Economic Review, Vol. 56 No. 7-8, 2005.
Preliminary communication
INVESTING LIFE INSURANCE MEANS AS A VERY IMPORTANT REFERENCE OF AN INSURANCE COMPANY MARKETING MIX
Mira Pešić
Abstract
Insurance is reciprocal settlement of many subjects endangered in the same way, whilst the endargement is random by its character and can be evaluated. The very essence of the insurance is to form money fund consisting of payments and premiums of the risk community partners and pay out the insuree the premium or the agreed sum for the damage suffered. Life insurance is a special kind of insurance with particular characteristics not shared with other insurances. Only life insurance is longterm and economical, whereas the insured sum of money gets always paid out to the insurance holder. Therefore the insurance policy is as valuable as securities, and may also have the guarantee function. Also, the life insurance is an important source for investments with signifi cant profit. The insurance company place out the financial means of the people, which represent the savings premium, and that is mathematical reserve, onto the financial market. Mathematical reserve are temporarily free means of the risk community, insurer means, managed by the insurance company. This obliges insurer to form investment portfolio which will realize added contributions. That is why the strategy for managing mathematical reserve is crucial factor in managing, creating stability and survival of the insurance company. Namely, all insurance companies have the same terms of management and parameter values for net premium calculation and insurance cost price. This means that business results of each and every one of them derive from the quality of the mathematical reserve investment portfolio. Marketing mix is a modern tool of business policy of an insurance company that functions within market conditions. This strategy is particularly important for the management of the companies that belong to the full competition market activity. All this makes the marketing mix strategy unavoidable in insurance business, especially that of life insurance. It is less essential and needed in compulsory insurance, such as, liability insurance, for instance.In theory and practice the marketing mix strategy includes a product price, promotion and distribution channels. We state and conclude: in life insurance business the added and equally important element of the marketing mix is to invest temporarily free financial means, that is, mathematical reserve of life insurance. Profit, out of these investments, increases the life insurance risk community funds. This provides for the decrease of prices, premiums, insurance, thus increasing competitiveness on the life insurance market. The investment quality, and investment model which is used to optimize the investment portfolio, significantly influence the premium competitiveness and total insurance company business, as well as its survival on the life insurance market. This conclusion is supported by the investigation results of the Croatia osiguranje d.d., Ljubuški business. The data shows a remarkable business competitiveness of this insurer on the life insurance market, secured by its qualitative management of the mathematical reserve.
Keywords
insurance activity; life insurance; marketing mix strategy; mathematical reserve; mathematical reserve investments
Hrčak ID:
10294
URI
Publication date:
25.8.2005.
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