Post on 09-Jan-2017
INS533LIFE & HEALTH INSURANCE
FACTORS AFFECTING LIFE AND HEALTH INSURANCE
CONSUMPTION( ECONOMIC FACTOR)
“Pushing Beyond Boundaries”Mohammad Nazaruddin bin Azmi
2012654618Asma Liyana binti Ja’afar2012241896Nur Fatehah binti Abdul Razak
2012255522
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WHAT IS ECONOMY?
Study of production and consumption of goods and the transfer of wealth to produce and gain those goods.
Explains how people interact within markets to get what they want or achieve certain goals.
Driving force of human interaction.
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WHAT IS ECONOMIC VARIABLES?
Elements that which any changes toward its will give significant impact toward economy.
May be direct or indirect. What the economic variable that you
know?
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ECONOMIC VARIABLES
Income Per Capita Inflation
Insurance Sector
Development
Social Security System
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1) INCOME PER CAPITAo Ratio of the total disposable income of
the country over the number of population.
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CONT’ Relationship: Demand of insurance rise
with the level of income. Reason :
1. Individual consumption and financial strength increase along with income.
2. Life insurance may be a superior goods.
3. Reduction of overhead cost. Instrument for measurement : Nominal
GNI over Number of Population
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2) INFLATION
o General rise in prices measured against a standard level of purchasing power.
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CONT’ Relationship: Negative relationship with
life insurance consumption. Reason;
1. Insurance provide monetary benefit.
2. Unable to provide sufficient fund for investment.
Instrument for measurement : Customer Price Index (CPI).
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3) INSURANCE SECTOR DEVELOPMENT
Relationship : Positive correlated with the life insurance consumption.
Reason;
1. Financial strength & stability of insurance company - ensure good return in policy holder investment.
2. The development through merging of local & foreign insurance company.
3. Well-functioning insurance company may increase the confidence of consumers toward insurance product and return.
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4) SOCIAL SECURITY SYSTEM Definition: Welfare policies and practices in one country. Example ; Pension
Scheme for civil servant & Employee Provident Fund(EPF). Relationship : The size of the country’s social security gives negative impact
towards the demand of life insurance.
The size of social security system refer to the amount of contribution that government and private sector made to secure the continuity of earning for those who has retired.
Present contribution ; Pension – 50% of the last salary .
EPF – 11% from employee and 13% from employer.
2008 2009 20109,0009,500
10,00010,50011,00011,50012,000
10,022 10,146
11,515
TOTAL PENSION AND GRATUTIES
TOTAL PENSION AND GRATUTIES
No. of pensioners
Year
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CONCLUSION
Tremendous effect toward the consumption of life insurance product and vice versa.
Responsibility of the insurance industry. Insurance as a provider of financial
service to customer.
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REFERENCES
What Is Economics? A Definition Of Economics. Retrieve On 13th Oct 2012, From Http://Www.Whatiseconomics.Org/
MALAYSIA INFLATION RATE. RETRIEVED ON 13TH OCT 2012, FROM Http://Www.Tradingeconomics.Com/Malaysia/Inflation-cpi
Economic, Demographic, And Institutional Determinants Of Life Insurance Consumption Across Countries. Thorsten Beck And Ian Webb. Retrieved On 13th Oct 2012, From http://Www.Iifdc.Org/Pubs/Beck+webb.Pdf