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

A Mumbai-based life insurer notices that young salaried customers in Tier-2 cities repeatedly abandon its online application at the medical-disclosure step, saying they find the process long and confusing. Which response best addresses the consumer need revealed here?

The best response is to redesign the application journey with shorter, simpler disclosure steps and clear guidance. Customers are dropping out because of process complexity, so removing that friction meets their actual need, whereas changing commission, cover limits or premiums does not address the problem.

  1. ARedesign the journey with simpler, shorter disclosure steps and clear guidanceCorrect
  2. BRaise the commission paid to agents who serve these cities
  3. CIncrease the sum assured limits on the product
  4. DCut the premium rate for all customers by a fixed percentage
  5. Stop selling to Tier-2 cities and focus on metros

Explanation

The evidence points to friction in the process, not to price, cover size or distribution reward. Simplifying the disclosure journey tackles the stated need for ease and clarity. The other options address needs that customers did not express.

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