History
Zurich financial services was founded in 1872 under the name Schweiz Marine Insurance Company (Peterson 2008).However, in the year 2000, the general structure of the company changed when the two holding companies which were; Zurich plc which at the time was in the U.K and Zurich Allied AG which was in Switzerland merged to form the current Zurich Financial Services. Currently, the company has its headquarters in Zurich Switzerland and employs over 60,000 people in more than 170 countries that it operates in. The company areas of operation stretch from the Middle East to the Asia pacific Region. The company aims at being a leading global competitor in the insurance industry as well as being a key innovative player.
Introduction
The insurance industry is one of the most competitive industries. The company’s survival is entirely dependent on the consumers. Zurich provides wide range of services ranging from investment advice to general insurance on current and future risks. Zurich Company uses market research to develop business strategies that are tailored to satisfy consumer needs. The Zurich help point is a channel of communication between the company and the consumers regarding insurance policies and other insurance related issues. The company’s customers access various premium and financial management service with regards to the financial and insurance industry.
Role of marketing
One of the key problems in the insurance industry is poor marketing methods. The fundamental role of marketing process according to Simon is developing an economically benefiting relationship between the consumers and the organization a process that benefits both the consumers and the organization (Simon 1991). Regardless of the nature of marketing goals, the process is presumably the most vital process in an organization. Marketing is the operational process mostly involved in consumers interactions, business organization have to be creative in terms of developing diverse marketing options and detailed advertisement strategies to effectively communicate with the consumer.
Another key issue facing Zurich with regards to the insurance industry is competition in the highly liberalized industry. Survival and growth involves highly innovative strategies to counter competition. The global development in the insurance industry has also impacted on the players in the field such that there is more government interference than previously as noted by Outreville (Outreville, 1998).Competition is not just from the players in the insurance industry but also from players in key financial segments hence.
One way of ensuring survival in the insurance industry is coming up with innovative strategies that win consumer confidence and preference. In this regards, diversity in products and services is very essential. Consumers should have a wide range of products and services in which to choose from. The company should also initiate structural changes that are flexible to withstand liberalization as well as changes in consumer behavior.
Customer value
Customer value is the amount of satisfaction that a consumer gets from consumption of goods and services. According to Naumman, the term used to refer to what a customer gets from goods and services is realization while sacrifice is the term used to refer to the cost consumers have to incur in the consumption process (Naumann 1995). The Zurich helpline concept today has changed from not only being a help point but also a channel of communication between the company and its customers. The consumers can be able to access the company’s services and products with much ease.
The consumers are the most important assets in the company’s survival. This is because in the insurance industry, consumer loyalty and brand recognition helps a firm acquire competitive advantage over business rivals in the industry. With a comprehensive customer support plan, the company can be able to penetrate the market. That is why the mission and vision statement of Zurich aims at achieving company-customer relationship.
Market analysis
The major role of market analysis is to analyze the available opportunities and the general attractiveness of a specific market group. Global insurance premiums grew by a record 3.4% a figure that has not been achieved in the last three decades. This indicates that the insurance industry is directly affected by global economic status. Companies in the insurance sector should have enough capital to absorb losses in case of an economic downturn. However, the growth forecast of the industry is an estimated 3.5% in the next 5 years.
As seen by Belth, the banking and insurance sectors face different challenges with regards to fiscal and economic policies (Belth 1985).This is because the two financial markets work hand in hand but oppositely when it comes two financial crisis exposures. Banks stand better chances to withstand market forces and highly volatile economic changes than insurance companies. However, liquidity crisis tend to favor the insurance market economically than it does to the banking sector. This is during the period that capital markets are functioning efficiently and also when the industry transits into a period of hard pricing.
Human resource Strategy
The Zurich helpline not only serves the external customers of the company but also the internal customers of the company’s products and services. The internal customers of the company are for example individuals working for Zurich. Zurich understands that cohesive internal organization lead to better performance by a firm. The company personnel are urged to focus on consumer satisfaction as a way of effectively participating in the competitive market.
Corporate Objectives of Zurich
The corporate vision statement is “a leading insurer acknowledged as an innovative provider of services and solutions for our customers through a culture of excellence” (Peterson 2008). This is what drives the company to aim at achieving consumer satisfaction through competitive marketing strategies and offering quality goods and products
The main points within the mission and vision statement is introducing a culture of excellence. Zurich Company tries to achieve excellence in its market segments. The company also believes in investing in people. The company ensures that it provides a convenient working environment that nurtures growth to both the staff and the customers. Success according to the company depends on going beyond the expectation levels of the consumers as well as strategic alliances with partners, the firm aims at building progressive growth in the insurance industry.
Opportunities and threats
According to Sammot, the insurance sector was one of the most affected industries during the recent global economic crisis (Sammot 2009).The insurance and banking industry are the key players in the financial industry. However, the two have different approaches with regards to risk. This is the reason why the recent economic crisis affected the two differently. The insurance sector is exposed to financial crisis due to investing in stocks which gives the industry exposure to bank loses through share price loses. The current opportunities in the industry are such that the insurance companies are beginning to offer financial services offered by the banking sector.
Global warming is an issue seen to affect major marketing segments in different economies. The key role of the insurance industry is to cover for future uncertainties. The global warming effects are bound to melt the polar ice. This will mean that people in low-lying coastal grounds will cease buying insurance cover. This is because damages on property or life are inevitable as a result of the melting ice. The industry is trying to establish partnerships with federal governments to combat global warming due to the fact that some of the world’s most lucrative real estate ventures are found in low coastal areas an example of this being California.
Macro-environment
Despite the macro-environment being characterized by marginally reduced economic progression and increased inflation rates, life insurance is one of the insurance segments that have experienced a steady rise despite the global economic hardships. Life insurance continued to expand in the year 2008 with life insurance premiums hitting an overall high of 2,393 million US dollars. According to Mathias, the premium growth was spurred by sales of retirement and other wealth accumulating products in the industrialized economies (Mathias 1996).The general business environment in the world is also seen to be recovering from the recent global economic crisis which saw the collapse of the world’s major insurers such as the AIG.
A competitive marketing field should indicate signs of growth. Future forecast on the insurance industry predict a steady rise in the number and rate of insurance coverage. This is because of the increased awareness regarding insurance covers as well as people becoming more risk averse. Multinational corporations have also taken up re-insurance, a move aimed at combating future uncertainties. This is due to the fact that economic crisis have significant impact on the industry. That is why even major insurers like AIG were not spared by the economic crisis.
Budgetary process
The budgetary process is aimed at providing long term financial projections and should therefore be consistent with the insurance estimates. An important factor in the process is to make sure that factors that are most likely to affect the budget decisions and the information used to make the decisions is obtained from reliable sources with regards to the current market trend in the industry. Close analysis of the company’s past performance, current financial position and future projections is what leads to an effective budget plan.
According to Torregrosa, zero budgeting is probably the best applicable budgeting strategy in the insurance industry (Torregrosa 2002).This strategy is formulated in such a way that all the budgetary allocations of each department for the financial year are set at zero. The strategy involves different departments being held accountable for use of resources allocated to them. Departments are allocated funds depending on how well they utilized the previous allocation. This helps contain inflation levels in the industry as well as improve services through cost efficient methods.
If this budgetary program was in place, some of the financial scandals affecting the company would have been eliminated. In 2006, the company was accused of being involved in market malpractices and fined an estimated 13 million dollars to several individuals and state in the U.S. It was said that the company was intentionally inflating premium prices as well as conducting improper bidding practices for financial gain. The company should build budget allocation in the established insurance markets such as Chicago.
Conclusion
The insurance industry has experienced significant progression over the years. According to Sammot, this is in relation to natural catastrophes that continue to impact on consumer behavior regarding the industry (Sammot 2009).The driving forces in the level of innovation in the insurance industry are catastrophe bonds. This branch of insurance links securities cover loses and risk arising from natural disasters and catastrophes.
References
Belth, J.M. (1985). Life Insurance: A Consumer Handbook, New York: Indiana University Press.
Mathias, J.H.et al, (1996). Insurance Coverage Disputes, New York: Law Journal Press.
Naumann, E. (1995). Creating Consumer Value: the Path to sustainable Competitive Advantage, New York: Thomas Executive Press.
Outreville, J.F. (1998). Theory and Practice of Insurance, New York: Springer.
Peterson, J.P. (2008). International directory of Company Histories, New York: St. James Press.
Sammot, L. (2009). Reinsurance: Risk and Capital management, New York: GRIN Verlag.
Simon, H.A. et al, (1991). Public Administration, New York: Transaction Publishers.
Torregrosa, D. (2002). Federal Reinsurance for Disasters, New York: Government Printing Offices.