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IAI Actuarial Core Principles · Business Management · Business and consumer needs, the industry value chain and competitive forces

A health insurer in Chennai segments its market into gig-economy workers, salaried families and senior citizens. Research shows gig workers value flexible, small, pay-as-you-go premiums because their income is irregular. What is the strongest strategic implication?

The strongest implication is to create a product with flexible, small-ticket premium payments targeted at gig workers. Segmentation is valuable when the proposition fits each group's distinct need, and this group's need is flexibility because of irregular income, which a one-size annual product would not serve.

  1. AOffer one standard annual-premium product to all segments to save costs
  2. BDevelop a product with flexible, low-ticket premium payment aimed at the gig-worker segmentCorrect
  3. CExclude gig workers because their income is irregular
  4. DIncrease marketing spend for senior citizens only
  5. Replace all products with a single high-deductible plan

Explanation

Segmentation is useful only if the offer matches each segment's identified need. Gig workers need payment flexibility, so a tailored premium structure fits. A uniform product ignores the segment evidence, and exclusion forgoes a viable market.

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