Acme Insurance

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Insurance Company Business Plan

Strategy and Implementation Summary

  1. Emphasize service and ongoing support. We must avoid selling only one policy at the lowest price for each customer and concentration account selling which greatly enhances client retention.
  2. Build an Insurance Partnership. The customer does not want to shop every year for a new broker. Concentrate on building a long term relationship with our customers and make the client and our staff appreciate the value of a long-term relationship.
  3. Focus on target markets. We must focus on personal and business customers that we identify and select to insure, instead of allowing potential customers to choose us, which could result in our brokerage attracting problem clients from other brokers.

5.2 Marketing Strategy

  1. Emphasize service and support.
  2. Build a partnership business based on account selling.
  3. Focus on senior, claims-free personal lines business and the profitable, well-run, small family business.
  4. Target small, non-franchise business that does not have access to group insurance plans.
  5. Investigate acquiring other brokerages in our area.

5.2.1 Promotion Strategy

We have depended in the past on a small advertisement in our local newspaper, listings in the Yellow Pages, and word of mouth. We must begin to investigate alternate ways to put our name in front of the public.

  1. All advertising has to emphasize our differentiation point rather than price. We will be developing a "Now what do I do?" message to emphasize the need for dealing with Acme's insurance professionals so that in the event a loss occurs, you know you have the proper protection.
  2. We must sell the company, not the product. In spite of some companies' efforts to minimize the importance of the broker, our clients still identify with the broker, not the insurance company.
  3. We must improve and increase our contacts with our clients. All clients should be contacted before renewal to ensure covers are current and adequate. Also, new insurance should be solicited. We are investigating the production of a company newsletter or use of the I.B.A.O. newsletter which is distributed on a bi-annual basis.
  4. We have put our email address in our newspaper advertising, but we must be careful about attracting clients from out of the area who may be difficult to service and properly inspect.
  5. Make contacts and support senior citizen groups and cottage associations. Identify sports and hobby groups that involve seniors and cottagers.

5.2.2 Distribution Strategy

  1. Select Seniors We will give special attention to this market in our advertising. We will make a concerted effort to support and sponsor seniors programs in our area. We will seek out Cottage associations and offer support and advice to attract new senior clients who are recently retired or about to in the near future.
  2. Insurance Partners We will include inserts in renewal, endorsements, and correspondence stressing the importance of the insured taking an active interest and responsibility for trying to control the severity and number of claims. Our staff should take every opportunity, when discussing insurance with a client, to emphasize the consequences of multiple claims.
  3. Business Partners Again we should encourage insureds to take responsibility for controlling claims in partnership with their broker by installing alarm systems and continuing to maintain and upgrade their property. We should stress the benefit that good loss ratios help to control rates and ensure markets that want to write their business.

5.2.3 Positioning Statement

Our target market is Smalltown District. The ideal client is claims-free aged between 45 - 75 who owns his own home and car and is debt free. Has exhibited stable family patterns and is known and respected in the community.

A similar profile should be used for commercial prospects with emphasis placed on the well-run, profitable business that has exhibited good claims experience.

5.2.4 Pricing Strategy

Our customers are especially sensitive to value. We must ensure that our price and service are perceived to be good value to our client.

Our markets must offer several payment options to our clients that are convenient to the client, not just to the company. Example - payment on insured's preferred day of month, not on the company's, and accepting payment by credit or debit card. Many insureds are on a fixed income and receive their income on a set day of each month or a paycheck on a particular day.

We encourage our companies to "Target Market." Many of our companies are now focusing on what they have perceived to be profitable niche markets, where they can offer a competitive product with little, if any, competition.

We are seeing our commercial markets now moving toward basic coverage and limiting the "bells and whistles," all-risk products available to only those clients who have modern, well-managed, profitable, low-risk operations. This should help stabilize pricing and, even more important, ensure that there is an insurance market available for most risks. Continued insistence by the industry on better protection, i.e. fire and burglar alarms, upgrading of buildings, etc., have started to lower loss ratios.

Many of the larger insurance markets have increased minimum premiums to $1,000 for any commercial package policy. Our Lloyds market should be able to accommodate these customers with a minimum premium of approximately $600.

5.3 Sales Strategy

We want to emphasize the benefit of dealing with professionals who live and work in our client's area. We know their needs and their problems and we have a local reputation to protect, unlike an out-of-town market. If the out-of-town broker fails to provide proper cover or advice, they lose one client. We could stand to lose many if the public perceives a professional failure on our part.

Competitive prices for our identified target markets. Discounts of up to 25% for claims-free seniors who renew their home insurance with us.

Careful inspection and the judicious use of deductibles and warranties for insureds using wood stoves should help alleviate company concerns about solid fuel heating devices. Competitive pricing is not an important factor to attract business because competition is very limited for primary wood heat houses in our area. This may provide a chance to pick up all of the insured's business because, in many instances, they contact us after being told by their previous broker that, in spite of their claims-free status, the broker doesn't want their house insurance.

Business partners provide us the opportunity to sell lower-priced, basic insurance coverage to our client. Many clients have expressed interest in retaining part or all of the insurance risk, especially for burglary. They feel that if they have installed central alarms and bars, they can take the chance of self insurance.

5.3.1 Sales Programs

We are investigating sales incentives for our producers. They must encourage profitable new business and have a retention component. Presently, our producers receive $10 for every new policy written in our office, with the exception of recreational vehicles.

5.3.2 Sales Forecast

The following table and related charts show our present sales forecast. We are projecting sales to grow at a moderate but steady pace for the coming year and to continue into 1997.

Sales Forecast
1996 1997 1998
Sales
Sales $677,600 $700,000 $750,000
Other $0 $0 $0
Total Sales $677,600 $700,000 $750,000
Direct Cost of Sales 1996 1997 1998
Sales $0 $0 $0
Other $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0

5.4 Strategic Alliances

Some of our present companies have surveyed us to investigate co-operative advertising but we have not committed to any programs at present.

5.5 Service and Support

Acme Insurance is really a group of small brokerages housed under one name and location. Our producers are each responsible for a book of business. They sell, service, handle claims and are responsible for their accounts receivable. We have found over the years that our clients prefer to deal with one broker who is aware of their particular needs.

5.6 Milestones

We have listed our plan milestones in the table below.

Milestones
Milestone Start Date End Date Budget Manager Department
Select Seniors 1/1/1996 12/31/1996 $0 P. Smith Sales
Broker Acquisition Course 4/17/1996 9/9/1996 $250 P. Smith Finance
Company Contacts 1/3/1996 12/31/1996 $1,000 P. Smith Marketing
Install Release 74 4/8/1996 7/8/1996 $0 J. Smith Staff
Release 74 Training 4/2/1996 8/2/1996 $300 Staff Staff
Jason - CAIB Course 2 5/4/1996 6/24/1996 $395 J. Smith Staff
Upload/download Training 1/7/1996 3/1/1996 $1,000 J. Smith Staff
Stephen - Remove Restriction 1/9/1996 1/10/1996 $400 Staff Staff
Mandatory Staff - 3hr 1/10/1996 1/10/1996 $1,000 P. Smith Management
Totals $4,345

5.7 Service and Support

Acme Insurance is really a group of small brokerages housed under one name and location. Our producers are each responsible for a book of business. They sell, service, handle claims and are responsible for their accounts receivable. We have found over the years that our clients prefer to deal with one broker who is aware of their particular needs.