Among them only Islami Bank Bangladesh
Ltd. has a training institute and opportunities to provide its employees training services.
Employees are provided little training insurance (Ullah 2013). General Islamic insurance
companies (general takaful companies) do not have any training institutions, although the
Bangladesh Insurance Academy trains how to conduct Islamic insurance without interest but
there is no opportunities for one-to-one teach training or to research the Islamic insurance system
(Khalid 2007, pp. 27–28).

Lack of public interest in Islamic insurance and consensus among muslim

scholars (Ulamah)

Most of the people are not interested in Islamic insurance due to lack of Islamic knowledge and
understanding: absence of people’s awareness, propaganda, and misinterpretation about Islamic
insurance among the general people in Bangladesh (Reza and Iqbal 2007). The lack of financial
solvency further reduces subscriptions to Islamic insurance. Although Bangladesh is a Muslim
country, the governor is unaware of Islamic studies, especially Islamic finance (Huqe 2002, pp.
164–165). In addition, many question Islamic insurance and its operating system (Rahman 2006,
p. 273) particularly in Bangladesh. Some Muslim scholars say that Islamic insurance and its
operations are like conventional insurance and should be prohibited. Others argue that it is
legalised by shariah through some operations remain conventional. Others encourage avoiding it
completely as it is unclear whether it is truly Islamic in spirit and content (Khan 2015, p. 219).
Such debates confuse the public causing them to doubt Islamic insurance.

Proposed solutions of the problems

Steps are needed to overcome these problems. The government should introduce and implement
rules and regulations specific to ensure Islamic insurance complies with the shariah. Islamic
insurance can be regulated and monitored by the Bangladesh Bank, the Central Bank of
Bangladesh, which can emulate Bank Negara Malaysia (Central Bank of Malaysia). Bank
Negara Malaysia controls both the Islamic and conventional insurance systems through different
statutory laws. Takaful is regulated by the Malaysia Takaful Act 1994 (Abu-Hussin et al. 2014).
After passing this separate Act for takaful, Malaysia became a leading country for Islamic
takaful (Yazid et al. 2012). To benefit from this Malaysia Takaful Act 1994, the Bangladesh
government can send specialists to observe and discuss with Malaysia takaful authorities about
their policy. Alternatively, it can establish a bank or institution to monitor all Islamic insurance
companies in Bangladesh. This will help impose punishment by way of imprisonment, fine, or
both for fraud and illegal activities.

To solve the deposit problem, the government can provide Mudarabah bonds so that Islamic
insurance can buy these bonds and keep it as security (Kalil 2011, p. 218; Azad et al. 2013).
Simultaneously, the government should allow establishing Islamic re-insurance companies in
Bangladesh. At the same time, Islamic insurance companies should deposit money in Islamic re-
insurance companies in other counties like the United Arab Emirates (Dubai) (IICUAE Islamic
Insurance Companies in United Arab Emirates 2016).

Moreover, there are about 64,000 Qwmi Madrasa (voluntary private Islamic schools not
recognised by government) in Bangladesh (Ahmed 2005). They study Islamic studies based on
classical Islamic books. Their syllabus includes primary level modern subjects, but no higher
level reference of modern and Islamic banking, finance, and insurance. Their certificate is not
also recognised by the government of Bangladesh (Ellis 2007). Madrasah students know Islamic
shariah in depth but because of their non-recognised certificates, they cannot join any
government, semi-government, and non-government sectors. If their certificates are recognised
by the government and their syllabus combined with modern curriculums including modern
Islamic banking and Islamic insurance, this would help meet the need for skilled employees in
Islamic insurance.

Furthermore, approximately 7000 Alia Madrasa are government recognised Islamic schools in
Bangladesh (Ahmad 2009, p. 32). These Madrasas can play an important role in Islamic banking,
finance, and Islamic insurance by combining new syllabus with Islamic studies related to Islamic
banking, finance, and insurance.

The lack of public interest can be solved using mass media. Scholars should write articles in
newspapers and magazines about the negative effects of conventional insurance since it is based
on interest (usury) (Hussain and Pasha 2011) and extol the benefits of Islamic insurance which is
based on mutual help, brotherhood, and solidarity (Matsawali et al. 2012). Moreover, the Islami
Foundation of Bangladesh has seven Imam Training Academy Centres, six divisional and 58
district offices (Islamic Foundation 2013). It can training the Imams about Islamic insurance.
The trained Imams can then spread awareness of Islamic insurance and its necessity in the
society. Along with this, there are 250,399 mosques in Bangladesh (Iran English Radio 2013).
Imams of those mosques can play important roles advising people the benefit of Islamic
Insurance. To appease pubic concerns, the government can form a National Fatwa Board
comprising Muslim scholars specialised in Fiqh al-Muamilat (Islamic trade, finance, and
commercial law). To this end, it can follow the policy of the Islamic Financial Service Board of
Malaysia as it leads Islamic financial institutions by regulating rules and the requirements of
shariah scholars to be a member of supervisory boards (IFSB Islamic Finance Service Bill
2012).

Prospect of Islamic insurance (Takaful) in Bangladesh

Although the first Islamic insurance company was established in Sudan (Bekkin 2007), it has
expanded globally, especially in Asia (Rahman 2013). Bangladesh is the third biggest Muslim
country in the world (Rashid et al. 2008). It can be hoped that there are ample opportunities for
Islamic insurance companies and grow in Bangladesh. Unfortunately, there is little published
research on Islamic insurance in Bangladesh) Ali 2009, p. 3). If more articles and books would
be published with media campaigns relating to Islamic insurance, these would generate greater
awareness about Islamic insurance in Bangladesh.

Bangladeshis are generally religious minded and tend to avoid things that contravene with Islam
including in trade and commerce (Miah 1992). In the absence of an Islamic banking system, they
used to consider the conventional banking system (Sarker 1999). Later on, revolutionary changes
were observed in the public mindset regarding the banking sector in Bangladesh with the
establishment of Islamic banking in 1983 (Ahmed et al. 2006). If Islamic insurance is fair and
transparent in their transactions, people might avoid conventional insurance (Sarwar 2016). The
Fareast Life Insurance Company is a good example of the revolution of the Islamic insurance
sector in Bangladesh and is a fast growing insurance company (Kalil 2011, pp. 217–218).
There are eight full-fledged Islamic insurance companies in Bangladesh. Among them, five are life
Islamic insurance and three are general Islamic insurance (Ali 2016). Thirteen conventional insurance
companies have opened Islamic insurance windows (Sarwar 2016). Islamic insurance has emerged as a
fast growing industry in Bangladesh. Since 2004–2008, the total premium increased from Tk. 1.4 million
(USD 0.02 million) to Tk. 5.7 million (USD 0.07 million) forming 12 % of total premiums in the insurance
sector. Meanwhile, more than 60 Islamic insurance companies have applied for approval from the
Bangladesh Insurance Academy (Ali 2006). It indicates that the demand and prospect of Islamic
insurance is positively attracting interest across the country. Size and growth of insurance industry in
Bangladesh is mentioned in Tables 2 and 3.

Q: Problems and prospects of insurance sector in Bangladesh

Problems and prospects of Insurance in Bangladesh

Definition of Insurance
In legal terms, insurance is a contract of uberrima fidei, i.e. a contract of utmost god faith. Here
both the parties namely insurer (insurance company) and insured (policy holder) must be honest
and disclose all material facts about the insurable interest. Here the insurance company
undertakes to indemnify the insured against any loss in lieu of a small charge known as
premium. Such as insurance policies except life insurance allows a policy-holder to transfer all
risk to the insurance company in exchange of paying a certain amount of premium. The
insurance company then transfers the same risk to a large number of other policy-holders who
also pay the premium agreed among them. In reality, a small fraction of the policy-holders suffer
loss and hence the insurance company pays them for the losses suffered while retaining the
premium income from others.

The same principle of risk transfer is also applicable to life insurance policy but in a different
form. Here the person insured may or may not be alive to become the beneficiary of a life
insurance policy on maturity. This is, however, not applicable in case of a term or endowment
policy. A life insurance policy is mostly adopted by a person who gives high priority to
protection of family, economic security in the event of his death and deep emotional factor.

(To be continued)
Prospects
There should be vigorous campaign through out the country to make the people aware of the utility and
prospects of buying insurance. Bangladesh is a densely populated country and most of the people in our
country are poor. They would definitively go for insurance for the security and the risks covered by the
insurance. Therefore, the prospects of Insurance are very high in Bangladesh if the following measures
can be adopted.
First of all, there is no alternative of quality service. Insurance being a service rendering entity must
provide quick services. Policyholders are highly dissatisfied with service of JBC and SBC. Due to poor
quality services, public corporations are loosing market. In order to ensure their continuity, such
corporation must pay adequate attention on their quality of service. Private companies also need put
their all out efforts to improve quality of service so as to strengthen their position.

Secondly, the government should eliminate the difficulty in licensing procedure and should not delay in
the approval of new companies if all the requirements are fulfilled. It will help not only to increase
volume of business but also solve the problems of unemployment.

Finally, the policy holders are very much worried about the settlement of claims. Ordinary people also
consider it main constraint. Therefore, instance companies should settle the claims as quickly as possible
to create a healthy public image. For this purpose the claim settlement procedure can be simplified and
the insurers can provide proper written guidelines of claim settlement to the policyholders.

If the above steps can be taken, more and more people in Bangladesh will be interested in buying
insurance. Problems:

1. [LOW PER CAPITA INCOME] Poor economic condition is considered to be the main reason for poor
life insurance penetration in Bangladesh. The country has a very low per capita income and over 50% of
our total population lives below the poverty line. Inability to save or negligible savings by a vast majority
of population kept them away from the horizon of life insurance.

2. [POOR KNOWLEDGE OF AGENTS] The marketing of insurance is greatly hampered in the remote
village of Bangladesh where the agents are appointed from respected locality. This is because; educated
young people are seemed to be reluctant to become insurance agents. Therefore, persons finding no job
or persons having lesser knowledge become insurance agents whom cannot acquaint themselves fully
with the whereabouts of insurance. Such agents cannot play efficient role in convincing a prospective
policyholder.

3. [ILLETERACY] Mass illiteracy is another factor that adversely affects the marketing of insurance.
About 70% of the population is floating in the sea of ignorance. Illiteracy leads one to think that the
insurance is deception; it is no value in life. They cannot think rationality because they do not know
what is insurance and what its importance as security for future.

4. [RELIGIOUS SUPERSTITION] Religious attitude of the people also stands against efficient insurance.
The religious people believe that the future is uncertain, it is in the hand of Allah and they do not think it
necessary to buy life insurance policy for them.

5. [LOW AWARENESS] Insurance awareness is poor. Agents are not skilled enough. These agents cannot
perform their job properly to make the people aware of life insurance.
6. [LOW SAVINGS] People of Bangladesh have a very small saving potentially and thus have less or no
disposable income. Almost the whole of the income is exhausted in the process of maintaining the day-
to-day life. Thus they are left with little amount, which may not deemed to sufficient for the payment of
premiums. This factor discourages many to buy life insurance policy.

7. [LACK OF CONTINUITY] Discontinuation of insurance policy is found higher. This also adversely
affects the market efficiency of insurance business.

8. [SHORTAGE OF FUND] Most of the policyholders cannot continue their policies owing to price spiral
and shortage of fund.

9. [LACK OF REMAINDER] Increase in liability, lack of reminder notice from the insurance company
causes for discontinuation of policy.

10. [NEGLIGENCE OF POLICY HOLDERS] Many of the policyholders have expressed that; their policies
lapsed for their own negligence to pay premium in time.

11. [RESTRICTION] Another important reason for discontinuation is restriction investment allowance by
the government relating to income tax.

12. [POOR SERVICES TO CONSUMERS] An important reason for the dismal performance of insurance
business in Bangladesh is poor client services provided by the insurance companies. The public image of
service from life insurance institutions is very poor.

13. [IMAGE] High lapses of life insurance policies do much to harm insurance image.

14. [RED TAPISM TO OBTAIN COMPENSATION] When an accident takes place, a claimant faces many
difficulties to obtain money from the insurance company. This also discourages people for being a
policyholder.

15. [LACK OF NEW PRODUCT] In a dynamic life insurance market, one can expect to see new product
coming out every now and then. But still today one can hardly see any new product in the insurance
market in Bangladesh. 16. [LOW RETURN] Partly for reasons of drastic fall in money value and
partly for reason of nil or low bonus addition resulting from a combination of high management
expenses and low investment return, life insurance has ceased to look as an attractive savings
medium.

17. [TRADITIONAL MARKETING] Both as a medium of savings and as a provider of financial

security in the event of premature death of a bread winner and in old age, life insurance has
relatively greater appeal among the mid-income people having steady income. For various
reasons poor monetary benefit, poor services, no tax incentive to government employees etc.-the
traditional marketer of insurance have drastically shrunk. So insurers force to sell policies among
different classes, such as business people, well-to-do farmers, traders etc. These peoples interest
for life insurance is rather lukewarm. Soliciting business from them is harder. Procuration costs,
as a result, have to be raised and at the same time quality of business falls.

18. [TRADITIONAL INSURANCE ACT] The present insurance act was enacted more than half
a century back. Many amendments have been made though since then but the basic character of
the act has remained virtually unchanged. This act does not suit the needs of life insurance in the
present day in Bangladesh. The all pervasive stringent regulatory functions carried and exercised
by the office of the controller of Insurance (CI) is not consisted with the market liberalization
policy of the government. In its present form, the act is obstructing, rather than helping, healthy
growth of life insurance in the company.

19. [RESTRICTIVE INSURANCE ACT] One would find it difficult not to admit that the
Insurance Act is too restrictive in the matter of investment. The inflexible rigid rules put
obstacles in the way of earning high profits for the life fund.

20. [NATURE OF INTANGIBILITY] The current practice is that every company tries to
promote its own products, but the benefits of insurance as such are not highlighted. In other
words, the publicity is itemized, not general.

21. [INADEQUATE TRAINING] ] In life insurance, for the sales personnel particularly,
importance of training can not be overemphasized. But unfortunately the present facilities for
training, despite what the Insurance academy is doing, are meager.

22. [ADVNTAGES OF PSC] Whatever may be in theory, in reality a public sector corporation
(PSC) engaged in insurance business is not accountable to anyone. The controller of insurance
(CI) cannot enforce its authority over the PSC, since the latter can easily disregard the CI without
fear and any positive action. This gives the PSC, compared to private companies, many
advantages. Of course, these so-called advantages are truly of an illusory nature since in the long
run they will do much harm not only to the PSC itself but also to the life insurance industry as a
whole.

23. [DISCRIMINATORY ATTIRUDE] The private insurance companies are noticing that in any
dispute arising between the PSC and the private companies, the authority, for some reasons is
always found to take a position against the companies in favor of the PSC. This kind of
discriminatory attitude does not indicate a sincere belief in free market concept.

24. [LACK OF RELIABILTY] Peoples have lacking of reliability on the insurance company,
because many insurance companies do not make payment they agree to pay in time of selling
policy to the people.

25. [LOW ATTRACTIVENESS OF OFFERINGS] The offerings of much of the insurance

companies are not so much attractive that they can allure people to buy a life policy.

26. [LACK OF ADVERTISEMENT] The lacking of proper advertisement and information about
life insurance package are also important factor for poor life insurance business.

27. [INABILITY TO SOLVE PROBLEMS] Many of the life insurance companies are unable to
solve the problems of the policyholders.

28. [LOW QUALITY SERVICE] Inability to maintain the quality of the services provided by
the life insurance companies is also a problem.

29. [DEARTH OF UNDERWRITER] In Bangladesh, there is a serious dearth of life insurance

underwriters and for that reason-underwriting decision is delayed to the detriment of the sales
force and the proposed policyholders.

30. [LACK OF CONFIDENCE] Lack of faith upon insurers is one of the fundamental reasons
for which insurance business cannot strong position in Bangladesh. Most of the respondents have
said that insurance in Bangladesh couldn’t achieve the fullest faith of people. At one side,
insurance business is not well known to the general people and on the other side; the known
people are dubious about its service. Public image about services of insurance companies is very
poor. Majority of the insurance concerns and almost all non policy-holders confessed this very
frankly and counted it as a burning constraint behind the progression of insurance business in
Bangladesh. This feeling of distrust is very intense in the case of life insurance as life insurance
contract is usually made for a longer period of time. The non-policy holders argued that the
motive of insurance companies is to be a millionaire over night.
31. [INADEQUATE GOVERNMENT SUPPORT] A good number of respondents held the government
responsible for its little support for the enrichment of insurance industry. Since the majority of people is
uneducated and is unaware about the benefits of insurance, the government has to take the
responsibility for wide publicity. But the government hardly performs this responsibility.

32. [UNDUE PROMOTION] A very commonly noticed problem in every employment area of Bangladesh
is the undue employment and promotion. Insurance sector is also not free from this infamy. A significant
number of respondents answered in favor of undue practice with regard to promotion. Since majority of
the insurance companies are in the hands of private owners, the promotions sometimes depend on
their willful decision. The performance of the jobholders is not properly appraised.

33. [FABRICATED INFORMATION GIVEN BY THE AGENTS] A large number of agents act for different
insurance companies in the remote areas of the country. The agents usually perform on a commission
basis. The commission depends on the number of clients they can secure. Therefore, a common belief is
that the agents always have the intention to increase their commission and sometimes furnish favorable
information to sell a policy. But this popular belief is not found in reality at the extreme rate.

34. [LIMITED OPERATIONAL AREAS] Another clear problem of insurance business is that insurance
companies operate only in big cities for their operational benefits. There was no single negative answer
about this question. Majority of the companies has their agencies in Dhaka, Chittagong and in other few
big cities.

35. [LICENSING DIFFICULTY] Almost all the insurers and policyholders criticized the licensing system for
insurance companies. They identified it as a major constrain behind the commencement of new
insurance business. Insurance companies opined that the government does not evaluate their
documents of application with due consideration and unnecessarily delays of approval. In many cases
the government in all regimes gives restriction to those applicants who have political relationship or
maintain liaison. This dirty role of government not only encourages corruption but also hinders proper
growth of insurance business.

36. [RIGID PREMIUM PAYMENT SYSTEM] The policyholders pay premiums on installment basis
predetermined by the insurance companies. The companies follow a rigid system of installment adopted
at the beginning of the business. But, sometimes the poor policyholders can’t consistently comply
with the predetermined system for paying premiums on their policies. The premium rate appears higher
to them and therefore, the policyholders face difficulty to continue their premiums that results in
discontinuation of policies and potential insureds are discouraged to buy policy.

37. [BACKWARDS OF MENTALITY] In spite of the worldwide acceptance of increased role of insurance, it
has not been accepted as a satisfactory profession to the people of Bangladesh. In many cases the
insurance officers and agents are disregarded in the society. However, this view is changing gradually.

38. [IGNORANCE ABOUT CLAIM SETTLEMENT PROCEDURE] Ignorance about claim settlement procedure
creates a drastic problem for the insurance companies. Insurers viewed that many policyholders
don’t know the way of making the claim. The only abuse the insurer for instant claim settlement.
They also don’t know the requirements to be submitted to the insurers. But the insurers have to
comply with the formalities before settling the claim. The process usually delays due to the ignorance of
policyholders even though the policyholders hold the insurance companies responsible for this delay.

Q: Micro insurance
What is 'Microinsurance'

Microinsurance products offer coverage to low-income households or to individuals who have

little savings and is tailored specifically for lower valued assets and compensation for illness,
injury or death.

As a division of microfinance, microinsurance looks to aid poor families by offering insurance

plans tailored to their needs. Microinsurance is often found in developing countries, where the
current insurance markets are inefficient or non-existent. Because the coverage value is lower
than a usual insurance plan, the insured people pay considerably smaller premiums.

Microinsurance, like regular insurance, is available for a wide variety of risks. These include
both health risks and property risks. Some of these risks include crop insurance, livestock/cattle
insurance, insurance for theft or fire, health insurance, term life insurance, death
insurance, disability insurance and insurance for natural disasters, etc.

Like traditional insurance, microinsurance functions based on the concept of risk pooling,
regardless of its small unit size and its activities at the level of single communities.
Microinsurance combines multiple small units into larger structures, creating networks of risk
pools that enhance both insurance functions and support structures.

Microinsurance Delivery Methods

Delivery of microinsurance is a challenge. Several methods and models exist, which can differ
according to the organization, institution and provider involved. In general, there are four main
methods for delivering microinsurance to a client base: the partner-agent model, the provider-
driven model, the full-service model and the community-based model:

 Partner-agent model: This model is based on a partnership between the microinsurance scheme
and an agent, and in some cases a third-party healthcare provider. The microinsurance scheme
is responsible for the delivery and marketing of products to the clients, while the agent retains
all responsibility for design and development. In this model, microinsurance schemes benefit
from limited risk, but are also limited in their control.
 Full-service model: In this model, the microinsurance scheme is in charge of everything; both
the design and delivery of products to the clients, working in conjunction with external
healthcare providers. While benefiting from full control, the disadvantage of the full-service
model is the higher risks.
 Provider-driven model: In this model, the healthcare provider is the microinsurance scheme,
and similar to the full-service model, is responsible for all operations, delivery, design, and
service. This disadvantage of this method is the limitations of products and services that can be
offered.
 Community-based/mutual model: In this method, policyholders or clients are run
everything, working with external healthcare providers to offer services. This model is
advantageous for its ability to design and market products more easily and effectively, but
the small size and scope of operations limits effectiveness.
The term "microinsurance” typically refers to insurance services offered primarily to clients with
low income and limited access to mainstream insurance services and other means of effectively
coping with risk.

More precisely, microinsurance is a means of protecting low income people against specific risks
in exchange for a regular payment of premiums whose amount is proportional to the likelihood
and cost of the relevant risk. The principal distinction from traditional insurance is in the
targeting of low income people, which leads to distinct characteristics and objectives, including
addressing the particular risks of low income people, affordability and inclusiveness, simplicity
and clarity in documentation, accessible processes, and building trust among target clients.

Microinsurance is a highly diversified sector, in terms of:

 Stakeholders: Microinsurance is developed and offered by commercial insurers, mutual

funds, microfinance institutions, NGOs, governments or semi-public
bodies. Microinsurance ventures are often joint efforts among several of these
stakeholders, who can play roles ranging from market research and product design to
selling, delivering, and servicing claims.
 Products: Microinsurance products can cover any insurable risk, including death, illness,
accident, property damage, unemployment, crop failure, or loss of livestock.
 Portfolio size: Microinsurance can operate at any scale; a microinsurer may cover dozens
of policyholders, or millions.

The links on the right provide a primer on microinsurance, illustrating the qualities that
distinguish it from main stream insurance and providing an easy guide to the sector.
Q: Importance of insurance in a developing country
1. Saving and Insurance

Saving involves refraining from present consumption. The investment can take place only when
there are savings. The relationship between. saving, investment and growth of GDP can be
explained as:

G = S / K. Where G – Rate of GDP growth, S – Saving Ratio and K – Capital output ratio.

Insurance companies lead to economic development by mobilizing savings and investing them
into productive activities. Indian insurance companies are able to mobilize long-term savings to
support economic growth and also facilitate economic development by providing insurance
cover to a large segment of our people as well as to business enterprise throughout India.

2. Capital Formation and Insurance

Capital formation maybe defined as increase in capital stock of the country consisting of plant,
equipment, machinery, tools, building, means of transport, communication, etc. The process of
capital formation envisages three essential steps. These are:
a. Real saving: Mobilization of saving through financial and non-financial intermediaries to be
placed at the disposal of investor.

b. The act of investment: The contribution of insurance companies in the process of capital
formation appears at all these stages. Insurance services act as a tool to mobilize saving, function
as financial intermediary and at times also indulge in direct investment. Also govt. has made
regulations under which every insurer carrying on business of life insurance shall invest 25% of
funds in Govt. securities and not less than 15% in infrastructure and social sector.

The importance of Indian insurance industry is gauged by the fact that annual amount of
investible funds of LIC and GIC and its subsidiaries amounted to over Rs. 20,000 crore and Rs.
10,000 crore are invested in nation building activities, housing and other infrastructural areas.

c. Increased Employment: Prior to the liberalization of insurance sector in India, the

opportunities for employment were limited with the LIC of India as sole employer. While some
of the professionals left the country looking for opportunities elsewhere, those who remained,
worked within the confines and constraints of public sector monopoly. This has further
constrained the opportunities for exposure to the development in rest of the world. Liberalization
and the opening up of sector to private players has now created a vast opportunity for
employment.

3. Obligation to Rural and Social Sector

In India, the insurance companies are required to fulfill their obligation towards rural and social
sector. For this, Life insurers are required to have 5%, 7%, 10%, 12%, 15% of total policies in
first five years respectively in rural sector. Like wise General Insurers are required to have 2%
3% and 5% thereafter of total gross premium income written in first five financial years
respectively in rural sector.

4. Insurance as financial intermediary

Financial intermediaries perform the function of channelizing saving into domestic investment.
They facilitate efficient allocation of capital resources, which in turn improve productivity and
economic efficiency which result in reduced capital output ratio. The insurance companies
perform extremely useful function in economy as financial intermediaries. These are as follows:

a. Reduction in transaction cost: Insurers help in reducing transaction cost in economy by

collecting funds from policyholders and investing the same in different projects scattered over
different regions. It is a specialized and time consuming job.

b. Creating liability: The policyholders, in case of loss, are not required to wait for a long period
for the amount of claim. It improves their liquidity.

c. Facilitates Economies of scale in Investment: Insurers are in the position of financing large
projects, railways power projects, etc. These large projects create economies of scale, facilitate
technological innovation and specialization and thus promote economic efficiency and
productivity.

5. Promotes Trade and Commerce

The increase in GDP is positively correlated to growth of trade and commerce in economy.
Whether it is production of goods and services, domestic or international trade or venture capital
projects, insurance dominates everywhere. Even banks demand insurance cover of assets while
granting loans for purchase of assets. Thus insurance covers, promotes specialization and
flexibility in the economic system that play contributory role in healthy and smooth growth of
trade and commerce.

6. Facilitates efficient capital allocation

Insurance provides cover to large number of firms, enterprises and businesses and also deploy
their funds in number of investment projects. The vast pool of knowledge and expertise so
gained enable them to distinguish between productive and high return projects. Therefore, they
promote efficient and productive allocation of capital resources, which in turn lead to increased
productivity and efficiency in the system.

7. Encouraging Financial Stability and Reducing Anxiety

Insurer promotes financial stability in economy by insuring the risks and losses of individuals,
firm and organizations. Because of uninsured large losses, firm may not be able to compensate
for it leading to its insolvency which may cause loss of employment, revenue to supplier &
Govt., loss of products to customer, etc. Moreover, it relieves the tensions and anxiety of
individuals by securing the loss of their lives and assets.

8. Reducing Burden on Govt. Exchequer

Insurance companies, particularly life insurers provide a variety of insurance products covering
needs of children, women and aged etc under social security network and thereby reduce the
burden on Govt. exchequer in providing these services. This Govt., saves expenditure on these
items and amount can be utilized for more productive projects. To conclude, we can say that
insurance companies play an important role in economic development of country.
Q: The role of insurance in modern life
Importance to Individuals

Representing the benefits of insurance on the smallest scale, insurance has a great influence on
individual people like you and me.

1. Safety and Security: Insurance’s main purpose is to provide for the insured should anything
catastrophic happen. If your house is destroyed, you car wrecked, or your health decimated by
 illness, insurance steps in an helps take care of any financial burden that results from the
incident.
2. Peace of Mind: Aside from financial security, insurance also provides mental security, knowing
that your health, family, and possessions are taken care of should the unexpected happen. If
you’re unsure how to go about planning your financial future, this article on estate planning,
and this article on personal finance will help you achieve the piece of mind that planning your
future gives you.
3. Encourages Savings: Specific only to life insurance, when the insured pays into this type of
policy, it is seen as a type of saving and investing, not only because they are able to take a loan
out on it, but if it matures before the insured person dies, they receive the lump sum of the
contract. To learn more about this type of protection, check out this course on life insurance,
and find a plan that works best for you.

Importance to Businesses

Not just beneficial to individuals and their families, insurance also plays a large role in the
operations of businesses of all sizes.

1. Reduced Uncertainty: If the physical components of a business, i.e. the factory, machinery,
offices, etc., are destroyed, pretty much any hope of rebuilding is shattered if they were not
insured. Furthermore, if a business were so unprofessional as to operate uninsured, they would
have a difficult time finding people to invest in an unprotected operation.
2. Increased Efficiency: Much like the insured individual, the owners and management of an
insured business have piece of mind, and this piece of mind translates into unworried people
who are able to focus their attention onto the the business’ operations, rather than what will
happen if an accident occurs.
3. Key Man Protection: This type of insurance is very specifically tailored to business. If an
operation has in its employ someone who is so vital to the business that their death would be
catastrophic for them, then a policy is taken out on them. A form of life insurance, a key man
policy is reserved for those workers who brings to the table such indispensable things as capital,
expertise, goodwill, energy, dutifulness, etc., that the business would falter due to their
absence. The value of the policy would be equal to the amount of profits lost, money spent on
training a replacement, and any monies owed to the key man’s dependents.
4. Better Credit: A business may put up an insurance policy as collateral for a loan, thus increasing
their status to potential credit lenders. To learn more about money lending, this course on
understanding loans should shine some light on the subject.
5. Employee Welfare: It’s a business owner’s responsibility to look after the welfare of their
workers and their families should bad luck befall them. Besides life insurance, a business owner
may take out accident and sickness insurance, as well as a pension, the premiums of which the
employer usually pays. Not only do these help the worker and their family, but also provide
goodwill for the business and management.

Importance to Society

Finally, the benefits of insurance on the largest scale are those realized by society as a whole.
1. Protection of Society’s Wealth: Society as a whole benefits when its component parts are
protected by insurance: its people generate more income when they are not only healthy and
care-free, but also not worried about their financial future, its assets, such as buildings, crops,
livestock, etc., are able to produce to their fullest extent when protected, and its oldest and
youngest members are able to prosper with the aid of insurance.
2. Economic Growth: When the components of industry, such as plant, property, and equipment
(to use an economic phrase), are protected, the owners of these assets are at ease knowing they
will be repaid in the event of a disaster, and as a result, are more confident, resulting in more
production and investment, thus stimulating the economy. This course on commercial property
insurance will explain more about this meeting of business and finance.
3. Reduced Inflation: As result of money paid to insurance premiums, production increases and
the overall supply of money decreases, resulting in a decrease of the inflationary gap, which also
results in a benefit of the overall economy.