Kathmandu: Due to the global economic recession, life insurance companies are trying to make different strategies amid the expectation that the life insurance business will not be easy in the current financial year. After the decline in business growth in the last financial year, most of the life insurers have made cost reduction a strategic priority.
Scissors have been started to be used in the facilities which are being provided unnecessarily for the incentive of the agent to reduce expenses. In order not to affect competitiveness and profitability, life insurers are adopting the options of controlling the expenses of unnecessary facilities of agents, reducing the number of employees and operating expenses.
In addition to the cash and incentives provided to the agents, a large amount of money is also spent on the agency honor and felicitation events annually, so insurers may be forced to organize such an honor program economically this year.
Keeping in view the possibility of increased competition after the merger between life insurance companies, improving customer service and reducing operating expenses has been prioritized.
Since it is not easy to find customers for new business expansion due to on going recession, the strategy of life insurance companies is to retain old customers by making extensive improvements in customer services and earn more renewal insurance premiums. In addition, since it is relatively easy to attract new business through satisfied loyal customers, the top management is also in favor of using those customers as unpaid ambassadors.
After the completion of ongoing merger and acquisitions among life insurers, it is estimated that the companies born after the merger will be relatively in a comfort zone to expand its market share with the extended capital, larger physical infrastructure, additional skilled manpower, and expanded branch network. But it has also been commented that the merger between a life insurer with poor financial conditions and life insurers with normal financial conditions will not add much challenge to the market.
The life insurance business cannot run simply in the future, a chief executive officer, predicting the situation after the merger between the insurance companies, said that only life insurers that can keep the use of technology and customer service at high priority can survive.
