Prospective Insurance Company: History and Information

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Table of Contents

Introduction
Literature Review
Case Study
Conclusion
Works Cited

Introduction

Prospective’s Profile and Performance History

Prospective Insurance Company was founded in 2000 by a group of five investors. It has its headquarters in Compton, USA. Since its founding, the company has enjoyed significant success. Currently, the firm has more than $20 billion worth of life insurance policies. In addition, the group serves approximately 3.5 million clients. It provides such services as insurance and investment advisory. According to a 2015 report by the JCR-VIS Credit Rating Co. Ltd., Prospective Insurance Company was ranked among the top 10 insurance firms in the US. The criteria for grading was based on market capitalization and the policies sold.

Mission and Vision

For a company to succeed, its operations must be based on sound values, mission, and vision (Dorfman 75). Prospective Insurance Company’s core values are courage, excellence, relationships, and personal responsibility. Its vision and mission is to be the best insurance organization in the world and to positively impact on the community through the provision of effective financial security planning.

Problems Facing Prospective Insurance

In spite of the success, Prospective Insurance has faced a number of challenges over the decades. The main concerns include technological evolution, large volume of data, customer focus, and regulation. Customer focus refers to the need to create a better and comprehensive relationship with clients (Brocke and Rosemann 65). On its part, regulation entails operating within different jurisdictions and complying with the various guidelines, such as capital and investment rules.

To manage the challenges, Prospective Insurance Company makes use of ERP. Shaikh observes that ERP entails an integrated view of the primary business processes using the databases maintained by a catalog management system (88). Prospective Insurance Company uses ERP software to gather, store, control, and deduce information from its operational activities.

Literature Review

Overview

ERP has helped Prospective Insurance manage its challenges. As a result, the firm has avoided the negative consequences of disjointed business practices. The insurance industry is an economic sector. Consequently, insurance corporations are required to be effective in their operations to save on costs. In addition, they need to develop appropriate and reliable information transmitting channels. The reason is that they have to reach out to a large number of clients. Clark observes that insurance companies also deal with many files from different bodies, such as private and government entities (98). Over the years, Prospective Insurance uses ERP to manage its daily operations and provide its customers with high quality services.

Topics to be Covered

The topics to be addressed in this case study are the use of ERP in solving the challenges facing the company, the initiatives, and the steps taken to overcome the problems. The advantages of the initiatives adopted by Prospective Insurance include the development of channels to interact with clients, provision of high quality services, and sustainable economic continuity. Some of the risks associated with the initiatives are impersonation of applications used to provide services and resilience support. Other are slow adoption of the initiative in the business world and competition from rival companies.

Use of ERP by Prospective Insurance Company

Insurance companies carry out complex tasks that require the use of flexible systems. Current market trends reveal that there is a growing need among companies and individuals to acquire insurance policies. As a result, insurance firms are striving to provide customers with high quality services in a quick and efficient manner. The invention of ERP has helped the firms to achieve this objective. According to Shaikh, ERP software is used in contract accounting and preparation of different insurance documents (87). In addition, the technology speeds up the computation and formulation of payment procedures.

In Prospective Insurance, ERP is the primary tool used to develop quick output of customer services. The software has various features. The attributes include client database, purchase data, contract accounting, billing, cash, and finance management. Other features include contract follow-up, accounting transaction, human resource, receivables, and credit management (Sood 77).

Challenges facing the company

Attracting new IT talent

Prospective Insurance uses conventional work systems. Failure to use new modes and operational approaches prevents new and youthful employees from seeking positions in the company. When technology advances, corporations are required to adopt them. The reason for this is to simplify work and improve efficiency. Grant, Hackney, and Edgar note that technology and talent-related concerns are some of the major problems affecting insurance companies (102).

Retaining skilled employees

Retaining skilled employees is a challenge to most organizations. The main reason is lack of motivation, incentives, and competition. Highly skilled employees are productive and drive a company towards the realization of its goals (Dorfman 62). Upon attaining the set targets, it is important to acknowledge workers’ efforts through remuneration. Rewards can include bonuses and pay increments. Prospective Insurance lacks proper mechanisms of rewarding top performing employees. As a result, many of them move to rival companies with better offers and commissions.

Sales channels

Prospective Insurance faces the challenge of developing sales channels and mechanisms for its new products. The main issue associated with the problem is stiff competition and lack of proper marketing channels (Sood 66).

Selling to new demographics

Most insurance companies have local and international branches (Clark 74). However, majority encounter entry challenges and problems in establishing a strong customer base. Since its founding, Prospective Insurance has attained extensive success. To serve clients from different parts of the country, the firm has branches in over 10 states. However, some of the outlets have failed to attain success in the new areas.

Investment income

When investing, companies need to focus on effectiveness and efficiency. Brocke and Rosemann note that the failure to consider the aspects results in failure (104). Prospective Insurance Company has faced investment problems over the years, leading to a decline in annual revenues.

Growth

Growth is the greatest challenge affecting Prospective Insurance. After its inception in 2000, the firm stayed in the market for two years and collapsed. However, it was later revived through collaborative efforts between different stakeholders (Clark 88). In spite of opening branches in different states, the company’s growth rate is still low.

Economic uncertainties

Economic uncertainty is one of the main challenges affecting the insurance industry (Dorfman 98). At Prospective Insurance Company, the ambiguity was caused by a drop in the yield of bonds. The value decline put upward pressure on the insurance rates and affected the ability to attract low-risk taking customers. The uncertainty has prompted the company to raise its policy premium rates.

Pool optimization

Pool optimization is another problem facing Prospective Insurance (Sood 88). Due to extreme rivalry, firms compete for low-risk clients. They offer them reduced rates. The approach leads to pools imbalance in the industry.

Time to market pressures

Prospective Insurance Company is faced with the challenge of launching new products within short periods. The emergence of new insurance firms and increased competition requires firms to be at the forefront in offering new products (Brocke and Rosemann 114). In addition, corporations should develop strong marketing channels to ensure clients familiarize themselves with the products.

Solutions to manage the challenges

Cloud-based analytics

ERP has helped the insurance company manage different problems with ease. One of the ERP tools used by Prospective is cloud-based analytics. The technology is employed to create a foundation for a new data-driven underwriting model and pool optimization. According to Grant, Hackney, and Edgar, cloud sporting can hold large volume of data (69). The information is integrated into the actual model to compute probable risks.

Customer segmentation

In the insurance industry, it is important to understand and formulate the best means of partitioning client base (Sood 44). Prospective used ERP clusters to evaluate clients’ needs and financial potency.

Evaluation of product lines

When an insurance firm has a number of products, it is important to evaluate each line (Sood 102). Prospective makes use of ERP to determine the items doing well in the market and those performing poorly.

Reinsurance funding

Most insurers protect themselves through private reinsurance. The measure caters for catastrophes, which may hinder operations and the ability to effectively provide services to clients. It is one of the ERP approaches used by Prospective. The idea to adopt the approach was influenced by policyholders’ demand for more security after incidences of recent disasters.

Capital markets investment

Over the years, Prospective have tried to reduce property losses (Clark 115). The company put in place structures and measures aimed at minimizing losses caused by disastrous incidences. Prospective Insurance Company adopted an ERP driven capital markets scheme to safeguard its clients’ assets and reduce losses.

Understanding decisions of key stakeholders

Grant, Hackney, and Edgar note that for companies to develop appropriate strategies to deal with catastrophic risks, they can use ERP to understand the ‘potencies of the threats’ (62). In addition, firms need to evaluate the actions and the outcomes of the peril. Prospective Insurance has come up with a number of solutions by organizing forums with key stakeholders on different aspects concerning the company. The approach has helped the firm reduce the magnitude and impact of uncertainties.

Simplified decision rules

Prospective Insurance Company has used ERP to come up with simplified rules to overcome the effects of particular catastrophes in the business sector. Some of the guidelines include relocating people living in disaster prone areas and educating them on their roles in the insurance field. In addition, insurers have put in place measures to consider and calculate uncertainties by offering certain products (Clark 120).

Nested decision structure

Nested decision structure is used by insurance companies to develop strategies to manage risks with the different policy and stockholders’ associations. It can be incorporated into an ERP framework. One of the tools used in this structure is eGuide. According to Grant, Hackney, and Edgar, eGuide shows the way an organization needs to develop plans, goals, and strategies that are in line with its vision and mission (79).

One of the benefits associated with nested decision structures include increased operating system. It also helps employees to understand what is expected of them by the company. When workers understand their roles, they perform better. In addition, they become more productive, leading to the realization of organizational goals. The development makes it possible to achieve the set targets within the specified timeframe.

Nested decision structure also facilitates quick execution of business strategies. Brocke and Rosemann note that rigid goals and target visibility enable faster implementation of a company’s policies (79). To attain different goals, the management allocates labor resources and duties to various departments in the firm. The approach ensures that employees are not duplicating the work of their colleagues. In addition, the process allows managers to be responsible to facilitate the speedy realization of goals. Working or solving insurance problems in groups helps to better understand the added responsibilities associated with specific goals. The process is essential in the elimination of redundancy across job titles. In addition, the approach assists in determining the most important goals that need to be achieved.

Managing employee turnover

It is important to manage employees’ turnover rates. The reason for this is that workers play the greatest role in the company’s growth. Sood observes that the work setting is the primary cause of absenteeism (58). In addition, the feature is associated with reduced commitment among employees. Such factors as turnover rates can be managed using ERP.

Setting practical goals

Prospective Insurance Company uses ERP to set practical goals and solve some of the challenges facing the company. Brocke and Rosemann claim that goals established for the organization should be able to contribute directly to the achievement of the firms’ success (113). In addition, managers should maintain openness and transparency with employees when setting goals.

Customer focus

Customer focus entails creating better and comprehensive relationships with clients. In light of the increasing levels of competition, Prospective has used ERP to develop the best approaches to interact with customers and provide services (Dorfman 107). The adoption of the strategy has helped Prospective Insurance Company to develop ways that make it easy for customers to conduct business with the organization.

Initiatives adopted by Prospective Insurance Company

Insurance companies all around the globe are responsible for developing different initiatives aimed at benefiting both the firm and the community (Clark 105). Since its inception, Prospective Insurance Company has established a number of projects with the help of ERP. The plans include micro-insurance, sustainable insurance, and IN-APP initiative.

Micro-insurance initiative

Micro-insurance is a project that aims at providing clients with cost effective ventures through the use of collaborative novelty. According to Shaikh, there is a huge micro-insurance gap in the industry that needs to be filled (81). Failure to fill the space will hamper growth and hinder penetration of insurance products and services to the poor persons in the community.

The implementation of the micro-insurance initiative has various advantages. One of the plan’s benefits is that it has helped the company solve different societal problems, such as economic continuity and longevity. In addition, the initiative has benefitted first generation insurance clients.

The micro-insurance initiative faces a number of risks. One of the primary perils associated with the project is uncertainties in the development, design, and launch of micro-insurance ventures (Sood 95). Another risk is lack of capital to support the initiative’s products within the context of ERP.

Sustainable insurance initiative

Sustainable insurance creates awareness and improves levels of preparedness in communities. It also provides risk management guidelines to clients. In addition, the strategy is used to increase the capacity of insurance products to accommodate risks (Sood 76). The advantages of sustainable insurance include enhanced disaster response and recovery for communities and support for prudential policy and frameworks linked to sustainability.

Sustainable insurance initiatives adopted by Prospective face a number of risks. The main perils include problems associated with sharing of confidential information with key stakeholders and resilience support (Sood 77).

IN-APP initiative

ERP technology helps insurance firms to provide their services with ease (Shaikh 102). IN-APP initiative at Prospective aims to support the marketing of insurance policies. In addition, the project facilitates quick processing of clients’ problems.

The advantages of INN-APP include reinforcing financial strength and developing stable and lasting relationships with customers through the provision of high quality services. The risks associated with the initiative include defects in kernel and system codes provided by the insurance company and access to data by unauthorized parties. Another major risk associated with the application is UI impersonation (Sood 23).

Best Approach used to Implement the Initiatives

The best approach used for implementing the ERP initiative entailed making an in-depth evaluation of enterprise profile, competitors programs, and trends in the insurance industry. In addition, Prospective Insurance Company worked closely with other key players in the insurance business and other sectors. Working with different groups provide more information and better ways of tackling issues (Sood 63). Another approach involved refining the implementation plan of the initiative and educating members of staff and stakeholders on the new project. Enlightening shareholders and workers reduced resistance to the ERP project. Refining the execution plan helped the company to determine procedures that needed more evaluation and changes.

Case Study

Drivers for Formulating the ERP Initiative

Companies are influenced by numerous factors to develop projects. The main drivers associated with Prospective Insurance Company’s plan to develop the ERP plan was the need to provide high quality services to clients. In addition, the firm was motivated by the desire to help the community overcome different uncertainties that impact negatively on sustainability (Sood 65).

The plan was executed by following a number of steps. The first phase involved contacting stakeholders and other key parties. During the meetings with the relevant parties, the vision, mission, and goals of the project were discussed. Conferring allowed for sharing and brainstorming of ideas. In addition, the platform enabled the formulation of approaches to realize the goals of the ERP initiative (Clark 77). The second process of executing the plan entailed creating a process master, prioritizing processes, and assembling a process improvement team. The final steps were re-measure and execution.

Governance Framework

Once projects are implemented, it is important to do follow-ups. The reason for this is to ensure that the venture continues to run as expected (Dorfman 67). The governance framework adopted by Prospective Insurance entailed monitoring, evaluating, and analyzing any information acquired during the implementation of the ERP project. The governance framework was based on accountability, transparency, and integrity. Other principles were openness, efficiency, and stewardship.

KPIs Assigned as the Success Factor

The key performance indicator used as a success factor for the initiative was the SMART criteria. The approach was linked to targets and values that helped to determine whether or not the goals of the ERP have been achieved (Clark 74). Under the criterion, the specific purpose of the project was assessed. Each aspect of the plan had a different timeframe. However, the average duration for implementing each of them was around six to eight months.

Initiative Charter and Communication Plan

Implemented projects can fail if appropriate mechanisms and controls are not put in place (Brocke and Rosemann 104). The channels were used to ensure that information regarding the ERP initiative was relayed to all key stakeholders. The communication strategy used by Prospective Insurance entailed determining what will be communicated, who to communicate with, and whom the information will be transmitted to. Other features of the strategy were establishing parties responsible for making connections, selecting where the communication needs will be delivered, and determining the right channels of passing messages about the ERP.

Conclusion

Insurance companies face numerous challenges. The concerns include regulation, investment, growth, and technology. ERP has proved to be an effective tool in helping companies manage and solve issues affecting productivity. The success of ERP in Prospective Insurance Company was measured using KIPs. A number of lessons were learnt. For example, it became apparent that for a business to succeed, its operations must be based on a sound vision, mission, and values. In addition, it is important to involve stakeholders in decision making processes.

Works Cited

Brocke, Vom, and Michael Rosemann. Handbook on Business Process Management, Berlin: Springer, 2010. Print.

Clark, Geoffrey. The Appeal of Insurance, Toronto: University of Toronto, 2010. Print.

Dorfman, Mark. Introduction to Risk Management and Insurance, Upper Saddle River: Pearson/Prentice Hall, 2008. Print.

Grant, Kevin, Ray Hackney, and David Edgar. Strategic Information Systems Management, Andover: Cengage Learning, 2010. Print.

Shaikh, Zubair. ERP: The Future of Business Automation, New Delhi: Atlantic & Distributors, 2009. Print.

Sood, Harish. Insurance Management, New Delhi: Anmol Publications, 2014. Print.

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