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Bharti AXA strategy
Citation preview
STRATEGIC MANAGEMENT PROJECT
Submitted to-
Prof. Anshuman Tripathi
Submitted By-
Anurag Satpathy
Sec-B, U113074
Table of ContentsBusiness Model (4-22) Business Model of Bharti AXA 5
Business Model of Allianz (International Competitor)……………………………………………......11
Business Model of New India Assurance ( Government company) 16
Business Model of Bajaj Allianz (Domestic Competitor)………………………………………………19
Comparison between Bharti AXA and its competitors………………………………………………….21
Activity System Map (23-24)
Activity System map for Titan Insurance (Low Cost Organization) 23
Activity System map for Allianz (Diversified Organization) 24
VMO and Key Attributes of Success for Organizations………………………………………… (25-42)
INDIA- Low cost organization- Life Insurance Corporation……………………………………………25
-Diversified organization- Tata AIG…………………………………………………………………….27
ASIA- Low cost organization- Nippon Life Insurance…………………………………………………….28
- Diversified organization- Dongbu Insurance……………………………………………………….30
EUROPE- Low cost organization- AXA Insurance………………………………………………………….31
- Diversified organization- Generali Insurance…………………………………………………33
AFRICA- Low cost organization- Old Mutual Insurance………………………………………………..34
-Diversified organization- Pan Africa Insurance……………………………………………….35
NORTH AMERICA- Low cost organization- Prudential Insurance………………………………….37
-Diversified organization- Allstate Insurance…………………………………..38
SOUTH AMERICA- Low cost organization- Porto Seguro……………………………………………..40
-Diversified organization- SulAmerica……………………………………………..41
External Environment Analysis of the Industry……………………………………………………… (43-49)
PESTEL Analysis……………………………………………………………………………………………………………………..43
Industry Environment Analysis of Insurance Industry………………………………………… (50-54)
Porter’s 5 Force Model………………………………………………………………………………………………..50
SWOT Analysis………………………………………………………………………………………………………….53
Strategy of Closest Competitor (Bajaj Allianz)…………………………………………………..54
Complementary products/ services in insurance industry……………………………….. 58
History, Evolution, Growth, Profitability Rate & Future of the Industry….. (59-63)
Historical developments & evolution in the Insurance Industry……………………………………….59
Growth rate, Profitability trends & Future of the General Insurance Industry………………62
History, Evolution, Growth rate, Profitability trends & Future of Bharti AXA………………..63
Size of Insurance Industry across the world and in India…………………………………..64
Key success factors for Insurance Industry & Bharti AXA’s Performance………….67
1. Compare and Contrast the business model of your organization with:
An International Organization with a similar Business Model
A Domestic Organization with a similar Business Model
A Government Organization within the same industry
Business Model
A business model is a manager’s conception of how the set of strategies his company pursues
should mesh together into a congruent whole, enabling the company to gain a competitive
advantage and achieve superior profitability and how the various strategies and capital
investments made by a company should fit together to generate above- average profitability and
profit growth. A business model encompasses the totality of how a company will-
Select its customers
Define and differentiate its product offerings
Create value for its customers.
Acquire and keep customers.
Produce goods or services.
Lower costs
Deliver those goods and services to the market
Organize activities within the company
Configure its resources
Achieve and sustain a high level of profitability
Grow the business over time
We will look at Business model of Bharti AXA and its various competitors from the various
aspects mentioned above.
1. Business Model of Bharti AXA
Vision Statement
“To be the Preferred General Insurance Company for our Customers, Employees,
Shareholders, Business Partners & Society”
Bharti AXA GI lives by the simple truth; insurance plays an important role in protecting
organizations and individual aspirations. Through comprehensive and innovative insurance
solutions, the company seeks to redefine industry standards by offering unparalleled and
empathetic service to every Indian. This ropes in their collective vision “to be the preferred
General Insurance Company for our Customers, Employees, Shareholders, Business partners &
Society”.
Backed by its constant endeavor to find new and improved ways to add value to its customers
through its innovative product and service offerings, the company always seeks to make a
difference through its professional and pragmatic approach. Working as a team with utmost
integrity Bharti AXA strives to maintain best in class standards. It assures its customers to be by
their side in their hour of need.
Value Propositions
Innovation
Constantly striving to find new and improved ways to add value to all stake holders. Innovative
spirit has driven the company to launch revolutionary products.
Integrity
Always being responsible and doing the right thing. Settled over 4.6 lakhs + claims in five years,
a testimony to its focus on customer centricity.
Professionalism
Always seeking to make a difference. With sheer professionalism the company has managed to
surpass targets and increase its growth in leaps and bounds.
Pragmatism
Facing reality with courage and focusing on outcomes. The company’s pragmatic, realistic
approach to insurance has made it amongst the fastest growing insurers in India.
Team Work
Being one company, one diverse team. The company’s dedicated team of employees, agents,
partners and associates have enabled it to reach a milestone of 29 lakhs + policies in just five
years.
Product Offerings
Car Insurance: Bharti AXA car insurance offers protection to car, passengers, and helps stay
protected on the road. All plans enjoy servicing at 2,000+ cashless network garages across India,
24x7 claim assistance and easy claim settlement process, No Claims Bonus (NCB) up to 50% on
car insurance renewal from Bharti AXA or other insurer.
Two Wheeler Insurance: With Bharti AXA Two Wheeler Insurance enjoy servicing at
2,000+ cashless network garages across India, 24x7 claim assistance and easy claim settlement
process, No Claims Bonus (NCB) up to 50% on two wheeler insurance renewal from Bharti
AXA or other insurer.
Health Insurance: Bharti AXA offers health insurance with a range of benefits to take care of
the customer and his family's health care needs. Its Comprehensive Health Insurance is flexible
and affordable, available in 3 plans - Rs. 2 lakhs, Rs. 3 lakhs and Rs. 5 lakhs - to suit needs and
budget.
Critical Illness Insurance: Bharti AXA Critical Illness insurance covers in the event one is
diagnosed with any of the 20 critical illnesses covered. Upon diagnosis and a survival period of
30 days, it pays a lump sum compensation equivalent to the sum insured of the plan - Rs. 2 lakhs,
Rs. 3 lakhs or Rs. 5 lakhs.
Personal Accident Insurance: Personal Accident insurance is available in 3 plans - Rs. 10
lakhs, Rs. 20 lakhs and Rs. 30 lakhs - to protect one’s family with premium starting as low as Rs.
899.
Home Insurance: Bharti AXA Home Insurance protects house and valuable contents against
fire, burglary and other perils.
Organize activities within the company
The company commits itself to shaping a better tomorrow by choosing empathy over sympathy,
respect over pity, and contribution over payment; to meaningfully transform the society at large
as "we choose to care"
Global Challenge Walk: This is a part of the week long CR Week programme. The "Global
Challenge Walk" is an attempt to reduce carbon footprint as well as promote health and fitness.
Risk Education: Keeping in mind the increased need to spread awareness around gender
sensitivity and related issues, Bharti AXA GI dedicates one day of the CR Week this year as
"Risk Education Day".
Diversity and Inclusion: Bharti AXA GI is committed in promoting Diversity and Inclusion by
creating a work environment where all employees are treated with dignity and respect; and where
individual differences are valued. The D&I board is dedicated to cultivate a diverse and inclusive
environment where all employees feel fully engaged and included in our business and strategy to
become the "Preferred Company".
Communicating With the Stakeholders & Keeping Customers (Channels)
The company’s stakeholders are a diverse group of people and organizations – ranging from their
own employees to its customers. There are common threads: the requests for transparency,
honesty and respect. While they communicate with their stakeholders in many ways through
means customized to their needs, they believe that there is only one way to communicate – with
integrity.
Consumers: They provide information and receive feedback through products, website
interaction, customer satisfaction surveys, focus groups, help lines and call centers. They engage
with consumer product advocacy groups through direct communication and industry
associations.
Employees: Their employee surveys and regularly scheduled employee meetings give
employees the opportunity to express their views, and provide information at all levels across the
organization. They also regularly update their intranet portal, allowing for effective, on-demand
communication.
Shareholders: They provide information on strategies, policies and performance through their
Annual Report, Proxy Statement, Annual Shareholders Meeting, Reports and other public
statements including investor presentations.
Communities: They are in touch with the needs of local communities through philanthropic
efforts and provide support through programs, philanthropy and website interaction. They also
engage with local business and community leaders.
Sustaining high Level of Profitability
Sources of Funds: The sources of fund are from the premiums of the products mentioned above.
Net Premiums Earned
Profit/ Loss on sale/redemption of Investments
Interest, Dividend & Rent
Utilization of Funds: The funds are mainly used in settling the claims.
Net claims incurred
Commission
Operating expenses related to Insurance business
Premium Deficiency
Pool Expenses
Bharti AXA Life insurance
The insurance products by Bharti AXA Life Insurance Company Ltd include:
Wealth Confident
Future Confident
Future Confident II
Secure Confident
Save Confident
Invest Confident
Each life insurance or general insurance product of Bharti AXA Life is named confident as they
believe in making each customer 'Life Confident' giving them the assurance that the future of
their loved ones is financially secure even in their absence.
Some of its products are-
Individual Plans:
Bharti AXA Life Bright Stars: - A Unit Linked Child product. Bharti AXA Life Bright Stars
provides a launch pad for child’s bright future. They have Jumpstart benefit which is paid out at
maturity along with Policy Fund Value, which enables the child to explore more career options.
Bharti AXA Life Spot Suraksha: - Spot Suraksha helps it to create a pool of wealth to meet the
customer’s long-term needs, with an added advantage of simplified buying process.
Bharti AXA Dream Life Pension: - A Unit Linked Pension Product, Dream Life Pension,
Bharti AXA Life Insurance’s unique pension product ensures that the company’s retirement life
is the customer’s Dream Life.
Group Plans:
Bharti AXA Life – Swasthya Sanjeevani: - Swasthya Sanjeevani is a single premium group
critical illness product, providing comprehensive protection against 6 critical illnesses.
Bharti AXA Life – Sanjeevani: - Sanjeevani is a single premium group term life insurance
product, offering protection to the family.
Bharti AXA Life Mortgage Credit Shield: - Mortgage Credit Shield is a Group Product that
provides coverage to people who have availed of a Mortgage\ Home loan\ Home equity loan
from an Institution/Bank.
Bharti AXA Life Credit Shield: - Credit Shield is a Group Product that provides coverage to
people who have availed of a loan for 1 to 5 years from Group Policyholder.
Grow the Business Overtime
ISO Certification
Bharti AXA General Insurance is the first general insurance company in India to receive dual
certification of ISO 9001:2008 and ISO 27001:2005. ISO has helped in its ambition to become
the Preferred General Insurance Company in India. It proves efficiency of Bharti AXA General
Insurance in regard to core brand values like Available, Attentive & Reliable. It demonstrates
the value of strong attributes like trust of its Customers and partners.
Being ISO 27001:2005 certified means that the comply with best practices that ensure that its
customer's information is secure with it and is under explicit management control. The ISO
27001 certification provides it a top-down and consistent approach to address all compliance,
risk, and governance issues related to information security.
Customer service continues to be its focal point. The Company continues to move forward to
provide service delivery and processes, satisfying the customers and trade and establishing
standards that differentiates it from its competitors. Some of the achievements which are a
reflection of the company’s values are-
AXA has been placed as the numero uno insurer on Net Written Premiums for 2010 and ranks
second globally on assets by A.M. Best based on rating given by Best Link data.
Milestone of having sold over 29 lakh policies since inception.
Bharti AXA has consistently focused on improving service delivery mechanisms as a key
differentiator to enriching customer experience and as a testimony to this it have settled over 4.6
lakh claims, since inception. What differentiates the company is the focus it has on claims
consultancy at the beginning of the client relationship rather than at the occurrence of the loss.
2. Business Model of Allianz (International Competitor)
Mission Statement
To be the outstanding competitor in our chosen markets by delivering:
• Products and services that our clients recommend
• A great company to work for
• The best combination of profit and growth.
It is important that the company is aware of its Mission and Values to inform its choice of
actions guide the behavior and define the company and what it stands for.
The Mission of the company is best remembered by thinking about it in terms of the three
stakeholder groups whose needs the company must meet simultaneously:
• Customers – both intermediaries and policyholders – They want the company to provide them
with the products and services that meet their needs, and the ambition is to do this so well that
the customers are happy to recommend them to others.
• Ourselves – All want a great place to work; and
• Shareholder – Must use all its skills to deliver attractive returns to its shareholder, Allianz SE,
with the goal being to achieve the best combination of profit and growth amongst the peer
competitors in the UK.
The company wants to achieve its Mission:
• Through outstanding technical, sales and leadership skills
• By being professional, dynamic, innovative, focused and socially responsible
• With teamwork, passion and style!
The core values which the company delivers to its customers are-
1. Outstanding Technical, Sales and Leadership Skills
Building an organization whose people have outstanding technical, sales and leadership skills is
central to delivering for customers and thereby achieving Mission. This provides the key source
of competitive differentiation for it. It are committed to investing to develop the people and
ensuring that its skill base rises year on year.
2. Professional
To be successful it must demonstrate its professionalism by being accurate in the work, efficient,
personable and fair in all its dealings and with a continued commitment to high quality. It
supports this by helping the people work towards achieving appropriate professional
qualifications and accreditations.
3. Dynamic
Insurance is a fast moving industry, change is the norm and it needs to embrace change to be
successful. It achieves this by being proactive and moving quickly, displaying ‘hunger’ in all our
actions and in support of its customers.
4. Innovative
New ideas are essential to improve the company and it must continually innovate to make the
company better. It needs to be creative, commercially oriented and to seek entrepreneurial
solutions for the benefit of all its customers.
5. Focused
It will be clear about its objectives and what the targets are. It is then committed to the
achievement of its objectives and delivering against the promises.
6. Socially Responsible
It is mindful of the communities around it and its obligation and ability to make a positive
contribution to society and the environment. It is proactive in finding opportunities to provide
targeted support – big and small – and working to create a sustainable future.
7. Teamwork
It can only achieve the mission by working collaboratively across teams, departments and
divisions. It must also leverage the opportunities of cooperating across the wider Allianz Group,
and working with both the suppliers and customers to create and deliver outstanding solutions.
8. Passion
Having energy, enthusiasm and personal engagement, putting in the extra effort to make the
company successful through constant focus on its customers and their satisfaction.
9. Style
Ensuring the company always represents itself to a high standard and with a confidence which
distinguishes it from its competitors. Its style creates a company customers want to do business
with and talented people want to work for.
Innovative New Business Model
Allianz launched its integrated full-cycle business model based on a
new QuoteSME platform. It provides full integration between quote platforms and telephony
capability, and allows brokers to trade completely online.
Developed using the latest technology, QuoteSME will provide a wide underwriting footprint,
instant online quotations and immediate delivery of electronic documentation, all backed by the
expertise of a specialist SME underwriting team.
Fully-integrated SME business model now provides multiple routes to market, offering brokers
the flexibility required to trade successfully in a competitive market.”
Key Benefits of the new platform are-
The ability to compete new business, mid-term adjustments and renewals online.
Instant electronic documentation delivery at point of sale.
A customer centric website with easy navigation and detailed product information
Dedicated support from qualified underwriters
Ability to flex premium and/ or commission earnings
Product Offerings
Private insurance-
Family, Health
Car & motorbike
House & Home
Retirement planning
Business Insurance
Large Corporations
Small and medium-sized companies
Credit insurance
Global Lines of Business The global lines of business for Allianz are-
Reinsurance
Employee benefits
Company health insurance
Direct Insurance
Life insurance
Real estate
Internal shared services
Some of the sustainable solutions provided by Allianz are-
Microinsurance
Insurance & services
Investment & other products
Strategy
There are 5 goals of the group strategy. They are-
1. Profitable and sustainable growth
Seek profitable and sustainable growth in three business segments: Property-Casualty insurance,
Life/ Health insurance, and Asset Management.
2. Well-balanced and synergetic business portfolio
The company’s segments and operating entities complement and enrich each other, primarily by
serving the diverse needs of its customers. It exploits the group-wide synergies that stem from its
strong brand, its capital allocation, functional and industry best practices, as well as from shared
operations and joint investments in technology.
3. Strong capitalization
Strive to protect the capital of its investors and to support its businesses with sufficient capital to
withstand shocks and to protect the wellbeing of the customers.
4. World-class investment management
Qualitative growth and solid capitalization depend on a sound and sustainable investment
strategy that can generate stable returns and compensate, if necessary, for low interest rates or
looming inflation.
5. State-of-the-art risk framework
Through the risk policies, guidelines and systems the company ensures that its investment,
underwriting and operational decisions are made within the limits of its carefully defined
appetite and tolerance for foreseeable risks.
3. Business Model of New India Assurance (Government Organization)
Vision
To be the most respected, trusted and preferred Non-life Insurer in the Global markets we
operate.
Mission
To develop General Insurance Business in the best interest of the community.
To provide Financial Security to Individuals, Trade, Commerce & all other segments of the
Society by offering Insurance products & Services of High Quality at affordable Cost.
Values delivered to the Customers
The values delivered by New India Assurance Co. Ltd. Are-
Highest priority to Customers needs
High standards of Public Conduct
Transparency in operations
Culture of the Organization
The company provides for a very friendly culture to its employees. They are-
Courtesy and Caring
Initiatives and Innovation
Integrity, Trustworthiness and Reliability
Commitments
The company is highly committed to its customers and is customer centric. It promises to-
Act courteously, fairly and reasonably in all its dealings with the customers.
Make sure all the policy documents and claim procedures are clear and complete
information is given about the products and services.
Deal quickly and sympathetically with the grievances of the customer and resolve efficiently
through nominated customer service officers in all operating offices.
Educate the client about grievance redressal mechanism including the system of grievance
redressal through Ombudsman.
Respond to all commercially viable General Insurance requirements of all categories
including products for weaker section of the society at affordable price within 3 months
from the date of such requirement.
Continue to develop a dedicated, sensitized and professional workforce for efficient
execution of roles assigned to them.
Have a regular monitoring and consultative process with all the service providers and set up
monitoring mechanism for delivery of promised services to its customers.
Standards for Access to Citizens
The company commits to-
Host on its website http://newindia.co.in for all relevant information relating to working
hours, contact nos., documents required for issuance of policies and claim settlement.
Make available information on products and services through display in office, information
kiosks, Brochures relating to the Products and Services in Regional Languages and in easy
to understand 'style'.
Reach out through electronic and print media, intermediaries and other active
communication channels available.
Enhance the access of citizens through helpline, call centre, portal and personalized
interactions through Retail customers Meets.
Standards for Servicing
The company gives utmost importance to service. In this regard it commits to-
Strive to achieve and excel the time lines/bench mark set forth by the regulator in respect of
policyholders servicing.
Be clear and transparent in seeking fulfillment of requirements for settling a claim or any
other services to the customer.
Standards and Fairness and Openness
The company is very fair and open as far as any disclosure is concerned. It commits to-
Enable the customers with opportunities to provide the organization with feedback on
services availed by them and suggest improvement through customer meets surveys, web
and interactive voice response system (IVRS). It has established call centre and also direct
customer on line, dedicated e-mail facility at suggestions (at) newindia.co.in through which
customers can provide their suggestion for betterment of service.
Enhance customer satisfaction through adoption of latest technologies in the area of
servicing processing and review of systems and methods.
Strengths
Largest number of Offices - In India and Abroad Trained and technically qualified staff 1085 fully
computerized offices across India. "A-" (Excellent) rating by A.M.Best & Co (Europe) First domestic
company to be rated by an International Rating Agency Rating based upon following factors:
Superior capital position, Strong operating performance, and strong market position. Only company
to develop significant International operations, long record of successful trading outside India.
Products Offered By New India Assurance
a. Personal Insurance
New India Floater Mediclaim policy
Personal Accident Policy
Motor Policy
Group Mediclaim Policy
b. Commercial Insurance
Shopkeeper’s policy
Aviation Insurance
Marine cargo policy
Jewelers block policy
c. Industrial Insurance
d. Liability Insurance
e. Social Insurance
4. Business Model of Bajaj Allianz (Domestic Competitor)
Vision
To be the first choice insurer for customers
To be the preferred employer for staff in the insurance industry
To be the number one insurer for creating shareholder value
Mission
As a responsible, customer focused market leader, we will strive to understand the insurance needs of
the consumers and translate it into affordable products that deliver value for money.
Partnership Based on Synergy
Bajaj Allianz General Insurance offers technical excellence in all areas of General and Health
Insurance as well as Risk Management. This partnership successfully combines Bajaj Finserv's in
depth understanding of the local market and extensive distribution network with the global experience
and technical expertise of the Allianz Group. As a registered Indian Insurance Company and a capital
base of Rs. 110 crores, the company is fully licensed to underwrite all lines of general insurance
business including health insurance.
Values Delivered to Customers
Customer First, Always
Treat all customers with warmth and respect
Understand and manage customer expectations
Listen and are empathetic to the customer
Engage with the customer in the long term
Spirit of Adventure
Lead change
Look for opportunities to innovate at every level
Empower others to take responsible decisions
Show tolerance for failure
Trust
Are accessible to all
Are fair and transparent
Are open to feedback
Keep commitments
Trust each other to do a good job and give due credit
Own up to mistakes
Shared Ownership
Take collective ownership for success and failure
Respect divergent views and own the decisions taken
Put organizational interest above team & individual interests
Consciously include and respect people from different backgrounds
High Standards
Set new benchmarks of excellence
Are open to new ideas for raising the bar
Take pride in our work and excel in what we do
Products offered by Bajaj Allianz
Life insurance
Health insurance
Motor insurance
Travel insurance
Home insurance
Comparision between Bharti AXA and its Competitors
Bharti AXA Allianz New India Assurance
Bajaj Allianz
STPEnterprise and
SegmentationPersonal and
Institutional InsuranceIndividuals who are
seeking financial help and advice
Personal and Group Insurance
Personal and Group Insurance
Target Group
Urban and Rural Investors
Large enterprises and rich individual
investorsUrban and Rural
InvestorsUrban and Rural
Investors
PositioningComplete Insurance and
financial solutions
A trust worth financial institution which has been in
this industry since a long time
Complete Insurance and financial
solutions
Complete Insurance and financial
solutions
SWOT Analysis
Strength
1. Integrated approach to seek innovative solutions.2. Policies for various age and economic groups.3. International expertise of AXA group.
4. Strong Marketing Campaign.5. 74% stake from Bharti and 26% stake from AXA Asia Pacific Holdings Ltd.
1.Strong brand name and good financial position2.Life and credit insurance service market leader3.Asset management operations are well sorted out4.Has over 150,000 employees
1. Global exposure in Insurance through Allianz SE and Strong Local Implementation by Bajaj2. Has network across 200 towns3. Fundamentally Strong with good paying Capabilities4. Allianz AG is an insurance conglomerate globally and one of the largest asset managers in the world.
1. Largest state-owned general insurance company in India2. Has over 1000 branches across all parts of India and more than 5,00,000 agents.
3. Has over 40,000 employees across India
Weakness
1. Less penetration in rural India.
2. Small agent base.3. Insurance companies have a poor image when it comes to payment of dues.
1. Heavily dependent on automobile market
2.Stiff competition with other major players
3.Controversies during the world war II
1. Lack of penetration in rural areas.
2. Smaller Infrastructure as compared to established players
1. It has an image of a Government agency and hence lacks innovation.2. Being a Government agency, red tape and bureaucracy causes problems3. Managing a huge workforce during economic crisis meant overburdened
due to salaries
Opportunity
1. Growing rural market2. Earning Urban Youth
3. Cross selling through financial services such as banking
1.Expansion in other countries2.Diversifying portfolios for customers3.Retirement benefits on the boom4.Innovative schemes
1. Growing rural market potential
2. Urban Youth with growing income
1. Use of Technology to provide effective services to cater to urban population.
2. Government Schemes implementation
Threat
1. Stringent Economic measures by Government and RBI2. Entry of new NBFCs in the sector
1.Changing govt regulations and financial crisis like recessions2.Natural disasters3.Increase in fraud cases
1. Economic crisis and economic instability
2. Entry of new NBFCs in the sector
3. Increasing awareness amongst people about securing their future
1. Economic crisis.
2. Entry of new NBFCs in the sector.
3. Varying Govt policies
2. Prepare an Activity System Map for both a Low Cost Organization as well
a Diversified Organization operating in the Industry/ Sector selected.
Activity System Map
Managers often find it difficult to identify with any clarity the strategic capability of their
organization. Too often they highlight capabilities not valued by customers but seen as important
within the organization, perhaps because they were valuable in the past. Or they highlight what
are, in fact, critical success factors (product features particularly valued by customers) like ‘good
service’ or ‘reliable delivery’, whereas strategic capability is about the resources, processes and
activities that underpin the ability to meet such critical success factors. Or they identify
capabilities at too generic a level. This is not surprising given that strategic capability may well
be embedded in a complex set of linked activities. But if they are to be managed proactively,
finding a way of identifying and understanding capabilities and the linkages that are likely to
characterize competences is important. One way of undertaking such diagnosis is by means of
an activity system map that tries to show how the different activities of an organization are
linked together.
Activity System Map for a Low Cost Organization (Titan Insurance)
Titan, a leading discount insurance company, is affiliated with Nationwide®, one of the largest
insurance and financial services companies in the world. Nationwide has been helping customers
protect what's most important to them and providing outstanding customer service .
Activity System Map for a Diversified Organization (Allianz)
n
Notification and information services regarding accounting
processing of insurance premium payment
Sell term insurance as a core product, which best fits the
needs of SME
management
Simplified procedure
and speedy payment
Assign a staff member for each corporate
customer
Provide discount premium rates to members of professional
associations.
Focus on term insurance
Develop and sell a set product for different
insurances
3. Identify the leading Organizations Low Cost Providers as well as the
leading Organizations with Diversified Product/ Service Providers for India
and for the 5 Continents (Asia, Europe, Africa, North and South America).
Document the Vision, Mission, and Objectives of these companies and
identify the key attributes of success for each of these organizations.
Evaluate the Mission statement.
Prepare the Strategy Statements and identify the Value Proposition and
Strategy Sweet Spots.
1. INDIA
Sell term insurance as a core product, which best fits the
needs of SME
management
Simplified procedure
and speedy payment
Provide variety of services for SMEs
Specialize in SME market
Reduce risk –weighted asset
Promote institutional group products through tie-ups with
associations
Maintain high level of financial health
Refusal to carry out sales activity in offices / work
areas of major corporations
Management integration in the form of holding
companyPay administrative service fees
to associations and organizations
Asset management that
matches characteristicsHighly efficient
operationsEfficient operations through integration of indirect work
including back operations
Promote institutional group products and efficient sales system, working
closely together with associations.
Provide discount premium rates to members of professional
associations.
a. Low Cost Service Provider in India (Life Insurance Corporation)
Vision
"A trans-nationally competitive financial conglomerate of significance to societies and Pride of
India.
Mission
"Explore and enhance the quality of life of people through financial security by providing
products and services of aspired attributes with competitive returns, and by rendering resources
for economic development."
Objectives
Spread Life Insurance widely and in particular to the rural areas and to the socially and
economically backward classes with a view to reaching all insurable persons in the country
and providing them adequate financial cover against death at a reasonable cost.
Maximize mobilization of people's savings by making insurance-linked savings adequately
attractive.
Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose
money it holds in trust, without losing sight of the interest of the community as a whole; the
funds to be deployed to the best advantage of the investors as well as the community as a
whole, keeping in view national priorities and obligations of attractive return.
Conduct business with utmost economy and with the full realization that the moneys belong
to the policyholders.
Act as trustees of the insured public in their individual and collective capacities.
Meet the various life insurance needs of the community that would arise in the changing
social and economic environment.
Involve all people working in the Corporation to the best of their capability in furthering
the interests of the insured public by providing efficient service with courtesy.
Promote amongst all agents and employees of the Corporation a sense of participation,
pride and job satisfaction through discharge of their duties with dedication towards
achievement of Corporate Objective
Key Success Factors
Claims settlement is the major factor for the success of LIC as its claims settlement operations
are transparent and fair. The corporation looks for reasons to settle claims rather than avoid
making payments on claims. In short, LIC's ability to withstand competitive pressure in the
market can largely be attributed to its positive and proactive claims settlement operations.
Prompt and timely settlement of claims help in enhancing the confidence of policyholders in
insurance company; thereby, the business of the latter will increase manifold.
Evaluation
Does it include…?Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
Yes Yes No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No Yes No No No
Self- Concept
Concern for public image
Employees
Score 2.0/ 4.5 Yes No No
Customer or Product-Oriented?
Product- Oriented
b. Diversified Service Provider in India (Tata AIG Insurance)
Vision
To be India's most preferred General Insurance Company.
Mission
To create unmatched value for our customers, employees, business partners and shareholders by
delivering remarkable service that is consistent, fair and transparent.
Values / Objectives
Our values represent the core, shared beliefs that guide how we act and work together to achieve
our goals. We share a set of 6 core values: Performance, Customer First, Integrity, People,
Passion, and Empathy.
Performance: We must constantly accomplish the highest possible standards in our day to day
work and in the quality of services that we provide.
Customer First: We must anticipate customer priorities and exceed their expectations.
Integrity: We must conduct our business fairly, with honesty and transparency. Everything we
do must stand the test of public scrutiny.
People: Develop true partnerships all around; with our colleagues across the company and with
our customers and associates around the world. We exist to build strong relationships based on
tolerance, understanding and mutual co-operation. We strive to develop our diverse talent and
reward excellence.
Passion: Be committed to what we do. We must have a strong drive to meet goals, and a
relentless determination to solve customer problems. We must remember to be happy about
ourselves and the company we work for and represent.
Empathy: We must always work for the benefit of the communities we serve by caring, showing
respect, and compassion to everything we touch.
Key Success Factors
Technology is a key factor in the company's strategy but equal importance is being given to
people, products, distribution networks, efficient service, staff training and, not the least, costs.
Cost control is, in fact, in the top priority. The backbone of Tata AIG's game plan is a
technological framework that the company has spent about Rs15 crores to put in place. The other
key success factors are product benefits (bonus or guaranteed additions), competitive
premiums, efficient distribution, and products /plans differentiation through promotion.
Evaluation
Does it include…?Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
Yes Yes No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No No Yes No No
Self- Concept
Concern for public image
Employees
Score 2.5/ 4.5 Yes No Yes
Customer or Product-Oriented?
Customer- Oriented
2. ASIA
a. Low Cost Service Provider in Asia (Nippon Life Insurance)
Vision
To be a company that customers continue to trust and choose.
Mission
We are dedicated to fulfilling our social mission as a life insurance company by creating a secure
future along with our customers.
Objectives
Strive sincerely to fulfill our responsibilities to the people by making every effort to offer
policies which are truly needed.
In recognition of the public service aspects of the life insurance business, strive to contribute to
the elevation of the social welfare level through proper investment activities.
Strive to increase further our productivity in every division of our company, with powerful
execution, strong conviction and creative imagination.
Strive to raise the living standard of all our employees through the prosperity of Nippon Life. We
will strive also to be good citizens of Japan and the world.
Cooperate with other life insurance companies for the development of this industry, and will also
cultivate public understanding and support for life insurance.
Key Success Factors
Knowing how to benefit from close ties with other businesses continued to be a key factor in
Nippon Life's success throughout history. In addition some of the other key success factors are
sound business strategy, good financial strength and strong operational efficiency. Nippon Life’s
ability to withstand competitive pressure in the market can largely be attributed to its positive
and proactive claims settlement operations which are one of its key success factors.
Evaluation
Does it include…?Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
Yes No No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No Yes Yes No No
Self- Concept
Concern for public image
Employees
Score 2.0/ 4.5 No Yes No
Customer or Product-Oriented?
Customer- Oriented
b. Diversified Service Provider in Asia (Dongbu Insurance)
Vision
A World-Class Insurance Company with Global Competitiveness to create Customer Values.
Mission
A top-notch company with sustainable growth driven by customer satisfaction and maximize
customer values by-
Completion of customer protection structure.
Customer service that exceeds their expectation
Boost brand image.
Objectives
Establish world class asset management competence
Expand overseas
Construct global- standard business infrastructure.
Secure unrivaled business efficiency.
Identify new business models in line with the core business.
Hire and nurture specialists.
Expand blue-chip customer base.
Enhance channel productivity.
Key Success Factors
Sound business strategy, good financial strength and strong operational efficiency continue to
be key factors in Dongbu Insurance success. Ability to withstand competitive pressure in the
market is one of its key success factors. People, products, distribution networks, efficient
service, staff training are other key factors.
Evaluation
Does it include…?Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
Yes No No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No Yes Yes No No
Self- Concept
Concern for public image
Employees
Score 1.5/ 4.5 No No No
Customer or Product-Oriented?
Customer- Oriented
3. EUROPE
a. Low Cost Service Provider in Europe (AXA Insurance)
Vision
Our vision is to become the preferred company for all our stakeholders.
Mission
AXA's mission is to help customers live their lives with more peace of mind by protecting them,
their relatives and their property against risks, and by managing their savings and assets.
Objectives
Continue the in-depth work on strengthening focus on the customer and fostering employee
involvement through building a culture of trust and achievement.
Responsibility to leverage skills, resources and risk expertise to build a stronger and safer
society.
Focus on core business - insurance and asset management - and aim to become the preferred
company of our key stakeholders.
Reinforce customer centricity and promote the engagement of our employees by rethinking our
corporate culture.
Committed to redefining the standards of business so as to truly differentiate ourselves and earn
the trust of our key stakeholders.
Key Success Factors
Open-minded dialog and exchange of information regarding clients’ needs and requests are
strong key factors for AXA. When it comes to risk identification and evaluation, AXA supports
its clients on the basis of its international experiences in underwriting and claims which are
reinforced by the technical expertise of its Risk Consultants’ innovative tools and experts. Some
of the other key factors for AXA are by innovating and modeling its products’ and services’ to
clients’ changing needs and to the fast evolution of the market.
Evaluation
Does it include…?Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
Yes No No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No No Yes No No
Self- Concept
Concern for public image
Employees
Score 1.0/ 4.5 No No No
Customer or Product-Oriented?
Customer- Oriented
b. Diversified Service Provider in Europe (Generali Insurance)
Vision
Our purpose is to actively protect and enhance people’s lives.
Mission
Our mission is to be the first choice by delivering relevant and accessible insurance solutions.
First choice: Logical and natural action that acknowledges the best offer in the market
based on clear advantages and benefits.
Delivering: We ensure achievement striving for the highest performance.
Relevant: Anticipating or fulfilling a real life need or opportunity, tailored to local and
personal needs and habits, perceived as valuable.
Accessible: Simple, first of all, and easy to find, to understand and to use; always
available, at a competitive value for money.
Insurance solutions: We aim at offering and tailoring a bright combination of protection,
advice and service.
Objectives
Strategic Objective -To pursue the Group's growth objectives by creating, together with
economic value, social and environmental value for all stakeholders
Operational Objective - To provide access to insurance for those excluded from the traditional
market due to their income status.
Group Commitment- Greater distribution of micro insurance products that meet the specific
needs of the working poor in the countries where the Group operates.
Deliver on the promise-
Tie a long-term contract of mutual trust with our people, clients and stakeholders; all of
our work is about improving the lives of our clients.
To commit with discipline and integrity to bringing this promise to life and making an
impact within a long lasting relationship.
Key Success Factors
Cultural diversity has been a key success factor in building Generali’s international group.
Cultural awareness must therefore be an integral part of how business is done. Generali’s ability
to withstand competitive pressure in the market and proactive claims settlement operations
are also its key success factors.
Evaluation
Does it include…?Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
No Yes No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No No No No No
Self- Concept
Concern for public image
Employees
Score 1.0/ 4.5 Yes No No
Customer or Product-Oriented?
Product- Oriented
4. AFRICA
a. Low Cost Service Provider in Africa (Old Mutual)
Vision
Our vision is to be our customers' most trusted partner - passionate about helping them achieve
their lifetime financial goals.
Mission
Our mission is to drive strategic growth, through leveraging the strength of our people and
through accelerating collaboration between our businesses. Our focus is to expand in South
Africa, Africa and other selected emerging markets; and to improve and grow Old Mutual
Wealth and US Asset Management.
Objectives
Deliver on customer promise
Drive profitable growth in core
Accelerate collaboration across the Group
Build a culture of excellence
Key Success Factors
Innovating and modeling its products’ and services’ to clients’ changing needs and to the fast
evolution of the market are critical success factors for Old Mutual. People, products,
distribution networks, efficient service are other key factors.
Evaluation
Does it include…?Does it mention values like…?
CustomersProduct/Services
MarketsCitizenshi
pTeamwor
k Yes No Yes No No
Technology
Concern for Survival
Philosophy
Excellence
Integrity
No Yes No No NoSelf-
ConceptConcern for public image
Employees
Score 2.0/ 4.5 No No YesCustomer or Product-Oriented?
Customer- Oriented
b. Diversified Service Provider in Africa (Pan Africa Insurance)
Vision
To be the provider of choice in wealth creation and protection.
Mission
We create and secure wealth for the changing needs of our clients and other stakeholders. We
achieve this through continuous provision of:
Innovative and affordable client solutions that improve their quality of life
Superior return to our investors that ensure growth from one generation to the next
Conducive working environment that promotes creativity, self expression and personal
development
Support and involvement in community activities that enhance a sense for life
Objectives
Client Focus- Listen to our clients and understand their needs; approach situations and
challenges from the client's point of view.
Accountability- Take full responsibility for our actions and results as well as honour our
commitments and take pride in good corporate citizenship.
Professionalism- Our internal and external relationships are conducted with respect and
discretion.
Integrity- Take pride in treating all stakeholders in an honest and fair manner, while maintaining
dignified and ethical conduct at all levels of our interactions.
Nurturing- Recognize both individual and team potential in an effort to draw synergies that help
achieve our goals.
Key Success Factors
Pan Africa’s ability to withstand competitive pressure in the market can largely be attributed to
its positive and proactive claims settlement operations. Prompt and timely settlement of claims
help in enhancing the confidence of policyholders in the insurance company.
Evaluation
Does it include…?Does it mention values like…?
CustomersProduct/Services
MarketsCitizensh
ipTeamwo
rk Yes Yes No No No
Technology
Concern for Survival
Philosophy
Excellence
Integrity
No Yes No No NoSelf-
ConceptConcern for public image
Employees
Score 2.5/ 4.5 Yes Yes NoCustomer or Product-Oriented?
Customer- Oriented
5. NORTH AMERICA
a. Low Cost Service Provider in North America (Prudential Insurance)
Vision
To distinguish Prudential as an admired multinational financial services leader, trusted partner,
and provider of innovative solutions for growing and protecting wealth.
Mission
To help our customers achieve financial prosperity and peace of mind.
Objectives
How we conduct our business is just as important as what we do. Our objectives are the
principles that guide us daily in helping our customers achieve financial prosperity and peace of
mind. At all times, we strive to distinguish Prudential Insurance as an admired multinational
insurance services leader and trusted brand that is differentiated by top talent and innovative
solutions for all stages of life.
Worthy of Trust: We keep our promises and are committed to doing business the right way.
Customer Focused: We provide quality products and services that meet our customers' needs.
Respect for Each Other: We are inclusive and collaborative, and individuals with diverse
backgrounds and talents can contribute and grow.
Winning: We are passionate about becoming the unrivaled industry leader by achieving superior
results for our customers, shareholders, and communities.
Key Success Factors
One key success factor differentiating the company from its competitors is its leadership
capacity at all levels of the organization. Some of the other success factors are solid brand,
global career development opportunities and culture. Size and reputation is also a key success
factor.
Evaluation
Does it include…?Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
Yes No No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No No No No No
Self- Concept
Concern for public image
Employees
Score 1.0/ 4.5 Yes No No
Customer or Product-Oriented?
Customer- Oriented
b. Diversified Service Provider in N. America (Allstate Insurance )
Vision
Deliver substantially more value than the competition by reinventing protection and retirement to
improve customers' lives.
Mission
Help customers realize their hopes and dreams by providing the best products and services to
protect them from life's uncertainties and prepare them for the future.
Objectives
Put the customer at the center of all our actions.
Utilize consumer insights, data and technology to serve customers and generate growth and
attractive economic returns.
Execute well considered decisions with precision and speed.
Focus relentlessly on those few things that provide the greatest impact.
Be a learning organization that leverages successes, learns from failures and continuously
improves.
Provide employees and agencies fulfilling work, personal growth and performance-based
rewards.
Take an enterprise view of our people and processes and work as a single team to advance
Allstate rather than our individual interests.
Key Success Factors
People, products, distribution networks, efficient service are some key factors for Allstate
Insurance. Technology is a key factor in the company's strategy but equal importance is being
given to, staff training and, not the least, costs. Cost control is, in fact, in the top priority.
.
EvaluationDoes it include…? Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
Yes Yes No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No No No No No
Self- Concept
Concern for public image
Employees
Score 1.5/ 4.5 No Yes No
Customer or Product-Oriented?
Customer- Oriented
6. SOUTH AMERICA
a. Low Cost Service Provider in S. America (Porto Seguro Insurance)
Vision
The most successful and admired insurance company, meaning that we are the most trusted
company, the easiest to deal with, offer the best value for money and set the standards in the
industry.
Mission
Our mission is to take risks and provide services through a family service that exceeds
expectations, ensuring speed at costs competitive with social and environmental responsibility.
Objectives
Cooperation, transparency, justice and attitude to meet with genuine interest.
The search for perfection requires humility, determination and patience.
Mistakes happen and need to be made and corrected immediately, as an opportunity for learning,
improvement and growth.
Work to be done with enthusiasm and seen as a development opportunity.
The dedication of each one must go beyond the duties of his office.
Not benefit function for personal gain and maintain an attitude of simplicity without personalism.
Responsibility to make a simple, flexible, agile and integrated management.
Preparing successors able to broaden the horizons of the Corporation.
Key Success Factors
Key success factors are (i) maintaining centralized underwriting control to ensure that the
policies and procedures are being consistently and appropriately applied, (ii) closely monitoring
the quality of the business identified by the brokers, and (iii) using innovative techniques to
enable the company to select and rate risks in a technically and commercially precise manner.
Evaluation
Does it include…?Does it mention values
like…?
CustomersProduct/Services
Markets Citizenship Teamwork
Yes Yes No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No No No No No
Self- Concept
Concern for public image
Employees
Score 2.0 / 4.5 Yes Yes No
Customer or Product-Oriented?
Customer- Oriented
b. Diversified Service Provider in South America (SulAmerica )
Vision
To be recognized as the best option in the markets we serve, fulfilling our clients’ needs with
excellence through a close and solid relationship with our colleagues, brokers and business
partners, seeking a balance between growth and profitability
Mission
To provide protection and well-being to individuals and organizations, at all stages of life,
creating value in a sustainable manner, in a relationship of trust and respect.
Objectives
Guided by the satisfaction of our customers and brokers
Value our staff and teamwork
Seek healthy and long-lasting relationships with our partners
Always aim for the best results and the continuous improvement of our operations
Fulfill our promises, preserving our commitment to sustainability
Key Success Factors
Size and reputation is a key success factor for SulAmerica. Product benefits (bonus or
guaranteed additions), competitive premiums, ability to withstand competitive pressure in the
market, proactive claims settlement, good financial strength and strong operational efficiency
continue to be key factors for SulAmerica.
Evaluation
Does it include…?Does it mention values
like…?
Customers Product/ Markets Citizenship Teamwork
Services Yes No No No No
TechnologyConcern for
SurvivalPhilosoph
yExcellence Integrity
No Yes yes No No
Self- Concept
Concern for public image
Employees
Score 2.0 / 4.5 No Yes No
Customer or Product-Oriented?
Customer- Oriented
4. Conduct an External as well as Industry Environment Analysis for the industry in which the company (PESTEL and Porter's 5 Force Analysis) is operating. Identify the strategy of the company's closest competitor? Who are the complimentary of the organization?
External Environment Analysis of Insurance Industry
A. PESTEL Analysis
Pestel analysis is a tool which analyzes the macro environment of any industry by using
Political, Economic, Social, Technological, Environmental and Legal dimensions. It is a part
of the external analysis when conducting a strategic analysis or doing market research, and gives
an overview of the different macro environmental factors that the company has to take into
consideration. It is a useful strategic tool for understanding market growth or decline, business
position, potential and direction for operations.
a. Political Factors Affecting Insurance Industry:
Within India political ambitions and rise of communalism, fissiparous tendencies are on the rise
and may well continue for quite some time to time. Therefore, it expected that the insurance
companies might consider offering political risk coverage also. The only area where Indian
insurers consider giving cover is with regard to customs duty change under certain conditions.
Certain type of political risk at the international level has serious implications for exporters. The
term ‘political risk’ has a wider connotation than commonly understood or assumed. It covers
events arising not just from politics, but risks in the course of international transactions. In this
connection, it may be noted that export credit insurance has evolved out of uncertainties relating
to international trade, particularly due to problems arising out of foreign legal jurisdiction,
political changes and currency exchange difficulties faced by many developing countries.
Role of the government: -
As insurance is an important service sector, hence it is highly regulated by government. Since
1956 insurance sector was highly regulated by government of India. On March 16, 1999, the
Indian cabinet approved on Insurance Regulatory Authority Bills that was designed to liberalize
the insurance sector.
IRDA: Insurance Regulatory and Development Authority:-
The Insurance Regulatory and Development Authority, constituted under the IRDA Act, 1999,
provide for the establishment of an authority to protect the interest policyholders, to regulate,
promote and ensure orderly growth of the insurance industry.
a. Business Requirement:-
A company will not be issued a license unless the IRDA is satisfied with the sound financial
condition, the general character of management, the volume of business, the capital structure,
earning prospects for the insurers and that the interests of the general public will be served if
registration is granted to the insurer.
Foreign insurance companies have been allowed to have a maximum 26% share holding. No
insurance company can be registered under the Act unless they have a paid up capital of Rs. 100
crores. Every insurer shall deposit with the reserve bank of India one percent of the total gross
premium written in India in any financial year, not exceeding Rs. 10 crores.
This amount would not be susceptible to any assignment or charge nor would it be available for
the discharge of any liabilities other than liabilities arising out of policies issued, so long as any
such liabilities remain undercharged.
b. Investment of Assets:-
Every insurer is required to invest, and keep invested, assets equivalent to not less than the net
liabilities as follows:
(a) 25 % in government securities,
(b) a least 25% of the said sum in government securities or other approved securities and
(c) the balance in any approved investment rated as “very strong” or more by reputed rating
agencies, which include various debt instruments on which dividend on its ordinary shared for
the five years immediately preceding or for at least five out of the six or seven years immediately
preceding have been paid and which have priority in payment over ordinary shares of the
company in winding up.
In order to ensure that the company does not risk the money of the policyholder’s, the Act
provides that an insurer who does not comply with the aforesaid provisions may be deemed to be
insolvent and may be would up by the court.
Insurers are required to get an actuary to investigate the financial conditions of the life insurance
business including a valuation of liabilities every year in order to ensure continual compliance.
In order to maintain transparency in its dealings, insurers would have to keep separate account
relating to funds of shareholders and policyholders.
b. Economical Factors Affecting Insurance Industry
Interest rate at bank and interest rate of P.F variation very much affect to insurance industry,
because people always attract by higher return. Therefore, they do not prefer lower return policy.
Unemployment also affects insurance industry, because the unemployment people will not have
earning, so saving also affect to insurance sector. Insurance industry will directly affected by
Earthquake, Monsoon, and Natural calamity. Because of these events turns into lots of death, so
the \ insurance companies have to pay claim against policy.Typical Indian want luxurious
product against low income, so that they prefer installment or annuity (EMI), so that they may
not have extra saving to invest in insurance.
1. Adequacy of capital:
Capital adequacy is a matter of attention in view of the nature of the insurance business, where in
the case a contingency arises, the insurers should be in a position to meet its long-term
contractual obligations and pay up the dues or claims. In that sense, insurance is a capital-
intensive business and must be backed by an adequate capital base on the part of the owners and
the companies should not be running their business purely on other people’s money. So
minimum start up amounts and long running capital adequacy norms are absolutely essential, in
consideration of this, the Malhotra committee suggested and subsequently the IRDA stipulated a
minimum capital base of Rs 1 billion for any entity wanting to enter the insurance business.
2. Increased Economical Activity:
Although economic activity has slowed down since 1996, sooner or later there will be an
upswing. The increase in the growth rate in various sectors accompanied by the growth in trade
in the context of fulfilling of commitments to the WTO will signal a growth in the demand for
insurance covers of new types.
3. Interest Rates: -
During the last years the government has rationalized interest rate creating better business
opportunities for the insurance sector because the substitute products are graded lower by the
customers. On the other hand the value of the holdings of the insurance companies will increase.
Rationalized of the interest rates is still expected, and it is an opportunity for the company.
Low interested rates mean low investment return for reinsures causing negative impact on their
overall net profitability as pricing is to a certain extent sensitive to interest rate fluctuations. The
negative impact therefore, lead to higher pricing level for reinsures in order to sustain their
profitability. But, in reinsurance market, which is characterized by over capitalization a resulting
intense competition.
c. Socio-Cultural factors affecting Insurance Industry:
The basic social factors that affect the insurance sector are as under: -
Population
Life style
Educational level
Level of earning
Societal benefits
These are the major social factors, which affect the insurance sector.
Population:
Growth in the population is a major factor pushing up the demand. It is also going to exert a
special influence on the life insurance market in other ways. Apart from exerting pressure on
demand for goods and services, and through that, ill effects of uncontrolled growth of population
also could spur the growth of demand. For example, overcrowding in public places of
entertainment, public support, or too many vehicles on the road can result in hazards like
stampedes and pollution, which require covers and still are not sold on a large scale today. Thus
the positive as well as the negative aspects of population growth are going to spur demand.
Life style:
The peculiar lifestyle of a country or an age also influences the insurance business. Change
therein produces different demands for insurance. For e.g. All over the world, family size is
shrinking and the fact that in decades to come, both presents are more frequently likely to work
outside the home will mean that there could be a greater possibility of property loss. Similarly, a
larger number of vehicles on the roads for people commuting to their jobs or business would
mean larger incidence of accidents. This will increase the demand for life insurance products.
Of course, there is also the other possibility that wherever it is possible, some people will try to
spend a part of their time working at home either because they would like to be with their
families or because they find it more convenient. Activities like insurance and financial services
are particularly well suited for such arrangements.
Level of education:
India is one of the developing countries: the level of education is very low here. The literacy rate
is very poor. More than 50% of the population is still uneducated or more or less not educated.
Thus the people are not able to understand the concept of the insurance. Among the educated
people the quality of the education is still a big question mark. Thus the awareness is not created
and it has become a big challenge for the industry. Thus one of the factors, which affect the
insurance sector, is low level of education.
Level of earning:
Another factor, which affects the insurance sector, is the level of earning. In India the rule of 80-
20 is working. The 80% of the total population is having the 20% of the wealth and the 20% of
the total population is having 80% of total wealth. Thus the richer are richer and poorer are
poorer. Due to this the insurance sector is affected very much.
d. Technological Factors Affecting Insurance Industry:
Internet as an intermediary in the current Indian market customer is not aware about the
intrinsic value of insurance. He thinks of insurance only in the mount of March as a tax saving
measure. The security provide by an insurance cover is rarely thought about. In such a scenario
Internet can be an effective medium for educating the consumers about insurance. It serves as a
single window for disseminating product, process and procedural information to the consumers.
Product development and target marketing through the Internet: with increase in the number of
insurance companies there will be a need for market segmentation and subsequently product
designed for each of them. In such a scenario Internet can be an effective channel for pushing
product specific information to a particular market segment. Consumer feedback about a
particular product as well as suggestions for different types or covers can also be generated
through the Internet.
Maintaining the database:
The most important factor that is affecting the insurance industry is the marinating the database
of the customers. The insurance industry is having a huge list of the customers.
In order to maintain it in manual format it is really the work of stupidity. With the change in time
the computers has taken the work of this things. Thus with the development of the technology it
has becoming possible to maintain such huge database very easily. A person can switch over to
the computer and get the details of the customer very easily. Thus maintaining the database has
really become easy due to the development in technology.
E-business insurance in India: -
The Internet has played a vital role in transforming the business of the 21st century. Computers
are now being used extensively for creating a storing data, information with the help of complex
and sophisticated technological tools in every kind of business. This change having been widely
accepted, the advantages are numerous such as fast processing improved. Efficiency, cost
reduction among several other benefits. However, with every positive change, there is an evil
attached and technology is no exception. In technical is an evil attached and technology is no
exception. In technical terms, increased sophistications of technology brings with it, an increased
factor of risk involved. The risk can be of various attributes, for example, the risk of data being
lost due to a virus attack, the theft of important and confidential information and so on, which
ultimately results in losses for the business entity. With this change in the business process,
insurers have to devise new methods for assessing, underwriting and servicing claims for the so-
called e-business insurance.
f. Legal Factors Affecting Insurance Industry:
A company failing to comply with the IRDA act shall be liable for panel action. Further, IRDA
is empowered to investigate into the affairs of the company. Failure to comply with the
directions may lead to cancellation of the license for the company.
Also, if the IRDA has reason to believe that a company is doing business in a manner likely to be
prejudicial to the interest of policyholders, it is required to report to the central government.
The central government may base on the report, appoint an administrator to manage the affairs of
the company. This would act as a further assurance to the consumers, as their interests would at
all times be a priority and that in the event that the company acts in the manner prejudicial to
their interests, than an administrator would be appointed to serve their needs.
The court may also wind up the company if it fails to deposit or keep deposits as per the
requirements of the act or if the continuance of the company is prejudicial to the interest of the
policyholders or public interest.
But an insurance company cannot be wound up voluntarily or on the grounds that by reasons of
its liabilities it cannot continue its business, except for the purpose of affecting an amalgamation
or a reconstruction of the company. Therefore, a company after issuing a policy cannot escape
liability by seeking voluntary winding up.
The four amendments, made in the life insurance Bill by the Lok Sabha, are as under:
1. The Insurance Regulatory and Development Authority should give priority to health
insurance.
2. Policyholder’s fund will be invested in the social sector and infrastructure.
The percent may be specified by the IRDA and such regulations will apply to all insurers
operating in the country.
3. Insurers will be expected to undertake a certain percent of business in rural areas, and cover
workers in the unorganized and informal sectors and economically backward classes.
4. In the event of insurers failing to fulfill the social sector obligations, a fine of Rs. 25 lakh
would be imposed the first time. Subsequent failures would result in cancellation of licenses.
B. Industry Environment Analysis of Insurance Industry
Porters Five-Force of Insurance Industry
1. Threat of new entrants: -
The future of insurance market scenario will be marked by the active presence of many
international players, beside several Indian players. As far as insurance industry there would be
fewer entries due to more specialized firm with lower expenses ratios and better capitalization.
Threat of entry is determine by the entry barriers which act to prevents firms from entering the
industry. In insurance industry entry barriers is moderate so that it becomes profitable, it attracts
new entrants, thereby increasing the number of competitors.
The Indian market is highly brand oriented, it is difficult to introduce new brand.
The acceptability of new brand is also very low.
The capital requirement in insurance is Rs. 100 crores, which attract more companies to invest
in. promoters, can hold paid up equity capital up to 26% in an Indian insurance company. In case
promoters hold more than 26% of the paid up equity capital, they shall divest the excess shares in
the phased manner within a period of ten year.
Tax exemption structure makes the industry attractive.
High profit in insurance industry act as a magnet to firms outside the industry motivating
potential entrants to commit the resources needed to hurdle entry barriers.
But again due to potential market, private giants and international player try to enter in to the
market in the large scale with their proper homework with customized and products too.
Registration: Every insurer is required to obtain a certificate of registration from the controller of
insurance. The registration is required to be renewed after a period of three years.
Legislation or government action: Special permission is required from the government to enter in
the insurance sector. With the tariff advisory committee to control the rates, rules and regulation,
and with the control of IRDA and the government’s attitude to serve to the needs of the people
with social objectives, the multinationals may face breathing and developmental problems.
2. Bargaining power of buyer: -
Now a day competition is increasing in the each and every sector, and as a competition in the
market increase the bargaining power of the buyer will get increase. So buyers bargaining power
is high.
Market is highly segmented.
Buyers in this industry are very return oriented and it switches easily.
The switching cost of buyer over brand or close substitute products: The insurance industry has
the uniqueness of providing risk protection, which does have any substitute. Thus the switching
cost has no place.
If buyers buy insurance then switching cost become high. High switching cost creates buyers
lock in and makes a buyer’s bargaining power.
Buyers have a strong competitive force when they are able to exercise bargaining leverage over
premium, service or other terms of sale.
3. Bargaining power of Suppliers: -
Policy designer tend to have less leverage to bargain over premium and other terms of sale when
the company they are supplying is a major customer.
Suppliers bargaining power increase if administrative cost is reduced and also claim procedure
time is reduced.
Insurance is tax exempted so suppliers bargaining power increases.
Suppliers have a big incentive to protect and enhance their customer’s competitiveness via
reasonable premium, better service and ongoing advances in the technology of the item supplied.
Supplier’s ability to integrate forward: The private players can integrate forward to increase the
volumes of business by providing customized and tailor-made policies whereas existing players
whereas lack on this point.
Brand identity: There is certainty among the minds of people in relation to existence and
payment of claims from the existing players whereas the solvency of private players is not
certain.
4. Threat from Substitutes:-
Insurance sector can be featured in three factors. They are saving, risk and tax benefit.
Saving:
As far as saving are concerned, existences of a large number of savings option through PPF,
EPF. Most of the customers save their money in bank. Many customers invest their money in
share market, purchase Gold & Silver too.
The substitute products for the industry are as follow:
Term deposits in bank (5.25-8 %)
Investment in government securities. (4-5%)
Money market investment (for corporate)
Capital market (around 13% p.a. for developing country like India)
Threat of increasing market potential of NSC, Government debenture etc.
Risk coverage:
For risk coverage, there is no close substitute of the products. The risk protection is provided by
this sector only. No other instrument provides assurance against risk.
Tax benefit:
There are various substitute of insurance. Some of the substitute which provides tax benefit is:
• PPF
• NSC
• Post Office Securities.
• Investment in the Mutual Fund.
• Other Tax Saving Instrument.
Thus these are the substitute of the insurance industry. But the core competency of this sector is
the risk protection providing capacity, which no other sector can provide.
5. Rivalry among the exiting player:
As a result of privatization competitive conditions will prevail in which entry of companies
buyers will exercise control.
There is a cut- throat competition among rivals in insurance industry.
There are mainly 13 private organizations and one public organization in life insurance
competition.
The insurance sector is showing high market growth rate, which enables the insurance companies
to achieve its own market growth through the growth in market place.
As per the study conducted by the monitor group, the size of the Indian general insurance market
was of the order rs.10000 crores in 2001. The annual growth rate is expected to be 15%.
All the insurance companies deal in identical policies, as service levels offered are similar.
Hence, there is no product differentiation.
SWOT ANALYSIS
STRENGTH
Risk protection is provided by this sector only.
Insurance having currently good market.
Tax exemption.
The variety of products is increasing.
Insurance to build close relationship with customers.
WEAKNESS
Unable to convince people about the products.
Insurance companies instability
Limited working capital
Products or services similar to competitors.
OPPORTUNITIES
Technology is improving paperless transaction are available.
Busy life, customer need flexible and customizable policies.
Like mobile banking mobile insurance could be a hit.
New innovations in technology-measuring weather variables.
THREATS
Weather cycles.
New substitute product emerging.
Increasing expenses and lower profit margins with hard on the smaller agencies and
insurance companies.
Government regulations on issues like health care terrorism can quickly change the
direction on insurance.
C.Strategy of Closest Competitor (Bajaj Allianz)
The differential strategy adopted by Bajaj Allianz, which is the closest competitor of Bharti
AXA are-
Its business strategy is aligned to clients' needs and trends in Indian and global economy /
industry.
It has internationally experienced core team, majority with a local background.
The organizational structure and design provides for a fast, decentralized decision
making.
It has a long-term commitment to market and clients.
Trust
Bajaj Allianz realizes that the customer seeks an insurer whom he/she can trust. Bajaj Finserv
Limited is a part of Bajaj group, which is a trusted name for over 55 years in the Indian market
and Allianz SE has over 110 years of global experience in financial services. Together they are
committed to provide the customers with time tested and trusted financial solutions that provide
the customer all the security he needs for his investments.
Underwriting Philosophy
The underwriting philosophy of Bajaj Allianz focuses on:
Understanding the customer's needs
Underwriting what the company understands
Meeting the customer's requirements
Ensuring optimal coverage at lowest cost
Claims Philosophy
The Bajaj Allianz team follows a service that aims at taking the anxiety out of claims processing.
The company prides itself on a friendly and open approach. It is focused towards providing its
customers a hassle free and speedy claims processing. The company’s claims philosophy is to:
Be flexible and settle fast
Ensure no claim file to be seen by more than 3 people
Check processes regularly against the global Allianz OPEX (Operational Excellence)
methodology sold over 1 million since inception.
Customer Orientation
Bajaj Allianz’s guiding principles are customer service and client satisfaction. All the efforts are
directed towards understanding the culture, social environment and individual insurance
requirements - so that it can cater to all customer’s varied needs.
Experienced and Expert Servicing Team
The company is driven by a team of experienced people who understand Indian risks and are
supported by the necessary international expertise required to analyze and assess them. Service
engineers are also located in every major city.
Superior Technology
In order to ensure speedy and accurate processing of customer’s needs, the company has
established world class technology, with renowned insurance software, which networks all the
offices and intermediaries.
Unique Forms of Risk Cover
The company has some unique forms of risk cover.
Special PA cover for Amarnath Yatris
Film insurance
Event management cover
Sports & Entertainment Insurance Package
Risk Management- Expertise
Bajaj Allianz service methodology is tried, tested and proven and involves:
Risk identification: Inspections
Risk analysis: Portfolio review and gap analysis
Risk Retention
Risk Transfer: To an insurer as well as reinsurer
Creation of need based products
Ongoing dialogue and Productivity
Non-Life
Tie-up with motor dealers and manufacturers to increase volumes
Leverage IT and focus on IT-enabled systems
Create image for transparency and innovation
OPEX (Operational Excellence) methodology (claims handling, customer service)
Focus on retail
Pioneered several innovative services
Tie-up with non-traditional channels for distribution of products like motor dealers and
manufacturers, travel agents, banks
Life
Fast and nationwide roll-out of branches to leverage cross-sell/ up-sell
Focus not only on tier 1, but also on tier 2 + 3 cities
Minimize set-up costs for distribution
Fast roll out for pan-Indian presence
Plug & Play Model for accelerated growth
Innovate to grow – Product and services
Build and launch innovative products
Offer full product suite
Leverage existing gaps of “service differentiation” in the market
Forging Business Partnerships
Build partnerships with consumer databases
Leverage distribution & customers to build faster growth engines
Scalable Operating Platform
Outsource Technology & Operations for variable cost structure
Own / Automate risk & underwriting process
Leverage CRM Capabilities
Sell more & more to each customer
Acquisition and operating cost advantage
D.Complementary Product/ Services to Insurance
Insurance claims can take quite a long time to resolve and the claim amounts tend to
increase the longer the business is not operating. For these insurance agents, who sell
commercial property and business interruption insurance, sell a package of technology
services and associated hardware along with an optional recurring subscription for
services. It should reduce the claim amount and make the customers much better prepared
for such events.
In some countries, Credit Management and Trade Receivables financing services in
addition to insurance products and services are also offered.
Factoring
With factoring, a company offers longer payment periods to its customers. The financing
of the credit is organized through a third party, the factor. The company issues its invoice
as it normally would and submit it. The companies which provide this kind of service will
provide the company with nearly the full invoice amount.
Business Information
Non-payment risk prevention begins with gathering relevant and up-to-date information
on buyers and their environment. The analysis of this information helps with decision-
making. The business information services range from providing raw data, to providing
recommendations on risk-taking.
Debt Collection
Debt collection is an essential facet of the risk management that some companies offer its
clients. This activity requires a high level of legal expertise and a global talent network.
The clients have access to the debt collection services for both their insured and
uninsured invoices.
Bonds
Trust and obtaining rights in some activities are key means of doing business. Whether it
involves bidding on requests for proposals, importing, exporting or performing certain
transactions, companies are in need of guarantees. Some companies help its customers to
win contracts by offering a line of special bonds divided into two main groups: Contract
bonds, customs and exercise bonds.
5. A. Comment on the History, Evolution, Growth Rate, Profitability Rate & Future
Of the Industry in which the Organization is operating. How has it been for
Organization as well?
B. Size of the Industry across the world and the country where the
organization is operating
C. Key success factors for any organization operating within the Industry and
how is your organization performing on those criteria.
A. Historical Developments & Evolution in the Insurance Industry
3000 B.C. - Mesopotamian merchants assess “risk surcharges” in transactions with caravan operators
and traders to protect their capital.
1750 B.C.- Code of Hammurabi formalizes concepts of “bottomry” and “respondentia” (protection
against loss of hull and cargo, respectively) – the underpinnings of maritime insurance
1574- Queen Elizabeth I grants to Richard Candler the right to establish an insurance office in the
Royal Exchange Building for the preparation and registration of policies.
1601- Britain’s Parliament enacts the Assurances Act of 1601 creating an assurance commission for
resolving policy disputes.
1666- Great Fire of London. Shortly thereafter, Nicholas Brabon opens the first fire insurance office
in England. It eventually becomes The Phoenix Assurance Company. Over the next two decades,
more fire insurance companies start up.
1690s- Fire insurance companies form the first professional fire brigades.
Late 1600s- Edward Lloyd’s Coffee House. Seafarers, merchants and insurers meet for insurance
business and coffee.
1688- Edward Lloyd starts a shipping newspaper and reads out shipping news from a pulpit in his
coffee house; attracts even more ship-owners and insurers
1751- Benjamin Franklin and other capitalists start the Philadelphia Contributorship, the first
successful fire insurance company in America.
Mid-18th Century- Many insurance companies are more likely than banks to have substantial cash
reserves. Insurance companies function as lending institutions.
Mid-18th Century- Insurance underwriting is prosperous industry in America. Lloyd’s of London
also draws a significant share of Colonial America’s underwriting business
Today, Lloyd’s of London is an insurance icon. It is not an insurance company, but an exclusive
insurance market
In India- The history of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy
of British occupation. General Insurance in India has its roots in the establishment of Triton
Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile
Insurance Ltd was set up. This was the first company to transact all classes of general insurance
business.
1957- Formation of the General Insurance Council
1972- Passing of the General Insurance Business (Nationalization) Act, general insurance business
was nationalized with effect from 1st January, 1973.
Following the recommendations of the Malhotra Committee report, in 1999, the Insurance
Regulatory and Development Authority (IRDA) was constituted as an autonomous body to
regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April,
2000.
The overall general insurance industry growth has kept pace with the GDP growth in the country and
general insurance penetration has varied in a narrow band.
The industry, in terms of gross direct premium, has grown from INR 11,446 crore in FY02 to INR
57,964 crores in FY12, which corresponds to a compounded annual growth rate (CAGR) of 17.6
percent.
The growth in the general insurance industry has kept pace with the nominal GDP growth rate
resulting in general insurance penetration remaining stable in the range of 0.55% to 0.75% over the
last 10 years.
Changes in the regulatory environment substantially impacted the industry dynamics.
A multitude of factors adversely impacted the industry profitability over the last five years
• Price detariffication provided freedom to general insurance companies to decide the premium
rates in most of the product segments
• Between FY06 and FY12, 10 new companies have entered the general insurance business.
Intensifying competition and focus on growth by the new entrants led to competitive pricing
pressure
• Focus on growth by the insurers across the industry led to higher bargaining power of the
intermediaries and limited control on the claims cost.
Growth rate, Profitability trends & Future of the General Insurance Industry
While the general insurance industry has evolved significantly over the past decade or so, the
insurance penetration and insurance density levels are significantly lower for the developing
countries.
The under-penetration is driven by lack of overall financial awareness, lack of understanding of
general insurance products, low perceived benefits, and propensity to purchase insurance based
on reactive drivers such as insistence by financers, statutory requirements, etc.
Economic growth, socio-economic drivers, greater market penetration, rising prices of
underlying assets, increase in healthcare costs would significantly drive the growth of the general
insurance industry in the medium to long term.
The growth may also be supported by a focus on profitability by public as well as private sector
insurers resulting in lower propensity of price wars.
The general insurance sector is expected to grow at a CAGR of 16 percent from FY12 INR
57,964 crores to approximately INR 194,000 crores by FY20.
While, the overall macro-economic and socio-demographic factors would enable growth across
the industry, each of the industry segments would have specific growth drivers with respect to
the increase in the underlying assets or risks, market penetration and potential increase in the
premium rates.
Changes in the external environment would continue to present growth opportunities and
insurance companies would be better equipped to exploit them based on market insights and
internal capabilities developed over the period of time.
In order to deliver on the shareholders’ expectations, the companies will be driven to strike a
balance between growth, profitability and risk as they go forward.
Projected growth of Indian General Insurance Industry
(Gross Direct Premium) (INR Crores)Relative Growth & Profitability of the General Insurance
Product Segments
(
Companies with a one-dimensional focus on growth or on profitability would lose competitive
power either due to strain on capital or due to insignificance of the scale. Either way, this would
support the emerging trend of overall profitable growth for the industry.
Bharti AXA General Insurance Company Limited
History, Evolution, Growth rate, Profitability trends & Future of Bharti AXA
Bharti AXA General Insurance Company Ltd is a joint venture between Bharti Enterprises, a
leading Indian business group and AXA, a world leader in financial protection.
The joint venture company has a 74% stake from Bharti and 26% stake of the AXA Group.
The organization commenced national operations in August 2008 and currently has 58 branch
offices across the country.
It is the first organization in the general insurance industry to receive dual certifications of
ISO 9001:2008 and ISO 27001:2005 within the first year of operations in 2009 and
subsequently the certification has been renewed in 2012.
Presently the organization has cashless facilities in over 3900 network hospitals and over 2000
garages as well as 24/7 claims registration through multi-modal channels like e-mail and SMS.
Bharti AXA General Insurance is the only Indian company in the Life & General Insurance
category to have been nominated for and won the “Risk Manager of the Year” award at the
Asia Insurance Industry Awards 2011. The organization was also awarded the prestigious
“Personal Lines Growth Leadership Award 2011” at the India Insurance Awards 2011 and this
won the “Best Product Innovation Award” and “Commercial Lines Growth Leadership Award”
at India Insurance Awards 2012.
It won the “Best Employer Brand” award at the IPE BFSI Awards 2012 as well as the
“Claims Initiative of the year” award at Star of the Industry Awards 2012.
The company that launched its national operations in December 2006 has over 3000 employees
across over 12 states in the country and their business philosophy is built around the promise of
making people “Life Confident”.
There are certain restrictions on how the assets are allocated and how the profits are to be shared
and this underpins the time to return to profitability for the private players. 50 % of the assets to
be invested in Government Bonds and 15 % in Infrastructure bonds leaving only 35 % for the
fund managers to creatively manage. It is typically known to be a 6 year period and with the
opening up of this sector only in year 2000, none of the private players are profitable yet. This
makes it ever more challenging for Bharti AXA which is the newest player in the market.
B.Size of Insurance Industry across the world and in India
Swiss Re’s latest sigma study reveals that total global premiums written increased by 2.4% in
real terms in 2013 to USD 4,613 billion. Life premiums expanded by 2.3% unwinding some of
the contraction in 2012, thanks to improvements in emerging markets and solid demand in the
US and advanced Asian markets.
In non-life, premiums rose by 2.6% on the back of continued economic expansion in emerging
markets and selective price increases in some advanced markets.
Profitability of life insurers remains subdued but non-life underwriting results improved
modestly. Low interest rates continue to depress investment income, but are boosting reported
accounting capital and solvency levels under GAAP.
Overall premium volume expanded, but developments in Western Europe, China and India
weighed on the result.
Premium growth will likely improve further in the near term. The gradual hardening of prices in
non-life insurance is likely to broaden and deepen. In life insurance, China and India are
expected to rebound in 2013. However, the weak economy in the Eurozone will remain a drag on
insurance demand in the region.
Life premiums increased by 2.3% worldwide- Global life insurance premiums increased by
2.3% in 2012 to USD 2 621 billion after contracting by 3.3% the previous year.
Non-life premium growth picked up in 2012- Premium volume for non-life business increased
by 2.6% in 2012 to USD 1 992 billion.
In India
The Insurance industry in India has been progressing at a rapid pace since opening up of the
industry in 2000. Indian domestic insurance market touched around US$ 60.5 Billion in the
year 2013 from existing size of about US$ 10.2 billion about 500% hike.
India’s life insurance premium as a percentage of GDP is currently estimated at 1.8% against
5.2% in US, 6.5% in UK and about 8% in South Korea.
Rural and semi-urban India contributed US $35 billion to the Indian insurance industry in
2012, including US $20 billion by way of life insurance and the rest US $15 billion through non-
life insurance schemes.
The Insurance industry graph is definitely ascending. Distribution accounts for the largest
element in insurers cost and affects profitability. India with a population of more than a billion
people offers unlimited growth potential.
The Insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with
banking services, Insurance services add about 7% to the country’s GDP. Total value of the
Indian insurance market (2012-13) is estimated at US$ 41 billion. The funds available with
the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.
The US$ 41-billion Indian life insurance industry is considered the fifth largest life insurance
market, and growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance
Council.
Life Insurance Corporation of India (LIC) registered an 83 per cent increase in new business
income in March 2010, while private players posted a 47 per cent growth in new business
premium.
Moreover, according to IRDA, insurers sold 10.55 million new policies in 2011-12 with LIC
selling 8.52 million and private companies 2.03 million policies.
According to IRDA, total premium collected in 2011-12 was US$ 24.64 billion, an increase of
25.46 per cent over US$ 19.64 billion collected in 2010-11.
The public sector players posted 13.85 per cent growth in gross premium in 2011-12. At the
same time, private players recorded a 12.82 per cent increase in gross premium till March 2012.
The four state-run insurers fared better than their private counterparts, with New India Insurance
collecting the maximum premium of US$ 294.5 million in April and May 2012, compared to
US$ 253.15 million in the previous year, growing by 16.34 per cent.
If we look at the status of Bharti AXA Insurance’s market share in comparison of other private
company in comparison of premium earned:-
No Insurer Market Share (%)
1. Bajaj Allianz 7.56
2. ICICI Prudential 7.35
3. Bharti AXA 4.10
4. HDFC Standard Life 2.87
5. SBI Life 2.31
6. Birla Sun Life 1.89
7. Tata AIG 1.29
8. Max New York 1.23
9. Aviva 1.14
10. Kotak Mahindra OLD Mutual 1.11
11. ING Vysya 0.79
12. Reliance Life 0.54
13. MetLife 0.40
14. Sahara Life 0.06
15. Shriram Life 0.03
The Indian health insurance market has emerged as a new and lucrative growth avenue for
both the existing players as well as the new entrants. The Indian health insurance market has
continued to post record growth in the last two fiscals (2011-12 and 2012-13). Moreover, as per
the RNCOS estimates, the health insurance premium is expected to grow at a compound annual
growth rate (CAGR) of over 25 per cent for the period spanning from 2011-12 to 2015-16.
C. Key success factors for Insurance Industry & Bharti AXA’s Performance
In order to succeed in any of the business it is very necessary to make and follow the strategies.
Strategies are very important for any of the business. Following are the general strategies,
which are recommended for the insurance sector.
One approach is to focus upon product quality, which will instill confidence in minds of the
customers that they would be offered best product from out of the several available products.
The other approach, is to focus on the customers need, would involve a heavy investment in
developing relationships with policyholders. Under this approach, Bharti AXA provides a range
of products and services designed to give the customer what he specially desires.
The third approach is of greater market segmentation under which the population should be
divided into several homogeneous groups and product, and services would be targeted towards
such selected markets. In this Bharti AXA ties its clients by customizing combination of
coverage, easy payment plan, risk management advice, and convenient quick claim handling.
Porter Generic Strategies:
Overall cost leadership is clearly under stable. In a differentiation strategy, a company seeks
to be unique in its industry along some dimensions that are widely valuable by the customer. In
this regard, Bharti AXA’s lowest cycle time for settling a claim under say, a med claim policy
is a differentiating factor. In a cost focus, Bharti AXA seeks a cost advantage in its target
segment.
Marginal Different Product:
Another strategy would be for the companies to design products that will make comparison-
shopping difficult. Bharti AXA offers a wide variety of covers with marginal differences and
varying prices, whose terms and conditions are difficult to compare for consumers who may not
have sufficient experience in purchasing insurance and who would find it difficult to make a
clear choice.
Designing New Strategies:
The existing insurance companies cannot be satisfied with concentrating on the consolidation of
their existing markets, but have to achieve further growth and penetration. In this regard Bharti
AXA concentrates on strengthening existing points of service, designing new channel of
distribution, direct contact with its ultimate customers, and front line employee empowerment.
Move towards Rural Market:
It is one of the most important suggestions; data says that rural market is still uncovered by this
sector. I believe that the sector should move towards tie rural market. Insurance penetration can
be achieved by tapping the neglected Rural Markets. There is vast potential for insurance growth
in the rural sector.
Motivation of sales force:
An insurance company should constantly be involved in the process of motivating the sales
force in the turbulent times. The following strategies are recommending;
Building relationship is real perk. One should be sure to build in networking times for
agents during the program-in addition to entertainment and education.
Hold sales contests in the fourth quarter. It is the best times to motivate agents who want
to qualify for a trip.
Use of Internet:
The present scenario is such that the products sold with the help of Internet. The technological
advancement is such that force the companies to take such steps. Still the full-fledged use of
Internet is not done. The Internet based insurance will help the companies to reduce the
transaction cost and time. In this regard, Bharti AXA improves the quality of service to its
customers, which is the mission of the company.
Focus on customer needs:
Customer often turns to buy more financial product if a company could prove them that they
offer quality products. In this regard, Bharti AXA understands its customers’ needs. Successful
business can be achieved only if business knows what the customer needs.
Financial stability:
An insurance company should make sure to withstand against any fluctuations that happen in the
market. This should include managing business finances effectively. Make sure to distribute
equal amounts of investments in all specific market of your industry.