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Attaining competitive advantage has crucial importance for the companies by applying appropriate strategies and investing in the right plans so that they can pay them off to the maximum level. Learning about competitive advantage will surely give them a great chance to make better decisions. 1 What is a competitive advantage? Where are we experiencing the greatest pressure? Comparative advantage, Competitive advantage vs. Create an alert to follow a developing story, keep current on a competitor, or monitor industry news. The data was extracted from the financial statement of the insurance companies as posted on their websites. Whilst we were still waiting for the official FCA investigation results on market practices and fairness, some insurance providers were good to react. Criticality and complexity should determine when to migrate to the cloud and the effort required to do so. Much less appealing but even more important than having a holistic customer view and multiple new digital channels on which consumers can interact with their insurers are the underlying core systems that support the business processes. Heading into a recession and with costs continuing to rise at unprecedented rates, the next 12 months will undoubtedly be tough. Cummins et al. In order to achieve new gains for its stakeholders and fulfill their needs and requirements, organisations must continuously search for the development of its product and services through marketing innovation and creativity. Of novelty to the study is the use of the Boone Indicator, one of the new empirical industrial organisation methods which has not been applied in the insurance market in Zimbabwe. Not only will all businesses be tightening their belts due to rising costs, but particularly in the tax industry, there is a severe shortage of skilled professionals. Typically, there will be a common path that is frequently used, but not always the most efficient. A central banks The study evaluates competition in the insurance sector in Zimbabwe during the period 20102017. The soundness-enhancing effect of competition is greater for weak insurers than for healthy ones. J. Bikker and Van Leuvensteijn (2008) used the Boone indicator to study the Dutch life insurance market. The assumption of linear homogeneity in input prices is imposed by normalising total costs and input prices by one input price. Digital.ai has been named a leader in The Forrester Wave: Value Stream To keep the momentum of competitive advantage, companies should remain updated with the new technology and changing dynamics in the business world. The introduction of price comparison sites offered customers a quick and easy way to compare deals and switch, and has now become the mainstream option when buying or renewing policies. Drinks like Pumpkin Spice Latte, Frappuccino, cold brews, refreshers, and more offer customers the new taste very often. Understanding this and staying flexible to individual worker preferences when it comes to hybrid working is helping us to attract the right people. The study established that competition increases the soundness of the EU life insurance markets implying that efficiency is the mechanism through which competition contributes to insurer solvency. He has received various certificates over the past few years and helps his clients and readers by giving them a realistic outlook on what they can expect to achieve within their set targets. Customers can initiate a claim at the time and place of occurrence with near-real-time visibility of status along with the EOB. The growth trends experienced by the insurance sector since 2009 are a reflection of the performance of the economy. He has been published as one of the most referred agents by his peers in the insurance community. They considered that people will keep on paying for the newspaper once a day but the sweeping increment of the online newspaper has nearly replaced the demand for the paper news. The resources of an organization include capabilities, processes, assets, information, attributes, knowledge, etc that are controlled by the organization and rightly implemented to promote efficiency and enhance competitive advantage. According to delegates at the roundtable, the biggest and most immediate challenge that businesses are facing is the staffing crisis. Managers then pursue other objectives different from profit maximisation. The Reinsurance Realignment (Inside P&C Daily lead story): The transformation in the property reinsurance landscape will have a highly skewed impact on the primary market. Advanced analytics, IoT, and cognitive applications demand technology capabilities that are scalable and flexible. An example is how the pharmaceutical industry hikes up prices of drugs and plays a There are a ton of reasons your health insurance sucks and is so expensive. The elections in 2013 led to the disbanding the government of national unity which saw a single part taking charge of the government. The slow growth of the sector was in response to the generally depressed performance of the national economy over the same period. However, since then, there are other types of strategies that have also appeared such as brand image, network effect, barriers to entry, and competition. Having a strong commitment to privacy. The degrees of freedom for the regressions are also increased with panel data as compared to time series. In 1985, Michael Porter wrote a book in which he identified three strategies that can be adopted by any firm to tackle the possible competition in any marketplace. However, there are many challenges. There have also been country-wide interruptions in the power supply affecting insurers ability to operate. Your article was successfully shared with the contacts you provided. Under monopoly, managers can use resources to sustain market power. The manual, monotonous tasks should be automated to free up time for training and development that will accelerate the value being added to the business, agrees Tax Systems Martin. The government should put in place pro-growth policies so as to ensure insurance companies thrive. Industry-wide challenges include managing risk, recruiting and retaining customers, and now, for health insurance providers, implementing the provisions of the AHA (Affordable Healthcare Act). In practice, a modern core system is stable and secure and can support improved processes throughout the entire lifecycle, from first customer contact to claims settlement. This is a static model as compared to the above which is dynamic. Their study sought to ascertain the effect of competition on the outreach, financial performance and quality of loan portfolios of micro-finance institutions (MFIs). In particular, businesses note a lack of graduates and skilled young people some of whom are choosing to delay the start of their careers. Advanced technology, patent-protected products or processes, brand identity, superior personnel are all the drivers of creating a differential advantage over your rivals. The economy should be prevented from sliding into hyperinflationary environment, which negatively impacts policy holders as well as insurance companies. The insurance industry is a good testament to this. Time is ticking away. Which technology providers understand and have the capability to execute? According to McKinsey & Company, the insurance industry spends approximately $6 billion in marketing to attract new customers and retain existing ones. However, since 2011 the sector has begun to experience receding growth, recording an overall growth rate of 22.1% in 2011 which ebbed to 7.6% by 2014. The results show that the amount of competition in the insurance sector was almost consistent mean reverting around Boone indicator of 0.26 and 0.2 using average cost and marginal cost, respectively, implying moderate competition in the sector. Falcon Insurance Company is committed to providing simple, affordable car insurance regardless of your driving history. International Journal of Social Sciences and Entrepreneurship, 1 (11), 467-490. In line with prior expectation, the Boone indicator had negative values for all the years reflecting the fact that the more efficient insurer (with lower average costs) makes higher profits. During times of economic hardship, credit managers have a particularly challenging, frontline role to play in helping businesses to protect cash flow, while mitigating financial risks. He is also recognized by the legal profession as an expert on insurance coverages. Camino-Mogro et al. For many years, identifying process improvements has traditionally been a well-proven but heavy, slow, and manual process. Attaining competitive advantage has crucial importance for the companies by applying appropriate strategies and investing in the right plans so that they can pay them off to the maximum level. As we enter 2023, many business leaders may be experiencing feelings of uncertainty and apprehension. Troy Fine, Director, Risk and Compliance, Drata With the accelerating pace of regulatory change and operational resilience policies, organisations As we enter 2023, many business leaders may be experiencing feelings of uncertainty and apprehension. During this period, there was deceleration of economic growth. In this case, each firm has 32 observations, but the total number of observations under consideration is 608 observations providing more information and viability to the study. Using average cost, intense competition was registered in 2014 when the indicator score was 0.4005 after which competition declined (Figure 2). We have seen the beginnings of this in 2022 but I hope that 2023 will be the year it truly takes off.. The post hyperinflation period has two quite distinct episodes; the period of government of national unity (20102012) and the period of single political party (20132018). Since all the results had a negative sign for the Boone indicator, for ease of discussion only the absolute value is shown. No longer is it sufficient to have a consumer complete a paper application and wait days or weeks for a quote. It allows clients to link core systems & technology through APIs to visualise live end to end process to understand critical issues in performance, variation, and compliance. They cannot be strategically equivalent substitutes. As we know that every new and costly Switching providers, however, was often arduous and involved a fair amount of research and deal comparison that not many customers were willing to undergo. For that reason, a phased cloud migration plan would act as the most effective way to manage change of this scale and to also allow the required room for the deployment of new applications. People also read lists articles that other readers of this article have read. Captive agents, who only work for one carrier, may need to access company-wide CRM data or account history for existing customers, requiring tie-in to the carriers back office. The highest number of insurance firms were recorded in 2013, while the least number of 88 was experienced in 2018. The study recommends that the government should ensure that the macroeconomic environment is conducive for businesses to compete. First published at Credit Management magazine. It can be the case that successful industries may fail if they are applied in not so feasible environment. New market entrants are placing additional pressure on carriers by using technology to transform the industry forcing insurance companies to modernize their systems infrastructure. Consumers now require more interactive and dynamic experiences and want to feel empowered to see what they want when they want it, on the device of their choice. The millennials have never known a world without computers, the internet, mobile phones and other mobile devices. Competition in the insurance sector An . 2. Starbucks locates its centers at strategic positions such as in neighborhoods, high traffic areas like downtown, busy streets, and shopping malls. For instance, companies that are now launching wireless chargers are working exactly on differential strategy. In the world of competition in businesses, there is a dire need of remaining relevant and sustained over time. The company greatly invests in its employers by giving them good wages and other benefits. In the microfinance sector, Kar and Swain (2014) measured competition using the Boone indicator. The financial system in Zimbabwe is currently leveraging on the high mobile phone penetration rate by partnering mobile network operators to offer a range of efficient and safe digital financial services to different market segments, thereby broadening the consumer choices. The results further revealed that there was no significant difference in competition in the periods 20132017 and 20102012. All rights reserved, Competitive advantage vs. The study employs one of the new empirical industrial organisation methods, the Boone indicator. Andrew Doukanaris, Business Director Fintech Europe at Intellias, acknowledges that the success of Buy-Now-Pay-Later (BNPL) payment options will continue over the next 12 months and beyond: BNPL schemes have become a practically overnight sensation. When product innovation is more than just a buzz word. This is a growing area of credit risk that our customers are seeking information about particularly regarding the number of winding up petition applications., While there is no silver bullet to the staffing crisis, employers are aware that they need to remain flexible and understand what workers want. The sector wrote business amounting to $3.04 billion for the year ended 31December 2019, showing an increase of 250% from $869 million written during 2018. The rationale behind the indicator is that higher profits are achieved by more-efficient firms. In order to The financial sector in Zimbabwe is made up of various players (banks, insurance companies, pension funds, etc.) When planning to go digital, insurers should: Listen to free podcasts to get the info you need to solve business challenges! The main problem is that everyone is embracing technology and, therefore, requires staff with the knowledge to utilise the implemented tech. They can do the heavy lifting, the time-consuming data entry tasks and the repetitive work that can fill up so much of the working day. All of the above are topics are often discussed within the insurance world, but the broader fundamental challenge lying ahead is how insurers will create the springboard and set themselves ready for adapting and keeping up with changing customer and wider societal shifts. This strategy is usually applied by small businesses that dont find enough resources to spend on a large span of population. They also need accurate data about where risks might arise in the future, so they are better informed, commented Craig Evans. For businesses and individuals, the cost of living and operating will go up. The estimated coefficients of the cost function (1) are then used in the calculation of the marginal cost in equation 2. The study recommended that players in the insurance sector should constantly evaluate To analyze the influence of focus strategy on competitive advantage of insurance firms in Thika town iii. The study established that there is a positive relationship between competition and efficiency supporting the quiet life hypothesis where managers in a less competitive market may utilise the market power of their firms and reduce their efforts. Dynamics of the Boone indicator in the Zimbabwean insurance industry. For recruiters serving the industry, the lack of candidates for jobs in areas such as credit assurance and risk data analysis is inflating wage expectations, which makes it even more challenging for businesses to recruit the people they need. They are already on the brink and the rise in the energy price cap next April could push them over the edge.. that contributes to economic growth (Haiss & Smegi, 2006). This devastated the majority of the insurance policy holders since their livelihoods were destroyed after contributing for a long period of time more still for some retired persons who had contributed during their whole working life. By leveraging data and analytics, life and health insurers can capture customer information and make it available to all corners of the organization that touch the customer from sales and marketing to call-center representatives, actuaries, and claims adjusters. Hans Meijer, EICC director at Coface, said: We are recruiting in London and Watford at the moment and the demographic of the candidates for vacancies at each location is quite different. Finance Derivative. The insurance sector has experienced phenomenal growth since 2009. This then enhanced their capacity to compete in the sector. Figure 1 shows insurance penetration in Zimbabwe between 2012 and 2018. However, a strong focus on cash management and credit control can also generate opportunities to increase revenues and boost profitability. Copyright 2021. Once a quote is approved, should the customer have to print, sign, and fax the documents? Reevaluate core systems and processes. 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