For example life insurance implies low order frequency while auto insurance

For example life insurance implies low order

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the inherent characteristics of the type of insurance. For example, life insurance implies low order frequency while auto insurance policies are regularly updated. Secondly, there is also a competition on broader financial services offered in the industry. Considering that as stated above, the potential for the insurance market to experience overcapacity results in an increased difficulty when it comes to selling traditional insurance policies. Overcapacity of the market dictates that insurance companies start to develop the strategy of positioning the insurance company as an ideal instrument for saving money. As an instrument for saving money, insurance companies will compete with mutual funds and other
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ALLSTATE INSURANCE CORPORATION CASE ANALYSIS 8 investment options. Positioning insurance policies as advantageous investment mechanisms are now one of the common trends of the industry’s development. Factors that Influence Demand Functions Served by the Product The function served by the product was addressed previously while discussing the nature of insurance services. Buying an insurance policy is an effective instrument of transferring risks to eliminate or at least mitigate financial loss from unexpected events. Stage of the Product Life Cycle The life cycle of an insurance policy is generally comprised of four main stages: (1) purchasing an insurance policy, (2) carrying through premium payment, (3) expressing enquiries or changes and (4) receiving payment and /or closing the policy. However, it is necessary to mention other stages which may take place in the product life cycles of some insurance policies. These stages are as follows: (a) lapse of the policy, (b) changes to the policy, (c) surrendering the policy, (d) cancelling the policy and (e) taking a loan to name a few. The overwhelming majority of these changes are connected with specific features of the manner in which customer executed premium payment. Economic Trends Development of the insurance industry in the United States is closely correlated with the economic situation in the country. It is difficult to strictly define the influence of economic trends on this complicated market because, as stated above, this influence likely to be different in the case of each type of insurance service. Nonetheless, it seems logical to claim that changes in financial indices such as (a) gross domestic product per capita, (b) unemployment rate, and (c)
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ALLSTATE INSURANCE CORPORATION CASE ANALYSIS 9 inflation rate that represent the country’s economic position affect the total revenue in the industry. Upon initial consideration, insurance products and services would likely not be considered as necessities for life like food, water or sleep. According to Maslow’s theory of human motivation, security is on the next highest hierarchical level above such physiological needs such as food, water, and sleep[ CITATION Mas43 \l 1033 ]. It could be argued that to an extent, insurance coverage offers a level of security. Applying Maslow’s theory of human
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