It is well advised to get ahead of the game in building accountability and tolerance against potential operational disruption, not only to meet incoming new legislation but to be ready for potential disruptive events that could be on the horizon.. In line with prior expectation, the Boone indicator had negative values for all the years reflecting the fact that the more efficient insurer (with lower average costs) makes higher profits. Figure 1 shows insurance penetration in Zimbabwe between 2012 and 2018. Share & Print. Be it new customer onboarding, procure to pay, change of details, or new product development, process mining offers process transparency in its raw form. On the other hand, the amount of non-life insurance firms declined significantly from 28 in 2012 to only 16 in 2018. Reevaluate core systems and processes. The study recommends that policy makers and regulators should ensure a competitive insurance industry to enhance efficiency. Building competitive advantage For insurers that no longer have captive distribution or that can no longer afford to maintain it, the focus will shift to more effectively managing third Companies have to define the potential benefits that their product can provide to the target audience that their competitors wont be able to do. There are other strategies too that help the company maintain its business alive and up-to-date such as: Competitive advantage is the capacity of the company to strategize its business in a way that stands out its position in the market and pays it off for the loner and sustained way than to its competitors. He has been published as one of the most referred agents by his peers in the insurance community. The results also compare favourably well with those obtained by Abel, Khobai and Le Roux (2017) for the Zimbabwean banking sector where they obtained the average Boone indicators of 0.4950 and 0.2781 for the loan and deposit markets, respectively, for the period 20092016. The earlier period was mostly affected by lack of confidence in the market mostly as a result of the hangover people had from hyperinflation period when they lost the majority of their savings as most insurance policies were rendered valueless. Insurance customers used to pay the price for remaining loyal to one provider, with new customers getting the best deals commonly referred to by the term loyalty penalty. No longer is it sufficient to have a consumer complete a paper application and wait days or weeks for a quote. That being said, how does an insurance carrier go about mobilizing their large, geographically dispersed force of agents and brokers, and why does it matter? Profit is calculated as the difference between variable revenues and variable costs divided by total assets. Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine. The total assets held by the insurance sector increased from $4.2 billion in 2018 to $17.2 billion in 2019, phenomenal growth which is second only to the banking sector in the financial sector. We didnt know there was going to be a war in Ukraine and we didnt see the energy crisis coming. This then enhanced their capacity to compete in the sector. Advantage One Brokers is more than just your standard IMO. Some businesses are still working through customer issues caused by the pandemic restrictions. The financial system in Zimbabwe is currently leveraging on the high mobile phone penetration rate by partnering mobile network operators to offer a range of efficient and safe digital financial services to different market segments, thereby broadening the consumer choices. These strategies are also called porters generic strategies that can be applied by big of small businesses whether they are product-based or services-based. The government should put in place pro-growth policies so as to ensure insurance companies thrive. The main problem is that everyone is embracing technology and, therefore, requires staff with the knowledge to utilise the implemented tech. (2019) evaluated the impact of competition and concentration on stability in the Turkish insurance sector for the period 20022014. Gujarati (2007) argued that the problem of multi-collinearity exists if the correlation between independent variables is above 0.8. Despite the challenges above, a number of opportunities are presenting themselves in the insurance sector. Balkanization of standards, inconsistent implementations, and tepid enthusiasm on the part of incumbent banks have led them into Gartners Trough of Disillusionment. But 2023 could be the year that Europe catches up and reaps the technologys benefits. Businesses that work on this strategy look for the demands and needs of their target population and how their goods or services can improve their daily lives. Heading into a recession and Amit Dua, President, SunTec As Banking as a Service (BaaS) nears mainstream adoption, there is a significant opportunity for banks New year, new job? lshammari, Alhabshi, and Saiti (2019) examined the impact of competition on the cost efficiency of conventional insurance in the Gulf Cooperation Council (GCC) countries for the period 2009 to 2016. Episode 12: Why life insurers need to embrace data democratization. App Management. Using average cost, intense competition was registered in 2014 when the indicator score was 0.4005 after which competition declined (Figure 2). For instance, companies that are now launching wireless chargers are working exactly on differential strategy. Having a strong commitment to privacy. It is also important to reinforce the message in every communication channel to your customer from advertising to public relations, sales ads, and even from your storefront. The sector wrote business amounting to $3.04 billion for the year ended 31December 2019, showing an increase of 250% from $869 million written during 2018. Although salaries will rise accordingly, all those things must be accounted for, so we will need to keep a much closer eye on whats coming in, and whats going out., As the recession takes hold, I wouldnt be surprised to see the Government viewing fines for data misuse as a way to raise additional cash, adds Michael Queenan, CEO and Co-Founder of Nephos Technologies. Resource Based View suggests that the organizations within an industry possess identical resources and pursue similar strategies thats this kind of environment does not accelerate competitive advantage as the resources even heterogeneous in nature are mobile so can be easily bought and sold. Register a free Taylor & Francis Online account today to boost your research and gain these benefits: Competition in the insurance sector An application of Boone indicator, 1 Department of Economics and Economic History, Rhodes University, Grahamstown, South Africa, Evaluating competition in the loan and deposit market using the Boone Indicator Approach, Evaluating market power in the Zimbabwean banking sector, Do financial sector reforms improve competition of banks? The results also concluded that competition negatively affected the loan portfolio quality. The study established that there is a positive relationship between competition and efficiency supporting the quiet life hypothesis where managers in a less competitive market may utilise the market power of their firms and reduce their efforts. In international trade comparative advantage is determined by the available opportunity cost. In that regard, it provides safety and security to economic agents, reduces uncertainty and smoothens out volatile economic conditions (Chau et al., 2013), wielding a stabilizing effect on financial systems, protecting them against external shocks. Things are getting increasingly competitive and unrealistic wage expectations are a growing problem., Referring to staff shortages in other sectors, Craig Evans, head of new business sales at credit ratings provider, Company Watch, added: Staff shortages are so serious in some industries that businesses are unable to trade and some are choosing to wind up now, rather than wait for the situation to get worse. It also enables rapid standardisation which is essential for driving cost efficiency and offering the necessary room and platform for adapting, changing, and scaling. Hans Meijer, EICC director at Coface, said: We are recruiting in London and Watford at the moment and the demographic of the candidates for vacancies at each location is quite different. One of the main drivers for adaptability and change is the ability to deliver scalable digital capabilities at a faster pace. Cited by lists all citing articles based on Crossref citations.Articles with the Crossref icon will open in a new tab. The fall-out from Brexit remains a major issue for many industries, particularly those trading in Europe, driving up costs and administration and leaving a legacy of staff shortages that is impacting productivity. that contributes to economic growth (Haiss & Smegi, 2006). First published at Credit Management magazine. The study established that competition enhances stability. Not all strategies are appropriate and going to work for all types of industries. There are multiple theories and examples of the highly established brands in the world from where the new beginners in the market can learn to grow and remain relevant over a period of time. Thats a huge increase from only $90.69 billion in 2020. Insurance is a financial product that reduces or eliminates the cost of loss or effect of loss caused by different types of risks. Stylised facts about Insurance sector in Zimbabwe, https://doi.org/10.1080/23322039.2021.1974154, Medicine, Dentistry, Nursing & Allied Health. Achieving Competitive Advantage in Insurance Industry - Free download as PDF File (.pdf), Text File (.txt) or read online for free. Andrew Doukanaris, Business Director Fintech Europe at Intellias, acknowledges that the success of Buy-Now-Pay-Later (BNPL) payment options will continue over the next 12 months and beyond: BNPL schemes have become a practically overnight sensation. (2004) model and is shown below: pqi,qji=qiijqj1, The industry has a constant marginal costmci. Although the finance sector is currently behind the curve in adopting these technologies, hopefully, 2023 will be the year that businesses push and transform the industry once and for all.. The Reinsurance Realignment (Inside P&C Daily lead story): The transformation in the property reinsurance landscape will have a highly skewed impact on the primary market. 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