Gm Insurance Case Study

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value proposition, reputation and sales momentum and causing discontent among the company’s sales force and independent brokers who the company depended for their sales. The persistence i.e. the renewal rate was low owing to the initial service problems.

There were gaps in the communication between the field salesperson and the centralized office that led to further inefficiency and raised the cost. This meant that the company was overpromising and under-delivering. Furthermore, the dental insurance business which the company had outsourced to an external party was not being handled in a timely manner and the processing was slow. This is evident from the many months of mails the external service provider handed to gm on the termination of the business. Guarantee was committed to dental insurance business, but the need to allocate resources to keep up with the processing of claims- a tedious and labour intensive process pulled away resources from the build up of non-medical group benefits business.

3. GM’s core competency was in the individual life insurance and medical stop loss insurance. The employees and the resources were aligned towards this business as opposed to the non-medical insurance business it had taken up. Hence, it would be advisable to pull back from the risky waters it had sunk its feet into and refocus the company on its core lines of individual life insurance and medical stop loss insurance. These were mature cash cows and would augur well for GM. The decision would allow GM to avoid significant investment in new information technologies and significant realignment of the selling efforts, target markets and broker relationships that the group benefits focus would require. Instead of acting in furtherance of the sunk cost, this approach would completely shift its focus to something that GM was adept at. Furthermore, since persistence levels were low in the group benefits business, chasing the already strained relationships with the corporate clients would be a futile effort. Hence, in my opinion, in the light of the existing conditions, the strategy would give the best results for GM.