Hi, In the target market section it says that one factor driving life insurance demand is the number of viable customers. It says in particular in developing markets that a lot of the population may not be viable customers, is this referring to insufficient income to be able to buy insurance, and potentially the fact that they are unable to access insurance (though microinsurance if distributed in this country through mobile phones does limit this challenge)? Or is this referring to something else. Thank you, Rachael
Hi Rachael: yes - your interpretation is correct (bearing in mind that many would not even be able to afford microinsurance)
Hi again, In this same section low interest rates are quoted as an environmental factor that impacts demand for life insurance products. Does this relate primarily to interest rates impact on: economic growth --> disposable income attractiveness of products e.g. lower benefit projections or higher annuity rates cost of products due to higher valuations and high cost of guarantees Are there any other reasons why low interest rate environment might reduce demand for insurance products? Thank you, Rachael
Yes, those are reasonable suggestions, although be careful with the second bullet point: low interest rates would lead to lower annuity rates (more expensive to provide annuities due to lower bond yields). There will also be implications for the relative attractiveness of different types of business and different types of investment vehicle. For example, if interest rates are low, cash savings are relatively unattractive and there might be greater appetite for investment in equities, which could be achieved indirectly through investment bonds sold by life insurance companies. If the low interest rate environment is also a low inflation environment, there might be lower demand for index-linked annuities than would otherwise be the case. And so on.
