Everything about Just in Time Insurance

• 14 October 2019 | 4122 Views | By Mint2Save

Just in time is a concept that is very positively adapted in the market. The idea revolves around certain advantages over the commercial methods. This method indicates that the production suppliers can directly transport the goods on a needy basis rather than the manufacturers spending a lot of money and keeping the stock which involves a considerable amount of wastage of the money and raw material as well. The goods, when observed on a needy basis, include high accuracy and less cost with minimal wastage ratio as compared to the conventional method. The investment to be made also reduces and hence this is a widely accepted method, and similarly, the insurance policies have also started to rely on this technique, thus giving an endpoint to the traditional, outdated methods. This can maybe a necessary revolutionary step, but it comes with its own pros and cons, which are to be taken care of. Individual insurance companies still do not think this is a good idea as they believe forecasting is not always reliable, and this can lead to substantial losses sometimes, and a better safer option is the key. It is thus within the hands of the client to choose what best fits them.

What is just in time Insurance? 

Insurance companies are mostly revolving on the concept of a timely basis, which involves the relationships with customers for a very long period. This is not the case for Just in time insurtech. They say that the customers now are demanding differently and they have proposed options where the insurance cover is to be paid only when the foreseeable events occur or just after any activity has taken place. This involves deducting the insurance cover over long periods for the predefined specific period. This methodology is accepted and adapted from the concept of Just in time where several firms and companies have started to rely on this approach as it involves a lot of benefits over the methods that were used earlier.

However, this method does come with its share of the problem, and thus the crowd of investors and insurance companies have been split in two directions- one part of people that agree to this methodology while the others who feel this is a flaw, and it isn’t practically feasible option to start this type of opportunity. But at least with this concept, the customers are free to choose which type of policy is best suited to them depending on their requirements and needs from the market and the circumstances they go through. As far as the insurance companies end is considered, they have to dig in more profound study comparatively and extract accurate data predictions and foreseen the demand for cover based on the events and their client’s needs. 

How does this work? 

Just in time adapting companies have to undergo a more in-depth check, and study of the markets and the research-based predictions are to be used for forecasting the demands that will be further used for the stock data or other applications. However, there is involvement of the direct and indirect costs for the time or demand basis of the product. In cases like this, there can be involvement of any flaw within the entire process, the stock may run out when needed, or short supply and excess demand-type scenarios may come into picture which will disrupt the process to a great extent.

However, this is a two-way chain, and the customer-supplier bridging and relationship bonding will enhance the process of JIT. It opened doors to new options for the customers, and the next issue can be looked after if the synchronization of the parties is efficiently looked after.  The insurance companies collect the data and thus decide the cover for the clients based on various factors considered to be needed at the time of determining the value and time. Also, for events that are not foreseen, different approaches might have to be made for the clients.

Benefits of using JIT 

There are undoubtedly many benefits of using this insurance, which involves:-

• The reduction in premium amounts and also the policy period obligations.
• The covers are aligned concerning the types and duration of the operations and can be used whenever needed.
• Risks can be considered with a holistic approach and forecasting of such events which will be useful for planning the cover by the management.
• The management gets to consider the fact that what and which cover is needed at the current time. 

With this procedure, the forecasting has to be done in a way that the insurance companies should extract their benefits, and the customers must also be satisfied with the reduction of the amount they have to pay. In a way, this is highly reliable on the predictions and data graphics that the insurance company puts into consideration. A defect in this may turn the tables, and thus this system can be considered as demoralized and may again retort the customers to the traditional methods used for a long time. Therefore a higher customer study is to be made by the professionals here, and the precision should be correct enough.

How is JIT affecting other insurance companies?

With the times changing so rapidly, the customers now also demand a change in the policies that were running for an extended period. The customers require a different type of schemes where they don’t want the long term relationships and cash pay but only at the times when the demand is needed. To fit in such applications, Just in time approach was born. The insurance companies, some of them have attained this approach and are taking a road to success. While a lot of customers are impressed by this type of demand, the policy has undoubtedly gained a large number of crowds on its side, and hence the insurance companies that still rely on the traditional methods may incur some losses in the overall business they run. However, from the insurance company’s point of view, JIT is a beneficial but highly predictable method, and in case of any fault, the tables may turn, ruining the reputation in seconds. Also, an approach like this requires a lot of study and background check to ensure there is no leakage in the system.

One much talked about a JIT based is Trov, which has been explored by the team here.

Controversial topics rose

Certain companies do not accept this type of insurance policy as they believe that this type of insurance policy may raise the moral hazards comparatively more. The client may be unsure of the risk involved, and thus, this may encourage them for any undue risk. Also, the last-minute cover may not be suitable as the option to weather claim for any protection can be controversial. This type of method can also not work well as some events may be oblivious, and thus a high chance of potential risk may be there. The concept of clients claiming just before or after the event may also bring a lot of uncertainty. Thus, with this dual nature of thoughts amongst the policies, the customers have indeed got a better choice option, but also they have to rely on their instincts and choose what fits in better as per their requirements and how they expect the thing to be. This type of option may bring in variety and comfort but also have their pros and cons which cannot be neglected and to choose a safer and reliable option according to their own perspective and not from the market point o view.

Wrapping up, just in time!

 Just in time is a concept where the suppliers and manufacturers are directly connected, and the goods or material is not stored in stock but is taken only when needed. This type of similar concept is used in insurance where the cover can be claimed only before a foreseen event or after the fact. Customers demand a short term relationship and not to continuously pay for the policy when there is no need. This type of system has drifted the insurance market in two segments where certain companies have approached this method while some refuse to go with such activities as they feel this is a flaw filled manner on a holistic basis. From a customer’s point of view, this is a useful and new approach for them which fulfills their needs. For an insurance company’s part, this is based on the prediction approach, and hence a comparatively in-depth study of the foreseen events and accidents are to be made well in advance which will not cause any problems at the time of claiming insurance when in need. This has advantages like reduction in costs and covers aligned based on the time and event type. Also, here, risks are taken quite seriously, and when seen as a whole, the policy can be framed and customized as per the requirement.