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

A Mumbai-based life insurer is reviewing the external environment before launching a micro-insurance product. Its strategy team lists: a new government subsidy scheme for rural premiums, a rise in the share of the population owning smartphones, a change in the rate of GST on premiums, and an ageing population. Which of these items would be classified under the 'Technological' factor in a PEST analysis?

Rising smartphone ownership is the technological factor. It changes how insurance can be sold and serviced. The subsidy and GST change are political or legal, the ageing population is social, and the insurer's own pricing is internal, so it is outside PEST altogether.

  1. AThe rise in the share of the population owning smartphonesCorrect
  2. BThe new government subsidy scheme for rural premiums
  3. CThe change in the rate of GST on premiums
  4. DThe ageing population
  5. The insurer's own pricing strategy

Explanation

Smartphone penetration is a technology-related change that affects distribution and servicing. The subsidy and GST change are political/legal factors, and the ageing population is a social factor. The insurer's own pricing is an internal decision, not an external factor.

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