Problems of Insurance Business in Developing Countries
The complex government regulatory keeps on fluctuating every now and then, and it adversely affects the insurance industry. Factors in the economy, risk management, keeping costs low and retaining business in a competitive market are issues insurance companies face on a normal basis. There are some problems of insurance business in Developing countries. These are discussed below –
- Investment Risk:
Investment and income are the heart and soul of any business. It is obvious if your income is less than your investment that means it is a loss for your firm.
- Lack of insurance professional person:
Because of lack of professional person in insurance company, there create some problems due to experience or other institutional constraint.
- Frequent changes of insurance regulation:
Sometime Insurance Company Act may updated that may create problem in insurance business in Developing countries.
- Availability of formal insurance related education program:
In Developing countries there are a few institutions who studies about insurance. That may create a problem in insurance business in Developing countries.
- Political Unrest:
Because of political violence insurance companies do not run their business properly. This is a major problem for insurance business in Developing countries.
- Socio and economic condition:
The socio and economic condition in Developing countries may hamper the insurance business Developing countries. GOP and GNP also played a role for this problem and also people have a negative thinking about the insurance business in Developing countries. Thus it creates a problem of insurance business.
- Lack of trust about insurance:
Many people have a negative thought about insurance company because of the fraudulent activity. Thus it may create a problem in insurance company.
- Liquidity risk:
Liquidity risk means if there’s any sudden disaster and you don’t have that much of the assets or readily cash available to meet the obligation that leads to liquidity risk.
- Awareness about the benefit of insurance policy:
Because of lack of awareness about the benefit of insurance policy, people may don’t take the risk if open any policy in insurance company thus it may create a problem in insurance business in Developing countries.
From the above discussion we may say that there are many problems in insurance business in Developing countries.