Outsourcing of Underwriting Activities in Insurance - Advantages and Disadvantages

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Delhi-based Bounty Life Insurance Company (Bounty) has branches all over India and it follows an aggressive marketing strategy in order to obtain more customers. Soon after the liberalization of the insurance sector, Bounty started selling its products aggressively.

Initially, it made profits. In fact, the number of its customers exceeded the management's expectations. The popularity of the company also increased. In addition, there was a steady increase in the number of customers. The reason was that Bounty offered innovative products that suited the varied requirements of people. The company adopted the marketing strategy of offering customized products. Thus, it became one of the leading insurance companies, offering maximum number of product variants in the industry.

Over a period of time, there was a gradual increase in the number of players in the industry. Consequently, competition in the industry intensified. All insurance companies in the market were struggling to maintain and increase their market share. Despite the intense competition that prevailed in the industry, Bounty Life Insurance Company managed to increase its market share. Its performance in the competitive scenario was fairly good. However, during the last few months, its profits have decreased sharply. The company has been facing difficulties related to administration and interdepartmental coordination...