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PB - MIS in Insurance Sector

Management information systems (MIS) play an important role in the insurance sector by handling three major areas: developing new policies, settling claims, and administration/management. MIS helps with developing policies by assessing risks and premiums. It aids in settling claims by generating exception reports on pending, disputed, unsettled, and rejected claims. MIS also provides reports and displays information to insurance managers, considers information flows and organization structure, and aids the overall functioning and monitoring of insurance organizations. Thus, MIS is a crucial part of the insurance industry as it captures, processes, stores, and propagates timely information to assist decision-making.

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Priyam Biswas
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2K views3 pages

PB - MIS in Insurance Sector

Management information systems (MIS) play an important role in the insurance sector by handling three major areas: developing new policies, settling claims, and administration/management. MIS helps with developing policies by assessing risks and premiums. It aids in settling claims by generating exception reports on pending, disputed, unsettled, and rejected claims. MIS also provides reports and displays information to insurance managers, considers information flows and organization structure, and aids the overall functioning and monitoring of insurance organizations. Thus, MIS is a crucial part of the insurance industry as it captures, processes, stores, and propagates timely information to assist decision-making.

Uploaded by

Priyam Biswas
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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HOW CAN MANAGEMENT INFORMATION SYSTEM PLAY AN IMPORTANT ROLE IN

INSURANCE SECTOR? (15 MARKS)

Before analysing how MIS can play an important role in insurance sector, we must briefly
understand what MIS is and what are its principal objectives and characteristics:

DEFINITION

Management Information System or 'MIS' is a planned system of collecting, storing, and


disseminating data in the form of information needed to carry out the functions of
management.

OBJECTIVES OF MIS

The goals of an MIS are to implement the organizational structure and dynamics of the
enterprise for the purpose of managing the organization in a better way and capturing the
potential of the information system for competitive advantage.

CHARACTERISTICS OF COMPUTERIZED MIS

Following are the characteristics of a well-designed computerized MIS −

 It should be able to process data accurately and with high speed, using various
techniques like operations research, simulation, heuristics, etc.

 It should be able to collect, organize, manipulate, and update large amount of raw
data of both related and unrelated nature, coming from various internal and external
sources at different periods of time.

 It should provide real time information on ongoing events without any delay.

 It should support various output formats and follow latest rules and regulations in
practice.

 It should provide organized and relevant information for all levels of management:
strategic, operational, and tactical.

 It should aim at extreme flexibility in data storage and retrieval.

ROLE IN INSURANCE SECTOR

Insurance businesses are today much more concerned about the effect of competition than
they were a few years ago. They must react to the competitive threats not only from local
sources but also from regional, national and international sources; likewise, they must seek
to explore all opportunities that are available in the immediate, national and Global
environment. Deregulation has also increased competitive pressure for insurance
organizations to survive, grow and prosper. In such a competitive environment, insurance

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managers must employ a lot of the resources at their disposal as efficiently as possible to
accomplish the objectives and goals of the enterprise. MIS plays a crucial role in achieving
success in the business as well as providing customer support that is up to the mark and up
to date.

MIS handles three major areas of an insurance company: (could just mention the below 3 points without elaborating and
continue from the bullet points mentioned under Management and administration

DEVELOPMENT OF NEW POLICIES

 Finding out the risk incidence cost of risk management, identifying the conditions for
giving the insurance offer
 Assessment of insurance premium
 It is focussed on trend in the business and industry
 They must identify the risk possibilities and covering them by appropriate insurance
policy

SETTLEMENT OF CLAIMS

This is a very critical function of MIS for the insurance industry and it needs effective design
to help managers take decisions easily

Reports generated by MIS should bring out exception reports on the pending claims,
disputes, unsettled and rejected claims

ADMINISTRATION AND MANAGEMENT

Management of policy includes generating automatic reminders for beneficiaries

 Management Information System provides information in form of reports and


displays to insurance managers and many business professionals (Munirat, Sanni and
Kazeem, 2014).
 Management Information System considers integrative nature of information flow as
well as the structuring of the organization around decision centres.
 Standards of performance are part of any good plans; hence, determination of
standards like other aspects of the planning process depends on the availability of
relevant management information system. Management information system aids
the functioning and monitoring of an insurance organization. It also describes the
components and resources to ensure the proper functioning of insurance.
 Management information system has changed the physical layout of offices to
accommodate local networks and departmental integrated systems.
 It is also a formalized procedure to provide management at all levels and in all
functions with appropriate information from all relevant source to enable them
make timely and effective decisions for planning, directing, evaluating, and

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controlling the activities for which they are responsible for (Munirat, Sanni and
Kazeem, 2014).
 The role of information in decision-making among insurance practitioners cannot be
overemphasized; and effective decision-making demands accurate, timely and
relevant information. MIS enables the managers to take informed decisions that are
instrumental to the success of the company.
 As the numbers of employees, customers and transaction increases in an
organization the more it become multifaceted, and the information needed for
effective management, planning, decision-making and control invariably becomes
more complex. Thus, Insurance organizations are often making significant
investment of time and financial resources in the acquisition of information systems
and its services in recent times. Management Information System is a crucial part of
that entire Information ecosystem.

CONCLUSION

Relevant information increases knowledge, reduces uncertainty and is usable for the
intended purpose. However, there are difficulties in producing relevant and timely
information among most organizations in India and the insurance industry is not
exempted. In the context of insurance, MIS captures data, processes, stores, retrieves and
propagates information, provides relevant and timely information to assist in taking
decisions. Thus, making it an important part of the Insurance Industry.

For 5 marks

DEFINITION

Three major areas

Bullet points.

Conclusion

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