Strategic Plan of an Insurance Company in the UAE

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Introduction

It has become evident from the recent scenarios that the insurance and finance market is transforming peculiarly as more insurance companies are stepping into it. The competition among insurance companies is increasing with an increase in the number of companies which is also the case in the UAE’s insurance market. In order to establish and operate an insurance company efficiently and successfully a strong strategic planning is essential.

Strategic planning is required not only to maintain and operate some business, but also is required before launching a new company. This paper is aimed at discussing the strategic plan of an insurance company in the UAE, which is about to launch and has potential competitors in the market.

Since, the insurance sector is not as huge as the industrial sector therefore, no significant strategic elements have been highlighted for this sector. However, according to various authors the key elements which are very vital for the strategic planning of insurance companies must include various instruments.

Firstly, the plan should highlight the vision and mission of the company i.e. what it is aimed for and what are its objectives and also highlight ways by which the company plans to generate handsome and profitable revenue. Moreover, the plan should also include internal and external factors which may affect the business directly or indirectly, in a positive or negative manner.

Followed by these factors is the mid-term and long term planning including how the company plans to exploit resources, allocate budgets and its assets. Furthermore, an efficient plan is needed through which the company can overcome potential barriers and any financial breakdown (Van House and Hammond).

The basic reason for designing and following a strategy is to help the company that it can gain advantage over its competitors. Since, insurance is an intangible service, therefore, the significance of a strategy in this sector becomes vital. In order to get an edge over competitors an insurance company has to follow the plan very efficiently. Getting advantage over rivals / competitors means that the company can sustain in the market on a long run generating profits.

In order to attain this purpose, the company must take steps to achieve its set performance goals within the given time. In any organizational setup, strategic planning is of key importance. United Arab Emirates has been a centre of investors’ interest for many decades. This has ultimately attracted the insurance sector towards the country.

Although, there are many insurance companies working in the UAE namely Daman Insurance, Oman Insurance, and Adnec Insurance etc. and more insurance companies are seeking their way into the UAE’s market. Keeping in view, high demand of insurance providers in the UAE planning for the launch of a new insurance company in the UAE is being made and highlights are presented in this report.

This company namely Crescent Insurance Company (CIC) is a new born insurance company, which is planning to penetrate into the UAE’s market, with its main focus is to be a healthy insurance company with a successful and efficient strategy. Unlike other insurance companies our company has some different plans which will help CIC to attain its desired goals effectively in the long run.

The company also aims to spread its wings internationally once it gets hold of the UAE insurance sector. The business / strategic plan of CIC is so designed that it may provide an edge over competitors and help the management to acquire the company’s vision and mission. The company will offer different insurance services to its customers including life insurance, health insurance, safety, sickness, and damage or loss insurance.

Financial assistance is also one of the services that the company plans to offer to the needy customers. The company plans to hire a management team which is dedicated, friendly and skilled, and having experience in the insurance sector. This will help the company to undertake complex decisions regarding businesses and its customers. Moreover, it will also assure better customer services.

The following are some key elements of the strategic plan of CIC including the Vision, Mission, goals and objectives.

Vision

The Vision of Crescent Insurance Company (CIC) is written as:

“The insurance services are provided to customers according to their will with premium quality protection and that too at affordable prices.”

This states that the company offers different insurance products / plans to its customers who are in need of insurance and wants to design the plan as per their will. The option of tailored insurance services will provide an edge to CIC to outrun its competitors and become distinctive.

Mission

The core mission of the company is to establish a healthy partnership with the customers, workforce, members and the government. The victory of the company will be analyzed by customers when they will choose CIC amongst many other insurance companies present in the UAE. To become the leading insurance provider, fulfilling all customers’ needs with value services is what the company is planning for.

The company plans to provide insurance services to every individual who contacts the company regardless of their background and financial status. The company aims to plan such insurance designs that will benefit every segment of the society; poor or rich without neglecting any individual.

Core Activities

The core activities majorly include insurance services provided by CIC to its customers. However, the financial assistance and support to the needy customers is another core activity of the company. The company plans to generate revenues and profit through these services.

However, other activities of CIC include quality customer services and insurance guidance to new customers. The revenue generated through services will help the company to cover its costs and manage its resources which will help in sustaining operations of the CIC.

Internal and External Factors

While setting up any new business, it is very essential to consider both internal and external factors which can influence and affect the business. Internal and external factors are numerous which can vary based on the type of business. However, in the case of CIC which is an insurance company, the internal and external factors are limited.

These factors can be easily analyzed through different models. These models include PEST, SWOT, and Porter Forces etc. this paper will consider 5 Porter Forces and SWOT analysis for the examination of internal and external (environmental and organizational) factors faced by CIC.

5 Porter Forces

Since its establishment, the 5 porter factors have become very famous and significant for the purpose of business analysis. It was introduced by Michael Porter in 1979. These 5 factors are generally used to examine the market competitiveness and thus draw results for risks and benefits to the company from within its market.

The Porter’s 5 forces includes: threat of new companies, threat of alternate product or services, bargaining power of consumers, bargaining power of supplier, and competitive challenge among the present firms. Let us discuss these 5 forces in relevance with the Crescent Insurance Company and its service.

Threat of New Companies

Since, the insurance market is huge and open for new companies, the attractiveness of UAE makes it more complex for the existing companies. Therefore, no barriers are seen for new organizations which are willing to enter the market and thus, making it difficult for existing firms to hold their customers as there are no customer switching costs.

However, in the present case of CIC which is a new company this factor hardly affects the company at present. In the longer run, this factor may influence the company’s business and output. However, at present it has threats from the existing competitors.

Threat of Alternative Product and Services

The presence of other insurance firms in the market of Arab Emirates makes it a little difficult for CIC to ground its roots into the market quickly. As almost all the services provided by all insurance companies are the same except for their USP, therefore the threat is greater in this regard.

Bargaining Power of Consumer

UAE is seen as a potential market for insurance sector, however CIC is a new company and does not have brand loyalty, therefore it will take some time to develop the bargaining power of their customers. This factor depends on the efficiency of services offered by CIC.

Bargaining Power of Supplier

CIC has to abide all the rules and regulations set for the insurance sector by the government of UAE. However CIC is a new name in the insurance business, this factor is also not powerful which will exert high pressure on the company.

Competitive Challenge Among the Present Firms

This factor again exerts high pressure on CIC as it has three competitors in the market. CIC has to be very effective and influential in its operations and services to outrun these competitors.

SWOT Analysis

Analyzing any organization’s Strengths, weaknesses, opportunities and threats can be termed as SWOT analysis. Let us analyze CIC following the SWOT model (Pahl and Richter).

Strengths

CIC is a new name in the insurance market. However it has a list of strengths which will ensure better services and will allow the company to yield smart profits and revenues. First of all the company’s management and employees are a major strength for the company.

They will help to develop the business and to extend its wings in the market. Moreover the variety and distinctiveness of the services offered by the company is also strength of the company seems promising in regard of operations and expansion of business.

Weaknesses

At present, the company does not see any weakness which may harm the business except for that its plan / USP might be copied by any other insurance company which will reduce its customer loyalty and will harm the business.

Opportunities

Since UAE is the hub of industrialization and tourist attraction, more investors and people from the world are moving to the country for different purposes. This ensures positive future for CIC in UAE in a variety of ways. Once the company will become stable and will develop a brand identity in UAE, it will then expand its business on international level.

Threats

CIC predicts no threats or barriers in its operations however the competitors which are Daman, Oman and Adnec Insurance can effect and harm the company’s business. This threat can be encountered by a strong strategy and effective team work. However, CIC plans to do both so that its competitors may not in any way effect their business.

The reason for using these two models for the assessment of the internal and external factor is uncomplicated. SWOT analysis and the 5 factors of Porter makes it easy to understand the business from every perspective and thus to revise and improve the plan (if needed).

Strategic Plan

Mid-Term (2.5 years)

As it has been already discussed that strategic planning plays a vital role in any business therefore a sound strategic plan is essential for every business. It allows the business to assess its key features, the resources, profits and how to address the damages. Moreover it ensures that quality and customer care is maintained throughout without neglecting or compromising any of the standards set initially.

The company aims to hire experienced and skilled workforce and management. Moreover CIC has initial plans to construct state of the art building followed by effective marketing strategies and expanding the percentage of their market share.

Long Term (5 years)

The strategic plan of CIC is so designed that it may cater and respond to every possible situation with the ability to double the revenue every year. The long term goals of CIC further includes that it will become the pioneer of insurance sector in the coming 5 years with almost 60 offices in UAE and 10 international offices. CIC will monitor and maintain its operations and resources adequately and effectively.

The company also plans to address any financial turn over or other threats which may in future harm or slows the business. The company has also allocated resources and assets which can be utilized in time of any financial breakdown.

The company has decided to invest a total of $3Million initially including the cost of the building and the 5 initial offices in f cities of UAE. The company has also kept $1Million to address and overcome any financial breakdown. CIC plans to increase its sales by 10% at the end of 1^st year and by 50% at the end of 5^th year. The company’s profit is predicted to shoot form $3Million to $7Million at the end of 5^th year.

Tangible and Intangible Assets

The company plans to utilize its tangible and intangible assets in an efficient manner. The tangible assets such as the office building, the furniture, and other office related accessories will be used most advantageously. This will ensure better customer care and high customer service in an excellent manner. The office premises will also be used for client and management interaction centre where the trained personnel will guide and assist the clients with their queries and other services.

Whereas the intangible assets are basically the liquid cash which the company plans to keep aside initially and use it for damages or loss or financial breakdown. CIC also plans to utilize its intangible assets for the construction of different offices in different parts of UAE and world once it has formed a brand name.

Conclusion

However, Crescent Insurance Company is a new insurance company in UAE insurance sector, but with its effective and sound strategic plan it will be able to capture the market and beat its competitors. Following the proper business plan and the keeping the threats in mind, the company will be able to generate the desired profits successfully.

The company plans to maintain its business integrity by maintaining the quality of its services and customer care on short and long run both. The uniqueness of CIC’s vision which allows customer to design insurance plans as per their will, will attract many customers and will help the company to create a brand loyalty.

Works Cited

Pahl, Nadine and Anne Richter. SWOT Analysis – Idea, Methodology And A Practical Approach. Santa Cruz: GRIN Verlag, 2009. Print.

Van House, Charles L. and William Rogers Hammond. Accounting for life insurance companies. New York: R. D. Irwin, 1969. Print.

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