CORE FUNCTIONS OF AN INSURANCE COMPANY

Whilst an insurance intermediary is unlikely to have close contact with the internal organisation of insurance companies, it is good to understand something of their infrastructure and to be aware of the various departments and personnel behind the marketing process. These, in outline, are considered below. Please remember, however, that there is no single system for insurance companies to follow, and therefore the suggested structure must be seen as representative only.

PRODUCT DEVELOPMENT

Someone once said, ‘Insurance is not something that is bought, it is something that has to be sold’. We shall recall this when discussing marketing and promotion (4.3 below), but to the extent that it is true the whole exercise depends upon having something to sell. That something may be described as an insurance product. Some insurances, of course, are compulsory (e.g. third party motor and employees’ compensation), but even with these classes the precise policy wording is not decreed by the Government. Therefore there is scope for flexibility in presentation (whilst the requirements of Ordinances must be respected). With other classes of insurance business, Hong Kong is an open and very competitive business environment. Insurers must therefore be efficient and dynamic in preparing the products they ‘sell’. As an abbreviated summary, the Product Development department/section of an insurer will be much occupied with:

(a) Individual product development: this is a never-ending process. With competitors eager to learn and copy, it has been said that the unchallenged ‘lifespan’ of a totally new product is very short, perhaps a matter of only a few weeks or months. After that time, the product has been copied, adapted and frequently undersold.

(b) Product portfolio development: increasingly, producing a ‘package’ of cover, especially for larger clients, has become sensible, even vital, in order to retain a competitive edge.

(c) Product research: we may think of this in three areas: (i) our own products: nothing is perfect beyond improvement. (ii) competitors' products: we do not, and cannot, live in a vacuum. It is essential to know what is happening in our market and ‘what we are up against’. Besides, they will have no hesitation in ‘borrowing’ from us! (iii) market trend: the needs of the general public.

CUSTOMER SERVICING

Sometimes described as Client Servicing, this section has a number of functions, and with a particular insurer some of these may be carried out by other departments (such as Accounts, Claims etc.). The general scope of its responsibilities is indicated by its name. It is to provide a service to existing and potential customers/clients, and the duties probably include:

(a) Correspondence: enquiries of every imaginable kind are likely to be received, asking for guidance and information. Sometimes, the enquiries will be totally unrelated to the company's business; therefore a degree of perception and tact will be required. It is quite sure that the response a company gives to enquiries is very important.

(b) Public relations: the more formal aspects of this could be within the province of the marketing people, but the way clients are dealt with profoundly influences a company's standing in the eyes of the public.

(c) Documentation: requests for duplicate policies, amendments to existing policies, copies of motor insurance certificates, etc. will probably receive at least their initial attention in this department.

(d) Complaints: an area that must be seen to be handled fairly and promptly. This may require considerable liaison with other colleagues/departments. It must also be remembered that complaints may reach high levels of company management and receive media and even Government attention.