Insurance is among the processes that facilitate business operations. By enlisting the services of an insurance company, a firm transfers the risks that it faces (Lester, 2009). In the US, the insurance industry has become intensely competitive. Many insurers are competing for a limited market. To set their services apart from those offered by the competition, insurance companies tend to offer attractive premiums and wider coverage. This is one of the insights that I gained after consulting an insurance agent. Through our engagement, I gathered that the insurance business is complex and vital for the smooth operations of an economy.
The insurance agent represents a company that has been in operation since 1985. At the time of its establishment, this company served a rather limited market. However, as the US market grew and households began to recognize the need to secure themselves against hazards, this firm expanded its operations beyond its original market. This company is not alone in spreading its influence across the US. Today, insurance companies in the country offer a wide range of services to millions of households and thousands of companies (U.S. Department of the Treasury, 2016). Furthermore, the companies are diversifying away from traditional insurance. They are offering such other services as asset management and financial consultancy.
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It has been noted above that the insurance business is complex. To survive in this industry, firms have to develop innovative models. The model that the insurance company whose agent I interviewed has adopted involves targeting households and market segments that have historically been neglected. It is common practice for insurance companies to shun markets which are deemed to be too risky. This insurance company recognized that to counter the competition, it needed to focus its efforts on these markets. This model has proven effective since the company boasts of millions of customers. Moreover, by targeting those considered uninsurable, the company has managed to spread risks and pool massive resources. Its high customer base has also allowed the company to develop a large premium volume. For the 2017-18 financial year, the total premiums collected was $3.8 billion. This figure indicates that the firm’s model was well-developed and has yielded success. In conclusion, thanks to my discussion with the insurance agent, I was able to understand the complexities of providing insurance. I would encourage others who wish to gain insights into the insurance industry to engage insiders from the industry.
References
Lester, R. (2009). Introduction to the insurance industry. World Bank. Retrieved June 21, 2018
From http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources/282884-1242281415644/Introduction_to_Insurance_Industry.pdf
U.S. Department of the Treasury. (2016). Annual report on the insurance industry. Retrieved
June 21, 2018 from https://www.treasury.gov/initiatives/fio/reports-and-notices/Documents/2016_Annual_Report.pdf
