Risk Janampatri – A new beginning to identify most appropriate risk mitigation solutions

‘ The uncertainty is constant’ is a fact. Due to our lifestyle, all of us are prone to risks that were not even assumed to exist in older days. The introduction of newer technological changes such as wireless network, 5G etc., have increased the risks of uncertainty given our limited knowledge of new technologies and its impact on health of human and ecosystem. In addition the natural calamities such as forest fires, floods and earthquakes have added new dimensions in these uncertain times. The impact of Covid -19 on the economy is extremely fearful and difficult to comprehend. Few research reports have  indicated that the treatment of few diseases such as Tuberculosis may get further complicated and the period of recovery patients may get extended in post Covid era.

Furthermore, I believe while the risk of uncertainty is always there but its increasing at rapid rate. While many risks are beyond our control, we can still mitigate the impact of financial risk to large extent by taking timely actions. By taking care of our physical and mental health, we can significantly reduce the risk of health problems. Similarly, individuals can timely transfer the risk to an establish institution, they can mitigate the financial impact of the risks due to any hazards to large extent. For example, by purchasing a home insurance, an owner transfers various risks due to fire, earth quake, floods etc. to an insurance company for a small sum of money. Hence any subsequent losses to the owner due to these hazards will be borne by the insurance company and this smart customer does not suffer any material financial loss as he had transferred the risk.

Hence this mounting risk of financial uncertainties makes its essential for individual customers to have an effective risk mitigation mechanism. Insurance is the most popular financial instrument to cover these risks.

However, no insurance is worth if it’s not optimal. In other words, it is important to be optimally insured. The optimal level of insurance is based on the risk profile of an individual customer; however, this risk assessment is generally not considered while selling the insurance products. In the absence of risk profiling, normally same products are sold to customers with different risk appetite.

Let’s illustrate this with a simple example:  A person with low risk appetite (with limited ability to absorb losses) should ideally buy motor insurance with higher Insured Declared Value (IDV) and with add on such as zero depreciation, etc. This will ensure he does not pay any material charges to car garage in case of any accidental claim subsequently. Similarly, a person with higher risk appetite can save money on insurance premium with lower IDV and nil or minimal add on options. However, as these risk assessments do not happen while purchasing insurance products, it results in customers buying products not in accordance with their risk appetite. Hence a person with higher risk threshold will complain that he was sold an expensive product without any utility. Similarly, a low risk appetite individual will feel upset to pay huge amount to garage at the time of any claim in absence of add on options such as zero depreciation.

Currently there is another challenge. There is no tool to calculate the risk appetite of the individual customers and most of them do not fully understand the risk terminology and their risk appetite.

In order to overcome this challenge, SafeTree has developed Risk Janampatri, a tool that immediately calculates the risk profile of the customers. Customers choose their options to various life situations and tool automatically calculates the risk profile of the customer. Finally

the customers can select insurance products based on their risk profile. This results in a happy and satisfied customer.

This is a new beginning in selling insurance products as per the profile of the customer.

Want to know your risk Janampatri? Visit www.safetree.in to know more

 

About the Author
Vikas Anand
CEO, SafeTree