Analysis of Great Eastern Insurance Demand Factors and Market Share

This report provides an in-depth analysis of the Great Eastern Life Assurance Company Limited in Singapore, focusing on its life insurance products and comparing its offerings to those of its primary competitor, AIA Group Limited. The report investigates four key demand factors influencing the company's life insurance product demand: premium expenditure, education level, life expectancy, and income level. It examines how these factors impact the company's market share, supported by financial data. The analysis includes a discussion of the company's key product offerings and their features. The report also offers market recommendations to enhance the company's success in the insurance sector. It highlights the importance of factors such as flexible plans, team management, family care policies, and immediate assurance facilities in the insurance sector. The report emphasizes the importance of adapting to consumer needs and market dynamics. The report concludes with a summary of the key findings and recommendations.

Running head: ADVANCE DIP IN INSURANCE
Advance Dip in Insurance
Name of the Student
Name of the University
Author Note

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Executive Summary
The objective of this paper is to analyze the important demand factors of the life insurance
products of the Great Eastern Insurance company in Singapore. The paper has attained to
compare the functions of the company with respect to its rivalry company, called as, AIA group
limited in Singapore. Life insurance product and service is the core interest of this study. The
paper has further recommended feasible solutions to enhance the company’s success in the
insurance sector.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
One key product which is also provided by the competitor.......................................................4
Four significant demand factors of product service..................................................................6
Impacts of four demand factors on market share.....................................................................9
Market recommendations.........................................................................................................11
Conclusion.....................................................................................................................................13
Reference list.................................................................................................................................15

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Introduction
The importance of the life insurance is the key concern for the customers. Most of the
people expense certain amount of money as to purchase life insurance products in every year. the
growing number of customers in the life insurance sector reflects the evolving demand for the
insurance products. Over the last couple of decades, life insurance is observed as the driving
force to enhance the growth of the life insurance sector. The rapid growth in the insurance
customers of both developed and developing countries assures the growing tendency of enrolling
into the insurance market. The paper is aimed at analyzing the concept of economic, institutional
and demographic aspects of the life insurance demand1. The economic concept considers
individual income, saving pattern and expenditure habit, whereas, policy framework,
advertisement strategy and premium strategy are the key concerns under the institutional fact.
Lastly, the demographic aspect emphasizes on the uncertainty related to the political and
environmental factors. The principle analysis of this paper has been developed on a Singapore
based insurance company. The company has been operating in the name of the Great Eastern
Life in Singapore since 1908.
Apart from Singapore, the institution serves in Indonesia, China, Myanmar and Brunei. It
is labeled as one of the largest insurance companies in Asia2. The total asset of the company is
worth of $90 billion. The company owns more than four million policyholders. Its main three
distribution channels are bancassurance, comprehensive agency system and financial advisory
1 Abu Bakar, A, Regupathi. M, Aljunid. S, & Omar. M, 2020. Factors affecting demand for individual health insurance in
Malaysia.
2 An, Z., 2019. On the tax bias against investments in fixed assets: Empirical evidence from C hina. The World Economy, 42(2),
pp.419-428.

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team. On the account of its overwhelming presence in the insurance sector, Norton, AIA, Marsh
and United Insurance are the greatest competitors for the Great Eastern Insurance in Singapore.
Out of all the competitors, AIA Group Limited, a Singapore based insurance company, has been
considered as the top competitors in Singapore.
Discussion
One key product which is also provided by the competitor
Great Eastern Life assurance Company limited has been credited by AA- rating which
implies the company’s strongest position among the Asian life insurance firms. The objective of
the company is to provide better and life commitment to the customers. The company offers
wellness tips, exclusive rights and valuable rewards to the customers. This Singapore base
insurance company develops a wide range of personal and commercial line products through
agents, direct channels, brokers and bancassurance. More than a fifty millions of employees
along with their family members are insured under its insurance company. The company’s
continuous effort on improving technology has improved its efficiency as well as reliability
among its customers. The insurance claims offer secured features and compatible technical
solutions to the customers. Several types of products, such that, life insurance, home insurance,
travel insurance, health insurance, motor insurance and retirement plan are offered by the
company to its customers3. However, life insurance product is recognized as the significant
contributors to the company’s revenue. Flexible time plan, team effort, family care and supreme
multiplier series are the distinguishing features of Great Eastern Life Insurance Company with
respect to its rival company AIA group limited.
3 Burca, A.M. and Batrinca, G., 2014. The determinants of financial performance in the Romanian insurance
market. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1), pp.299-308.

5ADVANCE DIP IN INSURANCE
Flexible time plan: Flexibility in the life insurance plan allows the customers to choose the
insurance premium plans in accordance with affordability and comprehensiveness. In terms of
the additional benefits, the insurance offers child coverage benefits at free of cost. Contextually,
AIA Secure Flexi term acts as an affordable and flexible safeguard for the insured people
including their family members.
Efficient team management: The organization has been able to provide highly customizable
and convertible plan owing to the effectiveness of its management system. The affordable cost
structure along with the essential life benefits is the driving source for the company’s revenue. in
case of AIA life insurance group, one-stop solution is the key strategy in order to hold a stable
cash protection policy to the policy holders.
Family care policy: The core objective of this policy is to cover the health insurance of all
family members including the elder ones and children. Its health insurance offers coverage
against a number of critical diseases. Multi-generational term plan is the principle standard of the
life insurance policy. Meanwhile, in terms of the AIA life insurance, the people aged up to 100
years can avail the general facilities of the life insurance policies.
Immediate assurance facility: Under this provision, the life insurance policy offers coverage of
around 3 times of principle sum assured. Along with that, the plan offers immediate coverage for
the permanent disability and accidental cases4. Whereas, AIA insurances offers 5 times of
coverage of sum assured amount to its customers. This sort of facility consumes less time and
starts operating with an immediate effect. This constant support from the insurance company
develops strong market reputation for its own products and services.
4 Eeckhoudt, L, & Gollier, L., 2018. Symposium on Choices under Uncertainty: beyond Risk
Aversion.. in Journal of Risk and Insurance, 85, 309-312.

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Money back facility: The beneficiaries under its life insurance policy can enjoy money back
policy up to 300%. In addition to that, a customer will be able to get 100% of money back when
no claim gets registered. This is one of the interesting features in order to develop a strong brand
impression in the insurance sector5. On the other hand, AIA insurance charges low premium
value for the high coverage. Selling and purchasing of insurance products does not require any
mediator, which reduces the complexity in the business transaction of the AIA insurance
products.
Personalization of life insurance policy: A customer is provided with the personalization
facility. This feature allows the customers to modify the policy structure with respect to their
budgetary terms. The amount of payment gets fixed in terms of their capability of payment.
Meanwhile, AIA’s Gen3 policy proposes a considerable nest-egg policy which provides benefits
to the third generation of the insured people. The comprehensive nature of the policy
consequently assures better service quality of the goods and services in the life insurance market.
Four significant demand factors of product service
According to the study, the variables affect the life insurance demand are complex. It is
important to be noted that rising level of investment in the business of the Great Eastern
Insurance is expected to be result of enhancement in the human capital, real income and changes
in the standard of living6. The paper attains to highlight the following four demand factors
behind the evolving demand for the company’s life insurance products.
5 Wang, J. and Li, J., 2018. Comparative ambiguity aversion in intertemporal decisions. Journal
of Risk and Insurance.
6 Chen, S, 2016. Investment Returns and Currency Hedge for the Foreign Investments: Evidence from the Japanese Life
Insurance Companies.SSRN Electronic Journal.

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Premium expenditure: The consumption of the life insurance is intensively dependent on the
amount of the premium expenditure. The cost of life insurance surges when the premium
expenditure increases. In terms of the traditional economic theory, the product demand falls
when the product price increases7. Moreover, there is no fixed structure of premium level. The
insurance pricing structure varies with respect to the companies8. Some companies charge lower
price, whereas, other companies charge different premium cost for the consumers. This disparity
often brings negative impact on the buyers of the life insurance products.
Education level: Studies have examined that there exists positive relationship between
education and the demand for life insurance. Education makes people aware of the benefits
associated with the life insurance products. It intensifies the desire to defend dependents against
the possible economic uncertainties. Education helps to analyze the cost-benefit approach of the
life insurance policy9. The educated people generally purchase those life insurance policies
which are risk aversion in nature. In addition to that, the availability of the life insurance
products will be recognized in a better way if people own proper education. Moreover, the
comparative advantage of the life insurance products gets acknowledged in the presence of
education.
Life expectancy: This is considered as one of the key influential factors to determine the
demand of the life insurance products. Life expectancy denotes the average number of years
7 Tukur, G. and Balkisu, A.A., 2014. Corporate board diversity and financial performance of insurance companies in Nigeria: an
application of panel data approach.
8 Dorofti20, C. and Jakubik21, P., 2015. Insurance sector profitability and the macroeconomic environment.
9 Eeckhoudt, L., Fiori, A.M. and Rosazza Gianin, E., 2018. Risk Aversion, Loss Aversion, and the Demand for
Insurance. Risks, 6(2), p.60.

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people are projected to live10. Life expectancy accounts for the proxy parameter to determine the
probability of death. According to the researchers, there is an assertive relationship between the
life insurance and probability of death. On the contrary, it implies that improvement in the life
expectancy rate lowers the demand for the life insurance11. The decreasing mortality coverage
cost is the significant consequence of the life insurance. Meanwhile, it intensifies the savings
nature of the people. A minimum amount of savings is required to bear the premium cost of the
insurance policy. Henceforth, life insurance policy plays a significant role in the wealth
generation program.
Income level: Several numbers of studies have examined that income augments the demand for
the life insurance. Increase in income generates surplus funds. This further creates more wealth
which supports the purchasing ability of the consumers for the life insurance products. Study
outlines that income makes the people concern about the utility of social security through the life
insurance products and services12. Life insurance is the integral part of the social security. It has
been observed than insurance products are income elastic products. This implies that people
having high income invests more in the life insurance sector. The income effect is greater than
the substitution effect in the case of the life insurance product.
10 Sugiharto, T., Sulistiowati, N. and Nofiyanti, R., 2019. THE RELATIONSHIPS BETWEEN THE FINANCIAL HEALTH
AND FINANCIAL PERFORMANCE OF LIFE INSURANCE FIRMS: AN EMPIRICAL EVIDENCE FROM
INDONESIA. Jurnal Ilmiah Ekonomi Bisnis, 24(3), pp.215-224.
11 Gatteschi, V., Lamberti, F., Demartini, C., Pranteda, C. and Santamaría, V., 2018. Blockchain and smart contracts for
insurance: Is the technology mature enough?. Future Internet, 10(2), p.20.
12 Gatzert, N. and Martin, M., 2015. Determinants and value of enterprise risk management: Empirical evidence from the
literature. Risk Management and Insurance Review, 18(1), pp.29-53.

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Impacts of four demand factors on market share
According to the company’s financial report 2018, total amount of profitable share to the
company is worth of about $750 million. The figure states that the country has experienced a
positive growth rate owing to the evolving demand of its life insurance products and services.
The company has recorded operating profit excluding the tax is around $640 million.
Subsequently, the following factors can be explained to analyze the impacts of the above four
demand factors.
Pay off monetary debts: The policy can be used as debt recovering tool for the customers. This
provides monetary assurance against the mortgage or asset. Life insurance can be of two types,
such that, whole period and time period. Financial tools like life insurance helps the consumers
to combat with the economic uncertainties related to the fluctuation in the per capita income
level, political instability and inefficient government activities13. On this account, the savings
amount in the life insurance gives protection to the economic entities against the probable
economic crisis. Great Eastern Life Insurance firm estimates the degree of risk factors with the
help of liability calculator. This estimates how much money will be required to protect the life of
nearest ones14. This secures the future of the individual person in terms of the assured premium
amount. Nonetheless, the life insurance policy is generally used as to avert the income tax. a lot
of people purchase life insurance policy as a proxy tool of the income tax payment.
Enhancement of the mental peace: The data suggests that more than 19% of death has been
reported to take place due to accident. Time and place of death are not predictable. In nowadays,
a number of deaths have been caused due to unknown diseases. Many people have been reported
13 Hambel, C., Kraft, H., Schendel, L.S. and Steffensen, M., 2017. Life insurance demand under health shock risk. Journal of
Risk and Insurance, 84(4), pp.1171-1202.
14 Sinha, R.P., 2015. A dynamic DEA model for Indian life insurance companies. Global Business Review, 16(2), pp.258-269.

10ADVANCE DIP IN INSURANCE
to lose their lives owing to dearth of financial assistance for the medical treatment. The
skyrocketing medical cost is the emerging concern for every economy irrespective of developed
and developing economy15. Implementation of technically advanced products and equipment are
required to resolve the complicated heath issues across the economy. In this regard, life
insurance provides both long term and short term wellbeing facility for the life members16. As
per the study, the number of people has been reported to avail the hospital facility owing to
having the appropriate life insurance policy. Considering the fact, many countries have started
issuing life insurance policy to the national citizens. This has raised the public expenditure for
this public insurance policy. The life expectancy on an average level gets intensified after the
adoption of the life insurance policy. As life insurance policy assures the life security the mental
peace of the people gets improved. This helps the people to lead a peaceful time in case of
exaggerated medical expenditure.
Leave secured collateral: Life insurance permits the insured persons to keep insured assets in
the name of beneficiaries. This collateral will help the beneficiaries to take higher education, new
business venture and creation of physical assets. Life insurance is a secured form of savings for
the investors17. The purchase of life insurance guarantees asset for their legacy members. People
can meet their daily needs from this certain asset amount. The insured person will be able to bear
the cost related to utilities, education and housing. As a result of that, collateral improves the
standard of living of the average people. It eases the financial burden of the people. It acts as a
15 Ioannidou, V. and De Dreu, J., 2019. The impact of explicit deposit insurance on market discipline. In Panel Data
Econometrics (pp. 839-864). Academic Press.
16 Saboor, A., Mukhtar, M. and Sadiq, M.K., 2015. Lmx as a predictor of performance behaviour: Empirical evidence from life
insurance sector of pakistan. Journal of Human Resource Management, 3(1), pp.1-5.
17 Jaspersen, J.G., 2016. Hypothetical surveys and experimental studies of insurance demand: A review. Journal of Risk and
Insurance, 83(1), pp.217-255.

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back-up plan for the family members18. Life insurance is the considered as the most cost-
effective solution for living a standard life. It enhances the stability in the life style of the
consumers. This maintains stability between the income and the cumulative consumption level.
Market recommendations
Clarity in premium disclosure: The break-up amount of the insurance policy needs to be
declared to the customers. The core topics like expense ratio, investment and mortality charges
are proposed to be covered under this calculation system19. This transparency in the price
structure of the life insurance policy will make the consumers aware of the policy cost. On this
basis, the customer will develop their investment plan for future.
Standard performance metric: This will enhance the performance of the life insurance
company. Quality of the life insurance product and services will be improved as to maintain the
standard norms of the insurance sector20. This standardization of the policy structure will assist
the lay man to avail the proper benefit of the life insurance policy. The pertinent benchmark
restrains the unfair practice of insurance policy in the insurance market. In this regard, the
independent insurance companies are permitted to fix the discount rate with the help of the
mortality rate. However, every life insurance firm are instructed to disclose the internal rate of
return on the secured return policies. This will give the details of the expenses deducted for the
tax payment.
18 Koijen, R.S. and Yogo, M., 2016. Shadow insurance. Econometrica, 84(3), pp.1265-1287.
19 Ramamoorthy, R., Gunasekaran, A., Roy, M., Rai, B.K. and Senthilkumar, S.A., 2018. Service quality and its impact on
customers’ behavioural intentions and satisfaction: an empirical study of the Indian life insurance sector. Total Quality
Management & Business Excellence, 29(7-8), pp.834-847.
20 Liu, W.S., 2019. Regulatory Capital, Business Growth, and Investment Risk: Evidence from Life Insurance
Companies. Business Growth, and Investment Risk: Evidence from Life Insurance Companies (September 30, 2019).