Analysis of Automobile Insurance Industry Essay

Insurance is compulsory in the United Kingdom is required. All vehicles must be insured, even if they are non trained and are kept on private land based on steps announced by the Minister of Road Safety. Automobile insurance is purchased for autos, trucks and other vehicles. Its chief usage is to supply protection against losingss incurred as a consequence of traffic accidents and liability that may be involved in an accident. The insurance certification or cover note issued by the insurance company constitutes legal grounds that the vehicle specified on the papers is ensured. There are many private insurance companies around the United Kingdom that provide insurance services to their clients. Among them, C Direct, a company that is located in Newcastle, England, specializes in selling car insurance straight to clients. All these companies provide the same services with different pricing policies and consumers to compare monetary values and prefer those companies that provide services with the right monetary value.

2: Background:

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The C Direct insurance company selling car insurance policies direct to clients. This company is working from 6 old ages in Newcastle England. Fortunately, in the first 5 old ages, this company have high growing rate because competition was non really tough and the director had no particular public presentation marks or formal control mechanism. After 5 old ages, 15 more companies supplying insurance services in the same market bring forthing a moving ridge of direct insurance start up. These companies targeted the same clients as C Direct Company. Customers are monetary value sensitive and they compare different companies ‘ offers with the rivals. As these new companies supplying low monetary values to their clients. So in the last 12 months, C Direct company gross revenues have merely grown by 3 % and the company is get downing to fight with decreasing net incomes and besides 17 % offers are converted into policies. I will utilize the different tools to work out and foreground the chief jobs and in the terminal some recommendation will be provided sing to the direct sell insurance company

3: Requirements and Problems:

Call centres have fast become one of the most of import medium of channels for organisations and their clients to interact. The C Direct insurance company is besides utilizing call Centre to supply insurance policies to their clients and serve its market. 105 employees working in CD call Centre in three different displacements during the twenty-four hours clip under one director. First measure that attracts clients ‘ involvement is publicizing and publicity which consequences in bring forthing questions to the Cadmium call Centre. It leads to the proviso of citations for forces auto insurance. In order to supply citation, clients call the Cadmium call Centre by a free phone figure. Cadmium operators collect the client ‘s forces and vehicle information in 17 points and so input the information to the computing machine terminus during the call and supply citation in 1 or 2 proceedingss. Customers pay by recognition and receive insurance screen instantly. Customers so receive written verification by electronic mail about 2 or 3 yearss after initial contact.

C Direct insurance company faces some jobs. The workstation for the staff is little less than one square metre. The boxes are really near together and make non hold a proper noise protection. Customers largely complain about the background noise of five or more co-workers. The Numberss of informations input mistakes are high due to proper concentration. Staff were non helpful and do non back up disturbance and angry clients. New entrants enter into the market aiming the same clients with low monetary values. Company has hapless anticipating of demands and market recognition but there are big figure of employees which cause the company to pay more salary and its consequence on company net income. C Direct Company still has chances to do a proper scheme planning to work out these jobs and put desire future ends in order to vie in the market.

4: Tools and techniques used to analyse the C Direct insurance company:

Harmonizing to businessballs ( 2010: online ) Project direction is the subject of planning, forming, procuring and pull offing resources to convey about the successful completion of specific technology undertaking ends and aims. These tools provide guideline how to work out different jobs faced by Cadmium. I have used different direction tools and techniques to analyse all the internal and external factors which are listed below:

SWOT Analysis

PESTLE Analysis

BCG Matrix

Mc Kinsey 7 ‘s Model

Porter Generic ‘s Scheme

4.1: SWOT Analysis:

SWOT Analysis is a strategic planning technique used to reexamine the internal and external environment in which a company operates and compete. It is a logical tool that study the interaction between the company proposed alteration and the external Marketplace ( QuickMBA, 2010: Online ) .

This tool covers four key categorise into internal and external factors such as

Strengths: features or expertness of the company that give it an advantage over others in the market.

Failings: deficiency of features that place the company at a disadvantage to their rivals.

Opportunities: external factor that give opportunities to company to do greater gross revenues or net incomes in the market place.

Menaces: external elements in the environment that could impact the company advancement or concern.

C Direct Company already exists in the market holding 6 twelvemonth experience and has high market portions, so it is easy for them to keep their place. There are some failings that Cadmium demands to cover all these failings so that they compete good in the market. This tool besides analyzed the chances and menaces that a Cadmium company can hold in the hereafter. It has chances to go the star of the market by aiming new clients. The menaces are the new entrants that supplying the same service in the same market with low monetary values. I have applied this tool to find the strength, failings, chances and menaces of CD Company shown in the diagram ( Figure 1.1 ) . Hence, this tool gives a clear image to the company to cognize their current market place and scheme require in doing the state of affairs better harmonizing the market place.

4.2: PESTLE Analysis:

PESTLE Analysis is used to happen out the current position and place of an organisation in relation to their external environment and current function. They can so be used as a beginning for future planning and strategic direction. There are many factors in the macro environment such as revenue enhancement alterations, new Torahs, trade barriers, demographic alteration and authorities policy alterations that will greatly consequence the company advancement. To analyse these factors company categorise them utilizing PESTEL Analysis ( Gillespie, 2007 ) .

It covers seven factors given below.

Political: What are the cardinal political drivers of importance?

Economic: What are the of import economic factors?

Sociable: What are the chief shared and cultural facets?

Technological: What are current engineering jussive moods, alterations and inventions?

Legal: Current and approaching statute law impacting the function.

Environmental: What are the environmental considerations, locally and farther field?

I have applied this tool on Cadmium to analyse some of import factors such as technological, economic and environmental. Cadmium operates their services utilizing call Centre but holding no web based application. Therefore, it needs to supply services utilizing some web application. Insurance companies play an of import function in UK economic system and besides have better environments for the companies.

4.3: BCG Matrix:

The BCG matrix or besides called BCG theoretical account relates to selling. The BCG theoretical account is a good known portfolio direction tool used to find what precedence should be given to portfolio of concern unit. It has two dimensions that are market portion and the market growing. Market portions are the current clients and market growing means the attraction of company in the market. If company have higher market portion or higher market growing, the better it is for the company. I have applied this tool to analyse the following about C Direct insurance company.

To cognize the current place of C Direct insurance company.

To cognize the place of the rivals.

How to go the star of the market.

Figure: 1.2

C Direct company have good market portion and but low growing rate, hence, from BCG matrix ( shown in Figure: 1.2 ) I have placed the current place of the Cadmium is in cow. As its rival semen in the market with low monetary value and clients are monetary value sensitive comparison monetary values offer by different companies. Cadmium has more experience in the market and hence, has better opportunity to go the star of the market. As their rivals need more attempts and resources to construct their place in the market ( Value based direction, 2010: online ) .

The BCG matrix can assist to happen a scheme that how to go the star of the market. As all the companies supplying the same services to their clients, so CD need to take down their monetary value to accomplish the rivals advantage and besides put more in publicity and advertizement. It will better the current growing rate of the Cadmium and have a better opportunity to go the star of the market.

4.4: MC KINSEY 7-s Model:

The 7S theoretical account can be used in a broad assortment of state of affairss where an agreement position is utile. The basic thought of this theoretical account is that there are seven internal facets of a company that need to be united if it is to be successful. It can assist to analyse the followers.

Better the public presentation of a company.

Check the likely effects of future alterations within a company.

Support sections and procedures during a connection or attainment.

Determine how best to implement a proposed scheme.

The McKinsey 7S theoretical account involves seven interdependent factors which are categorized as difficult and soft elements ( Value Base Management, 2010: online ) .

Difficult Elementss

Soft Elementss




Shared Valuess




Difficult elements are easier to specify or place and direction can straight act upon them where as soft can be more hard to depict, and are less touchable. Therefore soft component is every bit of import as difficult component for a company to be successful. I have applied this tool to analyse different internal facets of Cadmium as shown in the diagram.

Share values: What does the company base for and what it believes in.

Structure: The manner in which CD work. One director and 105 employees.

Scheme: Plan or procedure to make the identified ends.

System: The process and routine that characterized how the work should be done.

Staff: Number and type of people working with in the company.

Manner: Behavior of the director in accomplishing organisation ends.

Skills: What is the singularity of the Cadmium as compared to the rivals?

Using this tool, it is easy for the C Direct insurance company to analyse where are the job are exist in the on the job environments and so have to do some scheme to accomplish the company ends. For illustration the staff of the Cadmium is non flexible with their clients. They are reactive and do non demo sympathy with their clients. So the staff should be helpful and promote the disturbance and angry clients.

4.5: Porter ‘s Generic Scheme:

Porter ‘s Generic scheme is normally used by houses or organisation in order to accomplish the competitory advantages. Michel Porter argues that company ‘s strength lies between leading and distinction of merchandises or services. There are three basic schemes used in this tool but two schemes are related to C Direct Company. The general construction of the porter generic scheme is as below:

Differentiation Scheme: This scheme means supplying merchandises or services with some singularity in order to pull more clients even if the monetary values are high. As all the companies supplying the same services to their clients, So Differentiation scheme is non applied on C Direct Company.

Cost leading: Cost leading scheme set the monetary value of the merchandises harmonizing to the market demand and state of affairs. All other companies provided low monetary value insurance services to their clients as compared to C Direct. Customers are monetary value sensitive and they compare different companies offer. Companies with low monetary value attract more clients. Using this scheme, C Direct Company has to alter the monetary value program scheme in order to vie with other companies and besides pull more clients in order to derive net income.

Cleavage scheme: This scheme means to aim the specific clients or market either by utilizing cost leading or distinction. Using this scheme, C Direct Company needs to aim specific clients by maintaining the monetary values low in order to pull big figure of clients ( Paper4u, 2010: Online ).

5: Decision:

Automobile insurance is compulsory in the UK and clients are monetary value sensitive because they are comparing company offers different and prefer low monetary values. So if the Cadmium company provides low monetary values to derive a rival. This Cadmium will give a opportunity to increase their growing rate. Second, if the Cadmium to supply their services 24 / 7 through the development of Web applications for online insurance quotation marks. This will give you the chance to undergo Company C Direct selling as it has over 5 old ages experience in the intervention of other clients.

6: Recommendation:

The C Direct company has no future strategic planning and ends and besides has some failings that are associated with an organisational construction, forces and system. I have used assorted tools and techniques to place the key jobs and how to work out these jobs. After analysing C Direct insurance with different direction tools and processs, I have recommended the undermentioned solution for the Cadmium.

The staff should be flexible and demo sympathy or understanding to frustrated and angry client.

As their rivals are supplying low monetary value to clients. Therefore, CD Company besides provides low monetary value insurance to aim new clients and besides bing clients.

The current work station is little for 105 employees. So Four hundred demands to supply better workspace with noise protection.

Cadmium provides insurance services utilizing call Centre during the twenty-four hours clip from 0800 to 2000. Cadmium Company besides needs to supply their insurance policies utilizing on-line web based application 24/7. So clients can easy come in their required information with no input mistakes.

Need to put more money on publicity and advertizement on different media because it is the first measure to pull clients involvement and so to bring forth questions to CD company.


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