Thought for the quarter - Punjab National Bank Institute of ...

More documents

Recommendations

Info

e-tracksupported by suitable mining techniques go a longway in alleviating most problems associated withdata-based management decisions. In the insuranceindustry, for example, it could lead to a wide range ofbenefits like creation of better policy types that aimat the right segments, better pricing strategies, morereliable risk assessment and underwriting etc; apartfrom higher efficiencies in claims settlement andother customer service activities. It should howeverbe ensured that the data obtained is homogenous innature and at the right level of granularity. Datawarehousing and mining techniques provide theright balance for maintenance of a high level of datarelated accuracy.Insurance: A matter of choiceInsurance is defined as the equitable transfer ofthe risk of a loss, from one entity to another, inexchange for payment. An insurer is a companyselling the insurance; an insured or policyholder isthe person or entity buying the insurance policy. Theinsurance rate is a factor used to determine theamount to be charged for a certain amount ofinsurance coverage, called the premium. Riskmanagement, the practice of appraising andcontrolling risk, has evolved as a discrete field ofstudy and practice.The transaction involves the insured assuminga guaranteed and known relatively small loss in theform of payment to the insurer in exchange for theinsurer's promise to compensate (indemnify) theinsured in the case of a large, possibly devastatingloss. The insured receives a contract called theinsurance policy which details the conditions andcircumstances under which the insured will becompensated.The customer today can choose betweeninsuring and not insuring, between bearing the riskhimself or through industry / mutual arrangements,or passing on the risk to an insurer. His choicedepends on the industry players, schemes available,the nature and types of risks, the costs involved, theassociated risks, the probability of occurrence, thelikely impact on business and the risk appetite,approach and attitude. Insurance companies thatrecognize this factor; and are proactive in managingand tuning their business to customer needs willprove most successful in today's competitiveenvironment.Trends of Insurance in IndiaWith the de-regulation in Indian Insuranceindustry, the monopoly of public sector companies inlife insurance and general insurance has come to anend. The insurance industry in India has gonethrough many transitions, the latest being theopening up of the insurance sector to private andinternational players. With this, the monopoly of thepublic sector nationalized insurance companies hasbeen replaced by competition albeit in a spaceregulated by the IRDA, thereby giving a choice forthe first time to the consumer, the insured. IRDA hasthe responsibility of protecting the interest ofinsurance policyholders. Towards achieving thisobjective, the Authority has taken the followingsteps:IRDA has notified Protection of PolicyholdersInterest Regulations 2001 to provide for:policy proposal documents in easilyunderstandable language; claims procedure inboth life and non-life; setting up of grievanceredressal machinery; speedy settlement ofclaims; and policyholders' servicing. TheRegulation also provides for payment ofinterest by insurers for the delay in settlementof claim.January-March2011 10
The insurers are required to maintain solvencymargins so that they are in a position to meettheir obligations towards policyholders withregard to payment of claims.It is obligatory on the part of the insurancecompanies to disclose clearly the benefits,terms and conditions under the policy. Theadvertisements issued by the insurers shouldnot mislead the insuring public.All insurers are required to set up propergrievance redress machinery in their headoffice and at their other offices.The Authority takes up with the insurers anycomplaint received from the policyholders inconnection with services provided by themunder the insurance contract.Life Cycle of InsuranceThe life cycle of insurance can be viewed andanalyzed from two perspectives. One is that of theconsumer (insured), and the other that of the insurer.The insured is looking at risks and impact forappropriate treatment to mitigate and control lossesand to obtain maximum recoupment. On the otherhand, the insurer is looking at risks to developproducts and address the needs of the insured andearn a fair return by way of premiums that will givehim profits / surplus over and above the claimssettlement. The approach of the insured is from anindividual perspective, and that of the insurer from amacro perspective. Both are looking at risks andoutcomes – one from the loss perspective and theother from the claims perspective. The relationshipis mutual, symbiotic and interdependent. However,it also therefore envisages a better understanding ofthe risks, their likelihood and impact and the needsand pain points of consumers.e-trackInsured(Individual Level)Risk Risk Risk Insurance Risk Claim CompensationIdentification assessment Treatment EventRisk Risk Product Policy Servicing Survey SettlementIdentification assessment development& trainingInsurer(Macro Level)Fig1: Life Cycle of InsuranceData Warehouse & Data MartsA data warehouse is the foundation of powerfulanalyses. It supports business decision making byallowing managers and analysts to examine data andperform powerful analysis easily and quickly. Itfacilitates measurement of the effects of variouscombinations of factors (geographic, demographic,rating and underwriting variables) on sales, premium,losses, loss frequency, loss severity, loss ratio, customerretention and other measures, and provides a strongplatform for regression analysis and various other formsof predictive analysis.The term “data warehouse” is often used indifferent contexts to mean different things. Datawarehouses can be categorized in three types: CorporateData Warehouses, Data Marts, and Operational DataStores. Ideally, a company would like to have a “singleversion of the truth” in one large Corporate DataWarehouse so that all data used for reporting and analysisis extracted from it. Such a data warehouse will contain alarge amount of detailed transaction-level historical datathat covers multiple subject business areas broughttogether from multiple sources, and integrated into aconvenient format for extracting information for buildingData marts for individual departments and for other usesthat require detailed, granular historical data. In practice,a large company may have more than one datawarehouse, but not too many.Data marts are built to address the analytical needsof individual departments. For example, while Actuarialand Underwriting areas could possibly share a data mart,Marketing may need to have a separate data mart orientedto its specific needs and the Claims Department may have11January-March2011
Page 1 and 2: wiatkc uS'kuy cSadlpuk izkS|ksfxdh
Page 3 and 4: e-trackFrom the Director's deskKNOW
Page 5 and 6: information into nodes and relation
Page 7 and 8: Problems in implementation of KM pr
Page 9: KNOWLEDGE MANAGEMENT IN INSURANCE I
Page 13 and 14: e-trackProcessing - Decision Suppor
Page 15 and 16: systems in ways that are transparen
Page 17 and 18: e-trackThe core issue to start with
Page 19 and 20: e-trackbear on the achievement and
Page 21 and 22: e-trackexternal performance measure
Page 23 and 24: BOOK REVIEWe-trackIndian Financial

Thought for the quarter - Punjab National Bank Institute of ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?