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Value Based Marketing - A General Insurance Case Study

Value Based Marketing – A General Insurance Case Study

1.0 Introduction

As the global financial crisis begins to take effect in the ASEAN region and Malaysia alike, it becomes a test on the strength of internal capabilities of financial institutions, which have been operating under a tightly regulated environment and a booming investment market in the past years. Although insurance companies in Malaysia have not felt the complete wrath of the financial turmoil, most have already experienced a sudden decline in their investment income. The more long-term consequence is expected to hit the insurers’ bottomline resulting from a two-prong industry killer:
• Premium reductions caused by a decline in demand for insurance products as businesses and consumers choose to self-insure and the subsequent price-wars between insurance companies to maintain their share of the shrinking market; and
• Increased frequency of claims due to moral hazards in an unforgiving economic environment coupled with rising quantum of incurred losses from rising material costs

1.1 Jerneh Insurance Berhad (JIB)

Since its establishment as a captive insurance company for the Kuok Group, JIB has evolved over the years to provide general insurance products to the corporate sector and small businesses outside its parent company. With the current soft market for general insurance, JIB has been facing challenges caused by conflicting goals of targeting double-digit growth in gross premiums (The Star, 2008b), whilst maintaining high underwriting profitability commensurate with its parent company’s conservative philosophy. Despite the company’s recent rebranding as a provider of risk-based solutions, premium growth is expected to be slow due to stiff market competition (The Star, 2008a).


2.0 Embracing the Value Based Approach

To achieve its mission of being a risk-based solutions provider, JIB must embrace value creation from its two rudiments, ie. understanding what really...