Case Study Assetguard Case
AssetsGuard Case
Executive summary: Based on given conditions our recommendation is to launch AssetsGuard insurance product line for the following reasons: * product’s contribution margin under conservative estimates is at 79% which represent a very lucrative product profitability * estimated sales of AssetsGuard are at 8,759 new policies for the next year at monthly premium of $18.74 will generate revenue of $1,969,684 with 26.5% profit margin * monthly premium price of $18.74 (market average is $21.50) puts InsuOn at a very strong competitive position under current market conditions, with additional room for the future price increases while remaining competitive * at these price and coverage levels company will have market leading 14.26% conversion rate which should yield higher sales in the future * company has a unique competitive advantage for value pricing by providing value-adding features that are superior to the rest of the market * there are number of hurdles that the company needs to overcome in order to be successful with a new product offering: raise public awareness of FIT, raise public perception and credibility of internet based insurance business, form a better image of perceived value of AssetsGuard
Analysis:
In order to estimate the number of possible sales for the AssetsGuard product the following assumptions were made: * total estimated number of existing customers was generated by using company’s 5 year sales CAGR of 26% (in 1997 12,000 policies sold and 34,500 sold in 2001) which resulted in 105,000 existing customer accounts * identity theft probability per year of 3% was estimated based on the total number of adults in US with active credit and estimated 5 million people who would be affected by identity theft every year (5mil/180mil) * cost of reversing FIT damages per claim was estimated at conservative $1,500 per claim based on national estimates * the advertising media costs per medium were averaged
Executive summary: Based on given conditions our recommendation is to launch AssetsGuard insurance product line for the following reasons: * product’s contribution margin under conservative estimates is at 79% which represent a very lucrative product profitability * estimated sales of AssetsGuard are at 8,759 new policies for the next year at monthly premium of $18.74 will generate revenue of $1,969,684 with 26.5% profit margin * monthly premium price of $18.74 (market average is $21.50) puts InsuOn at a very strong competitive position under current market conditions, with additional room for the future price increases while remaining competitive * at these price and coverage levels company will have market leading 14.26% conversion rate which should yield higher sales in the future * company has a unique competitive advantage for value pricing by providing value-adding features that are superior to the rest of the market * there are number of hurdles that the company needs to overcome in order to be successful with a new product offering: raise public awareness of FIT, raise public perception and credibility of internet based insurance business, form a better image of perceived value of AssetsGuard
Analysis:
In order to estimate the number of possible sales for the AssetsGuard product the following assumptions were made: * total estimated number of existing customers was generated by using company’s 5 year sales CAGR of 26% (in 1997 12,000 policies sold and 34,500 sold in 2001) which resulted in 105,000 existing customer accounts * identity theft probability per year of 3% was estimated based on the total number of adults in US with active credit and estimated 5 million people who would be affected by identity theft every year (5mil/180mil) * cost of reversing FIT damages per claim was estimated at conservative $1,500 per claim based on national estimates * the advertising media costs per medium were averaged