Demographics Study of Life/Health Marketplace in 21st Century
An in-depth analysis of demographic factors that will affect the life-health insurance industry in the next century, has uncovered trends that show increasing diversity that adds to
challenges and opportunities.
Conning & Company, which did the study, said that success in the marketing of products would come to those insurers that become more creative in capturing a wider range of customers by using multiple distribution channels. The diversity uncovered by the Conning study includes the aging population, increasing household income inequality and social fragmentation. In addition, Conning said, there is a rise of small businesses and self-employment around the world.
Challenges/Opportunities
The study, "21st Century Demographics for the Life-Health Industry, "delineates the following challenges and opportunities:
Population around the world is aging, number of people in the old age bracket is growing continuously. As the population ages products such as annuities, IRAs and defined contribution retirement plans have enormous growth potential.
The changing composition of households from traditional family units to single households also presents untapped markets with real needs for life, health and retirement products. Growing income inequality means that insurers should find a way to market cost-effectively to all economic sectors, particularly the middle class, who run the risk of being abandoned by insurers chasing the wealthy. Insurers must recognize that small businesses now make up a growing portion of the world economy, presenting a huge opportunity for growth in this market.
Some New Policies Offered in West
School Pollution Coverage
Though this policy is available only in U.S. but it shows the direction insurance business is moving into. ECS Underwriting has introduced a pollution liability policy specifically designed for colleges, universities and school districts.
Educational institutions in developed nations are increasingly realizing that general liability policies with an absolute pollution exclusion or limited sudden and accidental coverage do not provide sufficient coverage for the variety of environmental exposures they face.
Common environmental exposures faced by educational institutions include donated property with unknown pollution conditions, asbestos, radioactive materials, sick-building syndrome, incompatible/unidentified chemicals, past waste disposal areas, wastewater releases, biological/pathologic wastes, leaking aboveground/underground storage tanks and piping and historical use of property.
ECS Underwriting's Pollution and Remediation Legal Liability policy for Educational Institutions includes coverage for on-site and offsite remediation of historical and current pollution conditions, as well as third-party property damage and bodily injury claims including students as third parties.
The policy features also include third-party bodily injury and property damage coverage for sick-building syndrome, lead, asbestos, and low-level and natural radioactive materials. Enhancements are available to cover underground storage tanks, "Superfund liability" associated with off-site disposal, and professional liability for individual projects such as research and development or lab analysis for third parties.
Long-Term Care Insurance
Long-term care insurance policies were first introduced in the 1970'sin United States of America. Significant sales of these policies commenced in the mid 1980's. Typical early policies provided limited nursing home coverage for a limited benefit period and were subject to certain restrictions such as prior hospitalization and a certificate of medical necessity.
As awareness of the long-term care needs of senior citizens has grown, the long-term care insurance industry has responded with more diverse insurance offerings to provide needed benefits in a cost-effective fashion.
Requirements for prior hospitalization and medical necessity are no longer standard and benefit periods have been extended up to the life of the insured. Many insurers now offer coverage for custodial care and home health care.
The Aging Of Society
The emphasis on long-term care insurance has evolved primarily as a result of the aging of society, increasing life expectancies and the escalating cost of care. In Indian context this kind of policy could prove to be a big boon. With the opening up of Insurance sector let us hope that these kind of products would become freely available in India.
Other factors causing growth of the long-term care insurance industry include the lack of suitable alternatives for financing long-term care.
There are four primary alternatives to long-term care insurance:
1.)Government programs
2.)Personal assets,
3.)Dependence on family members
4.)Life insurance.
Directors and Officers Liability Insurance
Directors and Officers (D&O) liability insurance does not have, at present, high profile in India but the worldwide trend towards consumerism and accountability is leading to greater concern amongst Indian Directors and Officers. Directors are now perceived as professional managers who should be accountable for their actions. The rise in litigation against directors reflects a change in the attitude of the general public towards greater management accountability and hence the position of a Director / Officer is becoming far more onerous.
A director / officer is open to actions from shareholders, employees, other third parties and indeed the company itself. He is exposed to the extent of his personal fortune.
• Actions are most likely to be commenced in relation to:
• Actual or alleged breach of trust
• Breach of duty or warranty of authority
• Neglect or omission
• Error or misstatement or misleading statement
• Failure to supervise or regulate properly
Director’s liabilities have increased considerably during the last ten years with the implementation of various statutes. These statutes impose personal liabilities upon directors, or call upon them to contribute personally.
When are claims most likely?
In the corporate world, directors of companies, both large and small face situations which make them vulnerable to litigation under various circumstances. These are some of the areas, which are most likely to give rise to claims.
• Health and safety, Discrimination and Harassment Employees and the public
• Mergers and Takeovers Shareholders, purchasers
• Trading Loses
• Liquidation Creditors
• Customs and Excise, Weight and measure Government
• Competitors Unfair trade practices
High exposure areas where a claim may arise during
• Initial Public Offering
• Stock Offering
• Mergers, Acquisition and Divestitures
• Share price fluctuations
• Management Buy-out
What is D & O
D& O policy is designed to protect the personal fortune of Directors and officers of a company (public or private) against the consequence of their personal liability for financial losses arising out of wrongful acts and omission done, or wrongfully attempted in their capacity as directors or officers. Wrongful act is defined as any actual or alleged error, omission, misstatement, misleading statement, neglect, breach of duty or negligent act by any of the directors or officers, solely in their capacity as directors or officers of the company.
Directors and officers liability coverage comprises two sections:
(a) Damages awarded against directors and officers including legal cost
(b) Company reimbursement.
Indian scenario
The exposure to D&O claims in India is very akin to that of the UK. The main difference between the two countries from a D&O point of view is purely awareness. Once the awareness is created, the plaintiffs are more likely to press for some recourse and therefore the directors will need protection.
An in-depth analysis of demographic factors that will affect the life-health insurance industry in the next century, has uncovered trends that show increasing diversity that adds to
challenges and opportunities.
Conning & Company, which did the study, said that success in the marketing of products would come to those insurers that become more creative in capturing a wider range of customers by using multiple distribution channels. The diversity uncovered by the Conning study includes the aging population, increasing household income inequality and social fragmentation. In addition, Conning said, there is a rise of small businesses and self-employment around the world.
Challenges/Opportunities
The study, "21st Century Demographics for the Life-Health Industry, "delineates the following challenges and opportunities:
Population around the world is aging, number of people in the old age bracket is growing continuously. As the population ages products such as annuities, IRAs and defined contribution retirement plans have enormous growth potential.
The changing composition of households from traditional family units to single households also presents untapped markets with real needs for life, health and retirement products. Growing income inequality means that insurers should find a way to market cost-effectively to all economic sectors, particularly the middle class, who run the risk of being abandoned by insurers chasing the wealthy. Insurers must recognize that small businesses now make up a growing portion of the world economy, presenting a huge opportunity for growth in this market.
Some New Policies Offered in West
School Pollution Coverage
Though this policy is available only in U.S. but it shows the direction insurance business is moving into. ECS Underwriting has introduced a pollution liability policy specifically designed for colleges, universities and school districts.
Educational institutions in developed nations are increasingly realizing that general liability policies with an absolute pollution exclusion or limited sudden and accidental coverage do not provide sufficient coverage for the variety of environmental exposures they face.
Common environmental exposures faced by educational institutions include donated property with unknown pollution conditions, asbestos, radioactive materials, sick-building syndrome, incompatible/unidentified chemicals, past waste disposal areas, wastewater releases, biological/pathologic wastes, leaking aboveground/underground storage tanks and piping and historical use of property.
ECS Underwriting's Pollution and Remediation Legal Liability policy for Educational Institutions includes coverage for on-site and offsite remediation of historical and current pollution conditions, as well as third-party property damage and bodily injury claims including students as third parties.
The policy features also include third-party bodily injury and property damage coverage for sick-building syndrome, lead, asbestos, and low-level and natural radioactive materials. Enhancements are available to cover underground storage tanks, "Superfund liability" associated with off-site disposal, and professional liability for individual projects such as research and development or lab analysis for third parties.
Long-Term Care Insurance
Long-term care insurance policies were first introduced in the 1970'sin United States of America. Significant sales of these policies commenced in the mid 1980's. Typical early policies provided limited nursing home coverage for a limited benefit period and were subject to certain restrictions such as prior hospitalization and a certificate of medical necessity.
As awareness of the long-term care needs of senior citizens has grown, the long-term care insurance industry has responded with more diverse insurance offerings to provide needed benefits in a cost-effective fashion.
Requirements for prior hospitalization and medical necessity are no longer standard and benefit periods have been extended up to the life of the insured. Many insurers now offer coverage for custodial care and home health care.
The Aging Of Society
The emphasis on long-term care insurance has evolved primarily as a result of the aging of society, increasing life expectancies and the escalating cost of care. In Indian context this kind of policy could prove to be a big boon. With the opening up of Insurance sector let us hope that these kind of products would become freely available in India.
Other factors causing growth of the long-term care insurance industry include the lack of suitable alternatives for financing long-term care.
There are four primary alternatives to long-term care insurance:
1.)Government programs
2.)Personal assets,
3.)Dependence on family members
4.)Life insurance.
Directors and Officers Liability Insurance
Directors and Officers (D&O) liability insurance does not have, at present, high profile in India but the worldwide trend towards consumerism and accountability is leading to greater concern amongst Indian Directors and Officers. Directors are now perceived as professional managers who should be accountable for their actions. The rise in litigation against directors reflects a change in the attitude of the general public towards greater management accountability and hence the position of a Director / Officer is becoming far more onerous.
A director / officer is open to actions from shareholders, employees, other third parties and indeed the company itself. He is exposed to the extent of his personal fortune.
• Actions are most likely to be commenced in relation to:
• Actual or alleged breach of trust
• Breach of duty or warranty of authority
• Neglect or omission
• Error or misstatement or misleading statement
• Failure to supervise or regulate properly
Director’s liabilities have increased considerably during the last ten years with the implementation of various statutes. These statutes impose personal liabilities upon directors, or call upon them to contribute personally.
When are claims most likely?
In the corporate world, directors of companies, both large and small face situations which make them vulnerable to litigation under various circumstances. These are some of the areas, which are most likely to give rise to claims.
• Health and safety, Discrimination and Harassment Employees and the public
• Mergers and Takeovers Shareholders, purchasers
• Trading Loses
• Liquidation Creditors
• Customs and Excise, Weight and measure Government
• Competitors Unfair trade practices
High exposure areas where a claim may arise during
• Initial Public Offering
• Stock Offering
• Mergers, Acquisition and Divestitures
• Share price fluctuations
• Management Buy-out
What is D & O
D& O policy is designed to protect the personal fortune of Directors and officers of a company (public or private) against the consequence of their personal liability for financial losses arising out of wrongful acts and omission done, or wrongfully attempted in their capacity as directors or officers. Wrongful act is defined as any actual or alleged error, omission, misstatement, misleading statement, neglect, breach of duty or negligent act by any of the directors or officers, solely in their capacity as directors or officers of the company.
Directors and officers liability coverage comprises two sections:
(a) Damages awarded against directors and officers including legal cost
(b) Company reimbursement.
Indian scenario
The exposure to D&O claims in India is very akin to that of the UK. The main difference between the two countries from a D&O point of view is purely awareness. Once the awareness is created, the plaintiffs are more likely to press for some recourse and therefore the directors will need protection.