Post industrialized world has paved the way for many new types of businesses, and they’re countless. More or less similar types of businesses joined hands and formed their own markets. That’s why it’s significant to comprehend the nature of the market which is too big comprising of various elements. Today, we’ll discuss swot analysis of the insurance industry.
The insurance industry offers the security of financial backing to property, assets, business ventures, lives of people, and many other things; in case of any unexpected and unforeseen incident or event like fraud, accident, loss, or death.
Wealth, money, and assets are the most significant and necessary elements for the survival of any person. People are always looking for ways to protect themselves against any danger or unexpected circumstances.
The swot analysis of the insurance industry explains the internal and external factors like strengths, weaknesses, available opportunities, and potential threats in the external environment. How the insurance industry would capitalize on its strengths to exploit opportunities, work on weaknesses in order to avoid threats.
Here is the Insurance Industry SWOT Analysis.
Table of Contents
Insurance Industry Strengths
Some of the internal strengths are as follows;
New Products
Technology and industrialization are working in collaboration and introducing new products or models every year. As we know that every new and costly product requires insurance for security and protection. For instance, Tesla’s new electric vehicles also need insurance. Insurance is the main differentiating factor that would protect your asset and make you avoid debt.
International Trade
If the international trade stops for any reason like it did during the pandemic months, then the global economy would be in great jeopardy. People would have to start living a life without their favorite international products/services if the US government decides not to trade with other countries. It would have a catastrophic impact on the global economy.
Insurance offers a safe route to international trading and businesses. People are highly cautious when it comes to investing millions and billions of dollars into global trade. In short, we can say that global business is happening because of the insurance industry.
Business Property
If you have insured your business, then you can perform all types of transactions and dealings regardless of their size because the insurance would cover them in case of any incidence. For instance, if a fire breaks out and burned down the whole building including equipment, machinery, furniture, and other things. The insurance plan would cover all the damages.
Financial Protection
We’re living in a world where everything including humans is uncertain, anything can happen at anytime good or bad. That’s why people buy insurance in order to secure themselves, their businesses, health, and family interests. For instance, if a person passes away by accident and leaves his children behind, then his business would go bankrupt because of a lack of management. Insurance offers a safe way to take care of your financial burdens and worries.
Insurance Industry Weaknesses
Some of the internal weaknesses are as follows;
Not inclusive
Like any other business, the goal and objective of the insurance industry are also to make a profit. Insurance companies don’t include everything and everyone in their plan like sick people, elderly, or vulnerable businesses. However, if they do cater to such people, then their insurance plan is very expensive.
Threatening
Insurance plans can be dangerous just like you have watched it in the Hollywood movies, where many people have to die in order to get their hands on the insurance money. Movies and films exaggerate real-life events and give them a dramatic touch. However, the reality is that people do commit crimes and fraud to get insurance money.
As we know that the insurance company protects the financial interests of so many people. It becomes the target of many criminal organizations to take cover under the shield of insurance.
Expensive
Various insurance companies offer different rates. Usually, the insurance plans of businesses and personal assets are very expensive. The thing about businesses and companies, they grow over time, so does their insurance plan also need up-gradation. Eventually, businesses and companies stop investing their money in insurance companies.
Fraud Cases
It doesn’t matter however secure and protective your insurance company is; there is always a person smarter and a step ahead of you. The insurance industry is most susceptible and vulnerable to fraud activities. However, ill-equipped and inexperienced insurance companies cause a lot of problems for ordinary people that buy their insurance plans. Such fraudulent activities create an environment of distrust in the market. People would think that having less money is better than having none at all.
Insurance Industry Opportunities
Some of the external opportunities available to the company are as follows;
Digital Insurance
Elderly people aren’t tech-savvy. But the younger people and new businesses are very cautious about data protection and encryption. Nowadays, a vast majority of companies are operating their businesses digitally. It is an excellent opportunity for insurance companies to offer protection insurance of digital data.
Targeting Individual
Traditionally speaking, there used to be one sole earner that take care of the needs of the family. The pandemic has limited the movement of the people and restricted them to their houses. They’re now working from home online. Therefore, insurance companies could offer them micro-insurance plans to secure and protect their tech and digital products.
Developing Economies
In developed and advanced countries, many products and businesses are auto-insured. The economic environment is stable, and people buy insurance plans. However, insurance is an expensive luxury in developing countries. It has also got a great potential for growth there because people love the idea of protecting their assets.
The growing economies have the potential for growth in education. When people are aware of the benefits of insurance, then they would likely buy the insurance plan. However, out of all insurance plans, health insurance has an exponential rate of growth.
Insurance Industry Threats
Some of the external threats that the company has to face are as follows;
Declining Brands
In today’s world of technology, many new brands are emerging, and older brands and businesses are getting obsolete. It puts the reputation of insurance companies is in great jeopardy, especially when they have the association with those brands that don’t exist anymore in the market.
Extreme Competition
The insurance industry has become very important in today’s market because many insurance companies are offering their services. They all offer almost the same types of insurance plans, so it’s difficult for them to differentiate their services from their competitors. First, it’s difficult for them to attract customers. Secondly, it’s even more difficult to retain them over time, because they would buy insurance from some other company with a better offer.
Natural Catastrophes
Natural catastrophic events and calamities pose a great threat and danger to insurance companies. Just no one was ready for the pandemic in 2020, but it did happen and shut down all the businesses worldwide. However, natural disasters bring such damage that is way bigger than the company’s insurance policy. It could cease the very existence of the insurance company.
Dynamic Environment
We’re living in the fast-evolving world of technology. The fast development in the tech industry is bringing new trends in terms of lifestyle and business. Therefore, insurance companies need to develop their policies and plans according to the pace of technology and new trends. It has become difficult for them to keep up with the trending pace, that’s why customers are losing in them.
