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The insurance system plays a pivotal role in automating various insurance activities, encompassing policy definitions, schemes, policy specifications, terms and conditions, customer policy registrations, flexible premium payment modes, and policy bonuses over flexible periods. Agents are integral to the customer policy registration process, and their commissions depend on achieving set targets. Additionally, the insurance system maintains a comprehensive database of branch managers who liaise with agents, ultimately serving the customers. The transition from manual processes to automated systems has significantly reduced processing time and manpower requirements.
This essay explores the evolution of insurance management systems and their vital role in enhancing efficiency within the insurance industry.
Risk management is a fundamental aspect of modern life, and insurance serves as a key mechanism for mitigating and transferring risks. Risks can be broadly categorized into speculative risks, which may result in either gains or losses, and pure risks, which entail potential losses. Insurance primarily addresses pure risks characterized by uncertainty.
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Effective insurance management systems aim to optimize coverage at an economical cost while ensuring timely protection when needed. While insurance transactions are commonly viewed as financial agreements involving premiums and compensation for losses, the scope of insurance management systems extends beyond financial considerations.
The insurance market comprises buyers, sellers (insurance and reinsurance companies), intermediaries (insurance brokers and agents), regulators, representative bodies, consultants, and technical advisers. Buyers of insurance include individuals, government entities, parastatals, multinational corporations, manufacturing industries, banking institutions, healthcare facilities, tourism and hospitality sectors, transportation companies, educational institutions, and the oil and energy industry.
The diversity of buyers allows for market segmentation based on insurers' strategies.
Insurance companies, both private limited liability and public companies, underwrite various types of insurance, with some specializing in life assurance. Reinsurance companies provide technical support and capacity to insurance firms but do not directly serve consumers. In Nigeria, insurance brokers and agents play significant roles in the distribution of insurance products, with brokers holding the majority of the premium income. However, insurance agents are prominent in the individual life insurance market, and banks have also emerged as influential channels for insurance distribution, often offering insurance products as additional benefits to customers.
Risk management is essential in contemporary society, and insurance is a critical tool for addressing various risks. However, four major challenges arise when creating a system to manage risks effectively: risk identification, evaluation, control, and financing. Identifying and evaluating risks is a multifaceted task requiring input from all areas of an organization. Risk control, including avoidance and reduction, falls within corporate safety policies, with the protection of assets and personnel assuming great importance due to the costs associated with risk occurrence.
Risk financing plays a crucial role in effective risk management, involving a cost-benefit analysis of insurance alternatives. The existing manual insurance system is susceptible to errors, time-consuming, and challenging to generate reports. It also presents opportunities for altering reports and malpractice. This manual system relies heavily on manual data entry, leading to inefficiencies, inaccuracies, and reduced productivity. Issues such as escalating paper-related expenses, increased labor, reduced control over financial transactions, delays in payment processing, and limitations on global transactions underscore the limitations of the manual system.
The proposed online microinsurance analysis and information management system provide easy access to information related to insured individuals and insurance resources. This dynamic platform includes search tools for insurance awareness articles, guidelines, and illustrative images for visitors. Furthermore, the system allows administrators to register insured persons, managing their personal information, residence addresses, medical histories, and policy details. Visitors can access articles to enhance their understanding of microinsurance. The objectives of the system encompass both functional and qualitative aspects.
The system aims to achieve two primary objectives: functional and qualitative. Functionally, it allows users to select the types of risks they wish to insure, understand the associated costs, register as customers, comprehend the benefits of coverage, and gain a general understanding of available insurance policies. Qualitatively, the system defines the corporate insurance philosophy while providing firsthand knowledge of the risks involved.
The proposed system aims to rectify the limitations of the existing system, providing a permanent solution to the challenges faced. It is designed to expedite transactions and streamline reporting for various insurance schemes. In an era where online insurance services have become prevalent, the transition from paper-based instruments to digital transactions is both logical and essential. The internet has opened up global markets, making it imperative for businesses, including insurance, to adapt to the digital age. Numerous companies are vying for prominence in online insurance services, and this essay explores how an automated system can revolutionize the insurance industry.
The proposed system offers several advantages:
Despite its advantages, the proposed system has some drawbacks:
The Nigerian insurance market encompasses buyers, sellers, intermediaries, regulators, representative bodies, consultants, and technical advisers. Buyers include individuals, governments at various levels, multinationals, conglomerates, manufacturing industries, small and medium-sized enterprises, the banking industry, healthcare institutions, tourism, and hospitality businesses, transportation companies, educational institutions, and the oil and energy sector.
The sellers or suppliers of insurance are comprised of insurance companies and reinsurance companies. Currently, there are approximately 118 registered insurance companies and 5 registered reinsurance companies in Nigeria. Most insurance companies are incorporated under the Companies and Allied Matters Act 1990, with the majority being private limited liability companies. Approximately sixty companies underwrite life assurance business, with five specializing in life offices. Reinsurers provide technical security and capacity for insurance companies but do not directly serve consumers. The banking industry has also emerged as a formidable channel for distributing insurance services, either directly or by facilitating direct marketing by insurers.
In conclusion, this essay has explored the evolution and significance of insurance management systems within the contemporary insurance industry. We began by delving into the fundamental role that insurance plays in managing risks, differentiating between speculative and pure risks, with a particular focus on the optimization of coverage and protection. We examined the diverse landscape of insurance markets, comprising buyers, sellers, intermediaries, regulators, and various stakeholders, shedding light on the complexities of this multifaceted industry.
The essay then turned its attention to the challenges faced by insurance management systems and the imperative need for an automated solution to streamline operations and enhance efficiency. The existing manual systems were found to be error-prone, time-consuming, and fraught with inefficiencies. The proposed system, designed to address these drawbacks, promises to expedite transactions and facilitate reporting, keeping pace with the rapid digitization of the insurance sector.
Furthermore, we discussed the advantages of implementing the proposed system, highlighting its role in providing financial security, planning for life's stages, and safeguarding against rising healthcare expenses, among other benefits. We also acknowledged the disadvantages, such as variability in data structures and difficulties in data management.
Drawing inspiration from a case study of the Nigerian insurance market, we gained valuable insights into the dynamics of insurance in a specific context, where insurance brokers wield significant influence, and banks play a pivotal role in insurance distribution.
Finally, this essay concluded by emphasizing the pivotal role of online insurance management systems in transforming the insurance landscape. Such systems not only enhance core functionalities but also contribute to the efficient monitoring of transactions and reports. The system's ability to reduce operational time and costs, coupled with its role as a risk management tool, underscores its significance.
In light of the essay's findings, it is recommended that governments consider measures to reduce tariffs on web usage, promoting greater accessibility to web-based insurance technologies. Encouraging individuals and businesses to embrace insurance as a means of risk mitigation will help expand the user base for insurance management systems. As technology continues to advance, the adoption of these systems will be crucial for insurers to remain competitive and provide effective risk management solutions to their clients in our ever-evolving world.
Insurance Management: From Manual Processes to Digital Efficiency. (2016, Mar 21). Retrieved from https://studymoose.com/literature-review-on-insurance-management-system-essay
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