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1 ACKNOWLEDGEMENT 1
2 INTRODUCTION 2
3 INSURANCE INDUSTRY OVERVIEW 3
4 DSS FUNDAMENTALS 7
5 NEW PRODUCT DEVELOPMENT AND DSS 10
6 EXAMPLES 12
7 CONCLUSION 14
8 REFERENCES 15
1.
ACKNOWLEDGEMENT
I would like to thank Professor Tejashree Colvalkar for her guidance and support throughout the duration of the dissertation. ... Pashupati, who is the visiting faculty for insurance in our institute. His suggestions about the new product development process form an important part of this work. ...
INTRODUCTION
Insurance firms across the globe have to manage vast amounts of data relating to customer. ... Decision Support Systems (DSS) can be used to intelligently segmenting existing clients and identifying groups that do not fit the profile of any existing product offering. Other way is to establish newer norms for product development like geography and the timing.
The industry has seen opening up of new markets, like India and the subsequent activities like mergers etc. ... It is in this stage that DSS will be of great help to the industry. ... They can also predict who will buy which product, and when leading to cross-selling opportunities. ... For example, an individual may be unprofitable on his motor insurance, but highly profitable on his household insurance. ...
INSURANCE INDUSTRY AN OVERVIEW
The insurance industry is quite diverse in terms of portfolio of products provided by different companies. The products can be broadly classified into two product lines: property and casualty (P&C) and life insurance. Life insurance product line can be further sub-divided into life insurance, health insurance and annuity products. ... A number of other trends in the insurance industry have also exponentially increased the importance of an effective DSS environment; at the same time, these trends are responsible for increasing the complexity of building such an environment:
• Growing Consolidation: Consolidation is a major force altering the structure of insurance industry, as insurers seek to create economies of scale and broaden their product portfolios. ...
• Convergence of Financial Services: Mergers and acquisition of insurance companies with other financial service providers like banks has led to the emergence of integrated financial services companies.
• New Distribution Channels: New distribution channels are fast catching up with the traditional insurance agent. ...
During the last three decades, insurance companies acquired significant product development capabilities; but they lagged behind in truly understanding the customer. ... But during last few years, deregulation and growing competition has forced insurance companies to move from traditional product-centric operations to customer - centric operations. ... Implicit in this argument is the assumption that insurance companies have the ability to turn volumes of data pertaining to their customers, agents, claims and policies into actionable information. ... Figure 1 illustrates the insurance value chain.
Corporate Management
Customer Relationship Management
Human resource Management
Financial and Asset Management
Channel Management
Acturial Underwriting and Policy Management Claims Management
Figure 1: Insurance Value Chain
With this background in mind let us look into what will be the future challenges for the insurance industry. These can be explained in the figure bellow:
Figure 2: Business challenges
Factors including globalization, product commoditization, industry consolidation, regulatory changes, distribution channels, and shrinking margins have presented the insurance industry with a new reality- securing a new competitive advantage is more difficult than ever. ... The industry needs better ways to integrate applications and business logic across the value chain.
The Indian scenario
The Indian insurance industry has been seeing various changes. The opening up of the industry, which was done as a consequence of the liberalization and globalization process sometime ago, has been having its impact on the way the business is conducted, although the old juggernaut rolls on without the `real competition. Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has stuck to its schedule of framing regulations and registering the private sector insurance companies. ... This does not augur well for the welfare of the countrys economy as also for the development of a vibrant industry. For example, not much has been done in the area of health insurance, which is one of the critical areas in the insurance domain in India.
One very significant event that has taken place in the Indian insurance industry in the recent times is the development of new distribution channels. The Brokers regulation in this regard deserves a great deal of applause and it forebodes the very understanding of the concept of insurance by the general masses. ... It might pave the way for disproving the age-old adage `Insurance is sold and seldom bought. The other considerations for buying insurance like the income tax exemption and long-term savings could take a back seat and the real purpose of insurance might reign supreme at least in the long run. ...
While discussing about insurance business that is replete with assumption of risks, one cannot stay aloof from the risks that an insurance company faces. ...
DSS FUNDAMENTALS
A Decision Support System can be defined as an interactive data processing and display system which is used to assist in the concurrent decision-making process, and which also conforms to the following characteristics:
(i) Sufficiently user-friendly to be used by decision-makers in person,
(ii) Displays its information in a format and terminology which is familiar to its user(s),
(iii) Selective in its provision of information and avoids exposing its users to information overload. ... If now they decide to use such a database to take decisions like which is the period when a certain product say is brought most, so as to match their stocking pattern in a similar way, such a system will be called as Decision Support System.
Approximate Word count = 4709
Approximate Pages = 18.8
(250 words per page double spaced)
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