Read all articles The insurance industry is not the only business to struggle with understanding its data. Disruption and innovation will alter established business models indelibly.
The Internet Industry As a result of globalizationderegulation and terrorist attacks, the insurance industry has gone through a tremendous transformation over the past decade.
In the simplest terms, insurance of any type is all about managing risk.
For example, in life insurancethe insurance company attempts to manage mortality death rates among its clients. The insurance company collects premiums from policy holders, invests the money usually in low risk investmentsand then reimburses this money once the person passes away or the policy matures.
A person called an actuary constantly crunches demographic data to estimate the life of a person. The greater the chance that a person will have a shorter life span than the average, the higher the premium that person will have to pay.
This process is virtually the same for every other type of insurance, including automobile, health and property. In the insurance business, this has led to a flurry of merger and acquisition activity.
In fact, a majority of the liability insurance underwritten in the U. Ownership of insurance companies can come in two forms: If the company is owned by shareholders, it is like any other public company.
That is, its shares trade on an exchange like the NYSEand it is required to report earnings on a quarterly basis. The other type of ownership is called "mutually owned insurance companies. It should be mentioned that in recent years many of the top mutual insurance companies have gone through demutualization to become shareholder-owned.
Today, only a small handful of companies are still policyholder-owned. Types of Insurance There are several major types of insurance policies. Some companies offer the entire suite of insurance, while others specialize in specific areas: Life Insurance - Insurance guaranteeing a specific sum of money to a designated beneficiary upon the death of the insured, or to the insured if he or she lives beyond a certain age.
Health Insurance - Insurance against expenses incurred through illness of the insured. Liability Insurance - The miscellaneous category.
There are many factors to examine when looking at insurance companies.
Poor fundamentals not only indicate a poor investment opportunity, but also hinder growth. Nothing is worse than insurance customers discovering that their insurance company might not have the financial stability to pay out if it is faced with a large proportion of claims.
Over the years, there has been a big shift in the life insurance industry. Instead of offering straight insurance, the industry now tends to sell customers on more investment type products like annuities.
As a result, insurance companies have been able to compete more directly with other financial services companies such as mutual funds and investment advisory firms. To capitalize on this, many insurance companies even offer services such as tax and estate planning.
Return on Assets ROA: In general, a life insurer should have an ROA that falls in the 0. Return on Total Revenue: Net Income Total Revenue This is another variation of the profitability ratios.
If possible, use the premium income and investment income as the numerator to find the profitability of each area. This is the process of multiple insurers sharing an insurance policy to reduce the risk for each insurer.The Market Structure of the Health Insurance Industry Congressional Research Service Summary In March , Congress passed a pair of measures designed to reform the U.S.
health care. The insurance industry includes life (individual and group life and an nuities and pension fund management), accident and sickness (health care, dental care, and disability) and property and casualty (vehicles, real proper.
From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.
'The Insurance Industry in Zimbabwe, Key Trends and Opportunities to ' report provides detailed analysis of the market trends, drivers and challenges in the Zimbabwean insurance industry.
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The market structure of the health insurance and hospital industries may have played a role in rising health care costs and in limiting access to affordable health insurance and health care.