Nice to get different perspective from different people on Insurance firms. Thanks @Surender @Mudit.Kushalvardhan & @Ram47 for your thoughts on this…
Very important point and looks like you speak out of experience. Can see it in Motor insurance in India and even Health insurance in some other parts of the world
Agree with all your points here
In Developed economy such as US, interest rates have been close to 0 since decades. How are they mitigating this? Are they taking excessive risks with their float resulting in bankruptcies for some of them? Is there no regulations on the float from any Insurance regulatory authority? Also, eventually in any economy, interest rates would go down towards 0, so does this mean that eventually the insurance firms will either go out of business or bankrupt or survive by virtue of unpredictable risks alone? If that is the case, why any firm or business group choses to enter this business in first place? What is in it say for example an HDFC group or an SBI group or the privately held New York Life for eg.?
Lastly, inspite of all this, some health insurance firms like Cigna & even Humana have generated decent wealth in last 10-20 years…How? By taking unpredictable risks or there is something else to it?
Pls not al above questions are not just to you, these are some questions I am asking myself as well to understand the essence of this business better. I am thinking loud and would be great to have your thoughts as well for these points…
That sounds like a decent figure in a relatively very high interest rate economy such as ours. Good to know that…
I remember reading long back somewhere that this is precisely what Buffet targeted in GEICO to convert it to a pull or even if a push, to a push via “direct” channels such as online (read “digital” in current context)
This is a very welcome step for Life insurance firms. I remember reading about it when in contention but was not sure if it went through. In this context, with HDFC Life and HDFC Ergo for example in same group (same for others like SBI, ICICI, Bajaj as well), it will be interesting to see how this plays out. I do remember seing a recent article on HDFC Life/Ergo combo product but seems like now HDFC Life can even go solo on this?
If you aware on further details like is there any cap on the type of health product which life insurance firms can launch or not? What would differentiate the Health offerings of a Life insurance firm from that of a pure play Health insurance or General insurance firm (other than the hospital/doctor network etc. which eventually even Life insurance firms can build up. My question is more from the product perspective).
Interesting point. The behavior of Insurance stocks in current high inflation context in US, Europe and even in India does not seem to support this. Is the market overlooking this?
Similar thoughts as above on success of some Health insurance firms like Cigna, Humana etc. comes to mind. They also operating in same low interest rate scenario. What different are the doing?
Disc: Same as above. Views only for academic purposes. Not eligible for any advice.
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