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IAI Actuarial Core Principles · Business Management · Strategy, competitive advantage, strategic decision process and PEST analysis

A health insurer's team lists the following as external factors: (i) a new data-protection law, (ii) rising medical inflation, (iii) growth of wearable devices that track fitness, (iv) its own high claims-settlement time. Which option correctly states how these fit a PEST analysis?

The data-protection law is Political/legal, medical inflation is Economic, and wearables are Technological. The firm's own slow claims settlement is internal, so it belongs in an internal analysis such as a SWOT weakness, not in PEST, which covers only external factors.

  1. A(i) Political, (ii) Economic, (iii) Technological, and (iv) is an internal weakness not part of PESTCorrect
  2. B(i) Social, (ii) Economic, (iii) Technological, (iv) Political
  3. C(i) Political, (ii) Social, (iii) Technological, (iv) Economic
  4. D(i) Political, (ii) Economic, (iii) Social, (iv) Technological
  5. (i) Legal is excluded from PEST, (ii) Economic, (iii) Technological, (iv) Social

Explanation

A data-protection law is political/legal; medical inflation is economic; wearables are technological. The firm's own claims-settlement time is an internal matter, belonging in a SWOT weakness or internal analysis, not PEST.

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