Thursday, August 12, 2010

New insurance products that would change the world

Insurance products have played a major part in the growth of mature economies. Complex risk products provided peace of mind for individuals and companies alike. Structured savings products assist individuals to prepare for retirement or other important events (like study, birth etc.). The premiums collected by means of these products often provide the capital to fund infrastructure and economic growth through investments.

Unfortunately, these benefits are not available in many emerging economies, primarily because of two reasons:
  • Limited statistical information to form the basis for actuarial calculations. Without this data it is impossible to design risks products that can be delivered profitably.
  • Inadequate payment systems making the collection of monthly or weekly premiums impossible and unpredictable.
Widely embraced mobile payment solutions will largely help solve both these impediments to insurance products. The statistical information available from the transactional behaviour of subscribers can provide much of the data that will enable actuaries to create suitable and profitable products. The payment platform provided by mobile payment systems is ideal to support regular collection of premiums in a cost effective way.

The time is ripe for the emergence of a new generation of insurance products specifically aimed at emerging economies. This will lead to a better life for all, but more importantly, the introduction of these insurance products will also directly lead to growth in the economy and will stimulate many secondary industries.

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