Infinity Auto Insurance Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Industry Opportunities and Treats

According to the United States Department of Transportation’s statistical analysis, there are roughly 62 million registered vehicles present in the United States. Actually the number of cars registered reflects the industry requirements for an individual automobile insurance; therefore, a regular increase in automobile purchases will essentially benefit the automobile insurance providers. In addition, continuous increase in the United States’ interest rates and improved investment activities also facilitates the industry growth. In United States, the personal automobile insurance is known as the most well known insurance firm. The reason for further growth opportunities present for Infinity in this sector is that it is compulsory in the majority states of the country.

Automobile insurance companies for example the State Farm Insurance holds a market share of 19% and the famous All State Insurance Group holds a market share of 10%. In insurance sector, all the companies charge monthly payment from insured clients with rates according to the profile of the client and the insured vehicle. In United States, individual automobile insurance payment capacity has grown 5% from $164 billion in year 2010 to $172 billion in year 2012, which accounts for around 35% of Casualty and Property premiums. This expansion has been motivated both by strong increment in the car sales in the United States. Automobile sales in the United States went up to 11% by 2011 and further increased to around 13% in the year 2012, as enhancing economic conditions boosted the consumer’s sentiments. A study by AAA reflected that an average automobile insurance costs for the sedans also mounted by 3.4% in the year 2011, followed by a handsome 2.8% increase in the year 2012. The massive number of 62 million vehicles reflects a tremendous opportunity for Infinity to work on.

Market Structure & Rules of Competitive Engagement

There is no monopoly in United States when it comes to the automobile insurance companies. There are over 2500 different companies that offer automobile insurance in the United States of America but these companies are not present in every state of the country. The U.S automobile insurance market is highly competitive.

Majority of the insurance companies trade their automobile insurance through the autonomous or independent agents and others sell straight through their own personal agent by using different options like phone calls, e-mails and over internet. Majority of the insurance companies propose similar types of services but the amount of insurance coverage and other details of the coverage policy can vary. These policy variations depend upon the price or the package the individual has selected. The famous insurance companies of United States are 21st century, AIG Insurance, Allstate, American Family, American National Property & Casualty Amica , AAA Auto Insurance, Auto-Owners, Infinity Auto insurance and so many other.

In this industry there are several barriers one need to face while entry. These barriers includes: capital requirements, license requirements, strict US laws and Taxation, massive customer care issues along with modernizing financial and risk management functions. These issues create a great deal of hurdle for new entrant because they are more likely to be less experienced and handling these issues may trouble them. Meeting the US standards for licensing is also not an easy goal to achieve because for this license one needs to be very competent from all perspectives.

Demand Analysis (the demand function)

Price of the Inifinity products is low as compared to its competitors, which will attract customers and increase the sales of insurance. Majority of the people takes the insurance as the formality and prefers the company, which is providing cheap rates in the industry like Infinity auto insurance and many others. The Consumer's Income plays an important role here because the when the income increase the demand for such product also increases. The per capita income of the United States is increasing year by year and currently stands upon $53,143 in 2013 as compared to $46,999 back in 2009. This results in the incremental effect for the sales of infinity insurance policies. Furthermore, preferences of consumers for the insurance policies can be transferred from one brand to another brand but cannot be replaced by a substitute..................................

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