PEST analysis (Political, Economic, Social and Technological analysis) describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. Insurance is one of the service factor that are expected to continue to drive growth in the economy. Thus the insurance sector play important role in supporting economic ,social and technology development. Economical factor Interest rate at bank very much affect to insurance industry, because people always attract by higher return. Therefore, they do not prefer lower return policy.
Unemployment also affects insurance industry, because the unemployment people will not have earning, so saving also affect to life insurance sector. Life insurance industry will directly affected by Earthquake, Monsoon, and Natural calamity. Because of these events turns into lots of death, so the life insurance companies have to pay claim against policy. Infant mortality rate and maternity mortality rate are also affecting to insurance. Typical consumer want luxurious product against low income, so that they prefer installment or annuity (EMI), so thatthey may not have extra saving to invest in life insurance.
Social factor The population in the age group 15-55 is usually regarded as the insurable population, since this can be considered as the main “active” age group ( in the sense of working, earning and supporting others), and beyond this range life risk may be considered to be not worth insuring. On the other hand, people over the age of 50 rarely apply for fresh life insurance, mainly because in Malaysia the normal retirement age is around 55- 60 years. Also, a high percentage of the population in the lower income group does not remain “insurable” after the age of 50.
A single respondent is less likely to purchase life insurance than a married respondent. Given that a married respondent is likely to have family members or dependents to care for, it is reasonable to expect that a married respondent is more likely to think and plan for his/her family members should an unfortunate circumstances fall upon him or her. Higher education is not a driver in the demand for life insurance.
Although the higher educated individuals may understand and appreciate insurance more than the lower educated individuals, they may be ore interested in wealth management and wealth creation products than insurance. The higher educated individuals may view the new wealth management products as a more appealing way of managing their finances than insurance. Technology factor Internet as an intermediary , customer is not aware about the intrinsic value of insurance. Internet can be an effective medium for educating the consumers about insurance. It serves as a single window for disseminating product, process and procedural information to the consumers.
Product development and target marketing through the Internet: with increase in the number of insurance companies there will be a need for market segmentation and subsequently product designed for each of them. In such a scenario Internet can be a effective channel for pushing product specific information to a particular market segment. Consumer feedback about a particular product as well as suggestions for different types or covers can also be generated through the Internet. For example, maintaining the database.
The most important fact that is affecting the insurance industry is the marinating the database of the customers. The insurance industry having a huge list of the customers. In order to maintain it in manual format it is really the work of stupidity. With the change in time the computers has taken the work of this things. Thus with the development of the technology it has becoming possible to maintain such huge database very easily. A person can switch over to the computer and get the details of the customer very easily. Thus maintaining the database has really become easy due to the development in technology.
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