The General Insurance Industry in Australia

Question:

Write a report on Medibank Travel Insurance.
 

Insurance is a process by which one party agrees to compensate the other party in case of certain events happening. This cover is provided by the first party in return of payment of a certain amount called premium by the second party. There are different types of insurances like life insurance, health insurance, general insurance, etc. people have become more aware of the need to insure themselves against different types of risks which can cause financial and physical losses to the individuals. As the demand for insurance products grew over a period, the number of companies providing insurance services has also grown. In Australia also there are several companies providing insurance.

The general insurance companies in Australia have existed for a long period of time. The insurance industry in Australia is regulated by a prudential regulator called Australian Prudential Regulation Authority. This authority is concerned with the implementation of Insurance Act. Further there is a corporate regulator called Australian Securities and Investment Commission which follows Insurance Contracts Act. There is also an organization of the general insurance industry of Australia called Insurance Council of Australia. This organization also creates awareness about general insurance issues among the people (Insurance Council Of Australia, 2016).

The general insurance industry in Australia is characterized by high degree of competition among insurance firms. There are also many fluctuations in the earnings of the insurers. The Global Financial Crisis of 2008 affected the general insurance industry in Australia adversely (Accenture, 2016). Further, floods and other natural disasters in 2010-2011 also led to increased claims by people who had taken insurance policies. This created financial problems for the insurance industry in Australia. A large amount of reserves with the insurance companies were used for settling claims of customers.

But the insurance industry has recovered from such setbacks. It has to face more challenges as customers have become more price sensitive. They have become more aware of the insurance products and compare insurance policies offered by different companies before making a purchase decision.

Medibank Private Limited is one of the leading insurance companies of Australia (Medibank Private Limited, 2016). The company has been doing well in selling different types of insurance products, but its market share in the travel insurance business is lesser than that of many other companies. Medibank has planned to launch again its travel insurance business. There is the need for the company to follow a new marketing strategy to increase its travel insurance business. 

There are a variety of reasons that make people buy a travel insurance policy. There are individuals who have apprehensions that their luggage might get lost while they are travelling. They want insurance so that they get compensated if such a thing happens. Some of them feel that they would suffer if their important documents get lost during a journey. Further there are many who are worried about the medical expenses in a foreign country.

Medibank should look thoroughly into the purposes for which people buy insurance while designing its travel insurance products. The company should offer a comprehensive travel insurance plan that compensates for lost luggage, medical expenses, flight accidents, etc. Further the consumer should be provided the option to cover for expenses arising out of cancellation of trip. The idea is to cover all the important objectives for which the consumers buy travel insurance. There is need for proper market research by the company (Zimmerman and Blythe, 2013). In this case premium to be paid by the customer would vary according to the number of options the customer has selected.

Medibank’s Interest in Travel Insurance

The company should focus primarily on the proper development and promotion of this insurance plan also because it would cover the needs of different types of people like those going on a vacation, educational tours, visiting relatives, etc (Ettlie and Rosenthal, 2011). the company should set up the goal of earning maximum revenues by selling this insurance plan. Instead of having too many insurance policies the firm should focus a large proportion of its energy in making this insurance plan a success.

Apart from the above discussed insurance plan, the company should also have insurance policies tailored to meet the needs of business people and those travelling for medical purposes.

The company should aim to provide professional services relating to issues like claim settlement, medical services in hospitals abroad and any other required documentation. The enterprise should make use of latest technology in offering its services. The company should have processes which are transparent and fair for the customers.  

Medibank wants to beat the competition in the travel insurance sector. One of the most important tools to achieve this objective is to fix the prices of its insurance policies, that is, premiums, at a lower level than its competitors (Zielke, 2010). The company needs to bring down the cost of operating its business. This can be achieved by having innovative processes and better training of its employees. The company needs to be agile and respond to the needs of its customers with speed. The decision making in the company should be quick. The claims of customers should not be kept pending for too long. When the customer contacts the company, then the executives of the enterprise should be prompt and show empathy.

As the company lowers its premiums, the volume of its business is expected to rise as the consumers in the insurance sector of Australia are very particular and sensitive about the price of an insurance policy. The customers are looking for value for their money. As Medibank provides good quality services for a reasonable price, its customers in the travel insurance space would increase (Steenkamp, Heerde and Geyskens, 2010).

Medibank has been doing well in other types of insurance like health and life insurance. People in Australia know about the company. The company can convey to its customers that lower premiums do not mean lower quality of service. The enterprise should have the objective of reducing or cutting costs without compromising on quality. Further while fixing premiums for travel insurance policies, the company should take into consideration factors like the total cost of the tour, its length, age of people being insured and the number of  insurance covers that the customer wants. 

Medibank makes use of modern technology to sell its travel insurance policies. Any individual can buy an insurance policy of the company by applying online at the enterprise’s website. The company has kept the procedure for buying the insurance policies online simple (Lunt and Carrera, 2011). There is some information that the customers have to provide and they get a quotation.

Market Research for Comprehensive Coverage

But Medibank should provide more information to a consumer when the individual uses the online process for buying travel insurance policy of the company. There are many online customers who buy an insurance policy only after comparing the insurance policies of different companies. Medibank should provide a comparison of the features of insurance  products of the company with that of the insurance policies of the other companies in a concise way to the online consumers. The information should be provided in an attractive way. The company should aim to sell a large proportion of its insurance policies online. This method is also less costly and less time consuming. The company should strengthen its information technology section to help the marketing department in making sales online. The company needs to properly organize its online operations. The company should develop more advanced application (software) that can be downloaded by consumers on their mobile phones. This software would help the consumers buy insurance products of the company online. The effort of the company should be to make the process of buying insurance from the company more convenient for the consumers.

Medibank also sells its insurance policies through intermediaries like brokers and travel agents (Manzano and Valpuesta, 2010). The company should organize workshops and training events for the agents and brokers. The company should provide them with more detailed information regarding its insurance products. Further there can be sessions to teach communication and marketing skills to these people. Medibank should also provide competitive commission and benefits to these people (Eckardt and Doppner, 2010). 

The market for insurance products in Australia is very competitive. Medibank Private Limited is one of the leading sellers of life insurance and health insurance in Australia. The company has an identity in the market. The enterprise should make use of this goodwill created over a period while selling its travel insurance products also. The company should convey in its promotional messages in the media that the same company with excellent management skills, knowledge and products has now come with better travel insurance products. The firm should do some introspection regarding how the company has been able to do so well in selling the other kinds of insurance products (Zimmerman and Blythe, 2013).

Medibank should try to associate with travel and tourism programs on television and radio. The company can also sponsor sports events especially adventure sports like skiing and rowing held in tourist destinations to target the people who visit such places. The firm can make its website provide more information and if possible make it interactive (Lunt and Carrera, 2011). The idea is to create an inclination in the consumer to travel by showing how enjoying and safe the experience can be if the consumer has brought travel insurance from the company. 

Conclusion

Insurance industry is a very important part of any country as it helps people face numerous types of risks. In case of any tragic incident happening, the insurance firm bears the cost out of the premiums collected by it from a large number of people. But in case of losses being very large, even the insurance companies find their resources too stretched. There is element of risk for the companies also. In Australia such a situation arises when there are natural problems like floods. The insurance companies therefore need to decide with utmost care what premiums to charge from their customers. There is lot of competition in the insurance industry in Australia. The companies cannot charge too high premiums but they have to charge a sufficient amount so that they do not find themselves facing liquidation in case of natural disaster happening. The insurance business needs to be carried out in a professional way. Some companies find it difficult to survive in insurance industry.

Medibank, as a company, should realize that competition is part of business. Further the enterprise needs to understand what its competitors are doing to be more successful. The firm should see whether it is not getting repeat customers due to its poor service. The company should train its employees better. After a customer buys the insurance from the company, the person should get the service promised by the firm. It is sometimes easier to build expectations but difficult to live up to them.  

References

Accenture (2016) How Australian Insurers Can Achieve Profitable Growth In A Challenging Market Overview. A

Eckardt, M. and Doppner, S. (2010) The Quality Of Insurance Intermediary Services: Empirical Evidence For Germany, Journal of Risk And Insurance, 77(3), pp. 

Ettlie, J. and Rosenthal, S. (2011) Service Versus Manufacturing Innovation, Journal of Product Innovation Management, 28(2), pp. 285-299, 

Insurance Council Of Australia (2016) Issues And Submissions. 

Lunt, N. and Carrera, P. (2011) Systematic Review Of Web Sites For Prospective Medical Tourists, Tourism Review, 66(1/2), pp. 57-67, 

Manzano, J. and Valpuesta, L. (2010) The Decline Of The Traditional Travel Agent Model, Transportation Research Part E: Logistics And Transportation Review.