Insurance Organisations as ABC Insurance - Case Study Example

Running Head: INTERACTIVE MARKETING Interactive Marketing of Table of Contents Table of Contents 2 1. Summary of the issue and its potential impacts on 3 ABC Insurance 3 1.1 Background of Issue 3 1.2 Industry 3 1.3 Needs of Business 3 2. Outline of the analysis with reasons of the selections 5 Figure 1: 5 2.1 Modernised form of Insurance 5 3. Presentation of the analytical work performed and a commentary on the outcomes 7 3.1 Environmental Analysis 7 3.1.1 Regulations 7 3.1.2 Market Expectations 7 3.2 New Knowledge Management System 8 Figure 2 9 3.3. Marketing Strategy Thinking and Planning 9 3.3.1 Marketing Strategy Plan 10 3.3.2 Market Expectations 11 3.3.3 New Business Opportunities 11 3.4 Emerging Issues 12 3.5 The Current Situation 13 3.5.1 Internet and E-business impacts 14 4. Decision-maker briefing notes 16 5. References 18 1. Summary of the issue and its potential impacts on ABC Insurance 1.1 Background of Issue ABC Insurance has recently begun its operations in Australia. With this, the company has inherited all the globalisation issues that most companies in this era are going through. Organisational Culture, vision, values, social embracement etc are a significant few. As Michael Hitt (2000) highlights the 'twin peaks' of globalisation and technology as being the macro-drivers affecting organisations in the 21st Century. 1.2 Industry Insurance provision flourishes on records and the skill to strategise information from a range of diverse sources to issue course of actions and supervise. Consequently the rapidly growing division in the insurance business is the incorporation of wide-ranging business processes, for instance underwriting policies, executing policy controller services, and reporting argues into workflow structures. Sensitive industry antagonism, augmented customer hopes and requirements for larger effectiveness are chief drivers shoving the insurance business to reassess its tactics and to adjust its long-established in use processes. 1.3 Needs of Business Insurance organisations, such as ABC Insurance, should gather the advantages of modernised Web-based flow mechanisation, lessening expenses of operations and cutting decision making time. By employing online automation, ABC can divest the vastness of this practice and enhance profits by giving end users direct access to their records online instantaneously and letting them to deal their own service requests, ask for an excerpt and even join and download a policy (Liang, 2000). Sharing and swap of confidential information between numerous public and corporations need by insurance industries. The test is how to achieve this harmlessly and cost effectively while promising customer trustworthiness and keeping high levels of customer satisfaction. Likewise it is essential to certify that only authorised staff can access restricted consumer statistics or supervise claim records in line with the Privacy laws. ABC insurance should bring variations to the marketplaces that permit representatives and customers to directly conduct the dealing of insurance. This process can be considered a great innovation by handing over not only information access but also operational transactions to the end user. The revolution will have the following impact on the insurance industry (Cockburn, 2001): Upgrading level of service to clients, Noteworthy cost reduction Versatile flexible, groups and products presented, Updated procedural effectiveness Better control of technology. 2. Outline of the analysis with reasons of the selections The link between Knowledge Management and Marketing Strategy (Smith, 2004) is the key to Web-based Insurance Structure of ABC Insurance and will enable this organisation to find gap between knowledge and marketing strategy (Refer figure 1). Figure 1: 2.1 Modernised form of Insurance The function of Internet and associated information technologies is to create and allocate insurance functionalities. In an advanced sense, it can be described as the specifications of an insurance cover whereby an insurance policy is implored, presented, conferred and indentured online. Re-imbursement, policy delivery and claims handling may all be carried out online too. It is a modernised form of insurance clarification, which connects all the channels within the indemnity and can facilitate online dealing services to the insurance co-workers, negotiators and clients. It will become a main link in having joint communications between the insurance corporation and all stakeholders involved in this particular field. The adequacy of the business action practices can drastically improve by continuous monitoring and execution of this system. This will definitely assist the company to maintain and improve control plus enhance the business position in the insurance industry. Quote engines, either broker-or client - constrained can be used that will supply timely, exact excerpts for probable clients. With structured Knowledge management in place it will also help in, electronic circulation of policy papers, insurance credential verifications, faster, and more proficient processing. The advantages include: quoting correctness, request totality, legibility, viable benefit, more agile product offerings and minor policy administration outlays. Insurance firms can join a collective gateway for agents. When insurance dealers sign onto the system and demand a quotation, companies with well maintained Knowledge Management can allow them to utilise their web resources to encourage the dealers to sell their offerings. The profit of Web facility is that it generates an instant application-to-application bond between the dealer's and Insurance's headquarters. As a consequence, a quotation can be received directly and transformed at once into an insurance marketing strategy. Several outlines that can be utilised are: WinRisk: make knowledgeable choices and enhanced workload supervision Iconnect: hoard priceless time and organisational overheads WebApp: directs the user during the application access method WebClaims: a claims management structure. From a system perspective Knowledge Management is the back bone to the overall offering and to get anywhere with knowledge management, you must have marketing strategy and individuals must be persuaded to contribute to both the formulation and implementation (Chourides, 2003). To evaluate capabilities and focus on the knowledge needs of the organisation, it requires knowledge management strategic plan. It structures the information and streamlines the sub systems to work in tandem and build up to make an over all system to handle the complex requirements of running an insurance company effectively. Innovatively linking the above modules to make optimum utilisation of information in the sub systems will enhance the affectivity of the overall system. 3. Presentation of the analytical work performed and a commentary on the outcomes 3.1 Environmental Analysis It is well accepted that the insurance industry is a necessity to our society. Without insurance, society's ability to lessen risk would be inadequate and the guard of assets from calamitous failure would be severely weakened. The industry's capacity to advance and to bring insurance at viable prices is a fundamental requirement for all. Elementary modifications in innate, financial, communal and political areas, changing stakeholder outlooks and all-embracing technological improvements lead to a continuously changing and challenging risk environment. This calls for adjustment from businesses around the globe. As the nature of its business is reducing threat, the insurance industry is chiefly exposed and in danger to these outer forces. 3.1.1 Regulations So far it is not only businesses; regulatory outlines and processes as well are required to consider. It is important that regulatory responses to the innovative challenges be well-made and compassionate of the economy. In reality, regulatory policies are not as static as we expect it to be. With new laws being continuously brought in the system should be architected adequately to accommodate new regulations and policies. 3.1.2 Market Expectations The company's customers strongly demand better value. The company must guarantee that its price and service are supposed to be superior value to its client. Its markets must offer numerous payment options to its clients that are feasible to the client, not merely to the company. For instance, payment on insured's chosen day of month, not on the company's, and acknowledging imbursement by credit or debit card. Several insured clients are on a set wages and obtain their wages on a fixed day of each month or via pay-check on a specific day. 3.2 New Knowledge Management System To address the above issues and implement the innovation of a solid web based system successfully it is imperative that we build a strong KM system. We here analyse the requirements of the Knowledge Management system. "Knowledge is a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knower. In organisations, it often becomes embedded not only in documents or repositories but also in organisational routines, processes, practices, and norms", (Davenport and Prusak, 1998). Knowledge management is to collect tons of stray but relevant information in a structured manner to enable retrieval of information quickly timely when it is required. There tends to be a massive data pool in the insurance industry that needs to be developed and designed in a systems approach to effectively utilise it. Insurers should capture the affluence of information they hold into knowledge in a distinctive ways. Carriers should focus on allowing accessible knowledge for domestic users, for instance call centre envoys and backers. At least insurers can place information on the Internet depicting different sorts of exposure, accountability perimeters and a little background on the ranking practice. In the past, customers would be given a reminder in the junk mail about a rate boost with slight justification. Companies are putting forward details of increases on the net so the underwriter isn't left in the sinister. Policy teaching is very significant for insurance consumer service. Consumer maintenance, consumer incursion and consumer life span significance are three things that should be considered. And if knowledge management is exercised to increase a retailing process, instantly thorough processing of applications is a simple one to appraise. But, most of all, the technology has to employ. To get large scale implementation through a corporation, the knowledge management venture has to supply functional capabilities over a user-friendly delivery channel. Figure 2 3.3. Marketing Strategy Thinking and Planning Unluckily, in majority of companies the marketing strategy exists exclusively in the head of the Chief Executive Officer or in a leather-bound documentation that be seated on the shelf accumulating dust. As management tries to apply the marketing strategy, the business demands change with time making it different to the direction of the strategy. The company can be defocused and resources are squandered. That is why ABC Insurance needs to emphasise the Strategic Thinking Process. This is not the same as strategic planning. As Mintzberg, 1994, states "Strategic planning isn't strategic thinking. One is analysis, and the other is synthesis". Conventional ways of strategic planning generate reports that are difficult to read, that can be misunderstood and hard to implement. Strategic Thinking is an existing, inhalation process which facilitates senior management to devise a strategy collectively. Involvement in the Strategic Thinking Process let senior managers to achieve rights of the strategy, converse the strategic course to the employees, distribute resources and assess opportunities consistent with an apparent strategic filter, successfully set out the strategy in a timely and judicious manner. To have a holistic view, a focus on intent, thinking in time, hypothesis driven and intelligently opportunistic is defined as strategic thinking by Liedtka (1998, p 31-32). 3.3.1 Marketing Strategy Plan The instantaneous outcome is a short and snappy marketing strategy that is evidently understood and sustained by those who will implement it. It also makes another, even more extensive effect, that is, a management team that can assume and proceed strategically each day. Strategic planning comprises of the process of emergent strategies to reach a definite objective. ABC insurance needs to apply engage the following strategic plan. Give emphasis to service and continuing support: The ABC insurance company must pass up selling merely single policy at the lowest rates for each customer and attentiveness account selling which very much enhance client preservation. Establish an Insurance Affiliation: The customer would not like to shop yearly for a new broker. Emphasis on establishing a long term liaison with customers and make the client and staff members to be grateful for the value of a long-term liaison. Concentrate on target markets: ABC insurance needs to concentrate on personal and business customers that they classify and pick to insure, rather than permitting potential customers to select us, which could give rise to our brokerage attracting trouble clients from other brokers. 3.3.2 Market Expectations Commercial markets now seems to be moving toward essential reporting and restricting the bells and whistles, all-risk products obtainable by only those clients who have contemporary, well-managed, lucrative, low-risk operations. This should assist consistent pricing and, even more vital, make certain that an insurance market is accessible for a large amount of risks. Sustained persistence by the industry on enhanced defence, that is, fire and robbery alarms, improvement of buildings, etc., have on track to minimize the ratios of loss. A number of larger insurance companies have raised minimum premiums to thousand dollars for any marketable package policy. ABC Insurance is able to manage these customers with a least premium of about '600. By implementing strategic methodologies, ABC can further improvise on the new systems and increase profits by providing higher service levels. 3.3.3 New Business Opportunities ABC insurance needs to make an intensive effort to sustain and sponsor seniors programs in their vicinity. It should provide support and advice to draw some novel senior clients who are lately retired or just about to retire in the coming months. The company will take account of inserts in restitution, endorsements, and communication highlighting the significance of the indemnified taking a lively attention and responsibility for attempting to control the harshness and number of claims. The company's staff should take all prospects, when conversing about insurance with a client, to put emphasis on the outcomes of multiple claims. The company supports insurers to take duty for managing claims in affiliation with their insurance broker by setting up alarm systems and keep on to uphold and improve their property. The benefit should be highlighted that good loss proportion assist to control charges and guarantee markets that are desirable to strengthen their business. 3.4 Emerging Issues There are several technical, common, and business issues as well as regulatory, legal, and changing legislation that may have an effect on insurance programs. ABC Insurance needs to transform its programs to reveal alterations in all those aspects. List of some of the issues are as follows: In their facultative reinsurance for insured property treatment, a few reinsures are striking a new type of check in case of loss. The carriers check the insured typical value not to the insured limit, but to the maximum value of enclosed property at any single location or to the affirmed value for the possessions where the loss took place. To assist main insurers minimize their sufferers when such checks apply, a new sanction has to be established. The new sanction will minimize the loss payment on things at a place to their declared value in addition to a particular proportion of that value. ABC insurance will also deem the need for analogous alterations in the business-proprietors streak of insurance. Scientists have indicated a continuing hotness of the surface of the earth known as the greenhouse effect - this will continue for several decades. A few scientists envisage that, on account of the greenhouse effect, the weather patterns of the world will become more vicious. That causes foremost business jeopardy for several industries, particularly insurance. Avian influenza arises among birds as a new flu type virus infection. Wild birds all over the world can carry the diseases in their intestines but generally do not get ill from them. Avian influenza is very infectious, and some types can nauseate and be fatal to birds. Mutated influenza viruses may bring about a new human plague. Since 1997, health authorities have stated that that there have been about 200 substantiated cases of human illness with the existing avian influenza virus, but this influenza killed over half of those infected human beings. Now, businesses should to continue services in spite of the reduction of the labour force and set up risk management measures to cope with workers, their customers, and contractors and retailers. ABC insurance is taking into account alterations to marketable property and accountability policies to cope with avian influenza. 3.5 The Current Situation The ABC Insurance Company is facing a tough situation in the middle of a global economic slow down and harsh earning pressures. Greater than before merger and gaining activity has resulted in the need for IT section to merge systems built on varied platforms. ABC Insurance Company needs systems to be more customer-centric. IT in insurance company needs to impel and prop up revenue-producing commencement, harness awareness for immediate decision-making and assist enhance the usefulness of channel management. All of these advancements set difficult challenges for IT in the Insurance industry. There is a need to contract out many conventional activities and to put together new technologies. Through this technology valuable services in the areas such as management check out, system check out, software services, business process subcontracting and training services can be obtained (Westland and Clark, 1999). Making use of an industry-tested style, the knowledge of the insurance sector in blend with above suggested across-the-board technology proficiency can be influenced to provide tactical business development services. ABC Insurance's management mentors have a verified track record in putting up practical plans that are considered more on cost management, resources optimisation, and long-range targets attainment. Some of the areas where mentors can assist include: Insurance examination, Business Planning, Technology development, Process evaluation, Business and Technology alliance, Offshore Claim Maintenance inclination, and Unit Cost Examination. ABC insurance must employ these services to improve its chief process areas as underwriting, application processing, policy issuance, policy administration, Customer Relation Management (CRM), Conversions, Compliance, Audit, Billing System, Premium and Commission Accounting, Case Management, Expenditure Management, Receivables Management, Management Accounting, Disbursements, Cash Flow Examination, Portal Development, Information Systems, Web-Based Front-Ends, Subrogation, Data Analysis, Claim Assessment, Claim Processing, their Payments and their Status etc (Conley, 2000). 3.5.1 Internet and E-business impacts ABC Insurance should offer an absolute Do-It-Yourself Web insurance quote and purchase system. The site will allow easy of comparison of the premiums from several insurers; this will statistically improve their sales conversion ratio to about six times higher than those that offer single insurance quote. ABC Insurance has a view that their clients are authorised as they have the skills to do comparisons regarding quote independently from their insurance agent (Brostoff, 2001). Data Executives International (DEI) has build a collection of solutions that provide efficiencies, mechanisation, and cost reserves to many ordinary processes in the underwriting sector within Insurance companies. The solutions unite verified structures with customised approaches. Some of the solution structures specially emphasising on the insurance domain are: WinRisk is a software product dealing with one of the most significant features of the insurance industry that is, Underwriting, by enhancing an underwriter's skills to track cases all through the underwriting process, make well-informed choices and better workload organisation. IConnect is an application structure that provides an online interface to many of the generally used underwriting information sources. Responses can be automatically accepted, coordinated, saved and directed to the suitable underwriter without intrusion, saving precious time and administrative costs. WebApp is a Web application structure, which gives basic entry of data about policy information. The application directs the user through the entry procedure of the application, providing choice (drop-down windows) wherever it is probable. The system is linked to WinRisk; let the underwriter direct access to new applications, in addition to the company's host management system. WinClaims is a claims management structure. System characteristics comprise Claims Outline, Retro Processing, Expense Processing, Necessities Tracking, Note Pad, Analyst in Basket, and Programmed Letter Generation. It may be incorporated with other systems such as Policy Management, General Ledger, Accounts Payable and others (McKnight, 2002). 4. Decision-maker briefing notes As you are all aware, ABC Insurance has come a long way from the days it stepped its foothold on the Australian shores. In order to strengthen its foundation and help benefit for future global endeavours we have analysed the following issues and come up with the under mentions suggestion. We have to leap frog from an individual customer response based company to a larger clientele base. This can be done effectively by implementing innovative methodologies and enable customers to service themselves by giving them to power to choose and select their insurance products directly from a website. By putting a strong knowledge management system in place we can ensure an error free, easy to use, user friendly system which will reduce internal processes and there by enhance our productivity. Based on our analyses and studies we expect an increase of business by six times if we implement a web based insurance operations process. An estimation of strategic contemplations relating to online insurance applications, mainly: how to tackle competition, how to avoid business being eroded, how to underpin customer affairs and augment new online regulars, reviewing the kind of the products appropriate for web distribution has been evaluated. As electronic insurance widens, insurers will transfer their emphasis from investments in portal procedure with partial immediate reimbursement to strategies where they utilise new technologies to gain expediency and trim down incompetence from their value succession (Loebbecke, 2003). For most insurers, web-based insurance has ceased to be an autonomous class. The various IT elements liable for serving policy owners, projection, agent, and partners all have e-business tasks concerning their own areas. While this spreading of electronic commerce functionality and facilities is a fine thing, insurers entail to ascertain that these modules sustain universal values in planning, data, and safety methods if they are to circumvent regenerating a concrete infrastructure at an advanced level. To that conclusion, experts suggest that insurers should offer direction, steadiness, and finest practices across all of these fields' hubs on the five major areas of approach, erudition, functionality, protection, and regularity (Calandro and Lane, 2002). ABC Insurance Company needs systems to be more customer-centric. IT in insurance company needs to impel and prop up revenue-producing commencement, harness awareness for immediate decision-making and assist enhance the usefulness of channel management. All of these advancements set difficult challenges for IT in the Insurance industry. A well designed Knowledge Management woven into a good web based insurance offering is the solution to the future of ABC insurance in the coming years. 5. References Brostoff, S. (2001), "Insurers vow to keep agents as key distribution component", National Underwriter, Vol. 105 No.29. Calandro, J., Lane, S.L. (2002), "Bringing value to the insurance industry: the insurance performance measure", Journal of Applied Corporate Finance, Vol. 14 No.4, pp.94-9. Cockburn, A., McKenzie, B. (2001), "What do Web users do' An empirical analysis of Web use", International Journal of Human-Computer Studies, Vol. 54 pp.903-22. Conley, J. (2000), "Powering innovations", Risk Management, Vol. 41 No.10, pp.18-24. Chourides, P., D. Longbottom, and W. Murphy (2003), "Excellence in knowledge management: and empirical study to identify critical factors and performance measures," Measuring Business Excellence, Vol. 7, No. 2, MCB University Press, England. Davenport, T. H. and Prusak, L. 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