STRATEGIC MANAGEMENT PROJECT

ON

RELIANCE GENERAL INSURANCE COMPANY

MADE BY

ANMOL SETHI

AAKRITI SHARMA

AALISHA CHAUHAN

SUJIT BHOWMICK

MBA- INSURANCE &BANKING

RELIANCE GENERAL INSURANCE COMPANY

INTRODUCTION OF COMPANY

Reliance General Insurance Company Limited is an Indian insurance company, a part of Reliance Capital Ltd. of the Reliance Anil Dhirubhai Ambani Group. The firm is amongst the leading general insurance companies in India, with a private sector market share of over 8%. It had a distribution network composed of 127 branches and over 12,000 intermediaries at the end of June 2013. The Gross Written Premium for the quarter ended June 30, 2013 was Rs. 706 crore (US$126 million). The Gross Written Premium for the year ended March 31, 2013 was Rs. 2,036 crore (US$374 million). Reliance General Insurance (RGI) offers insurance solutions for auto, health, home, property, travel, marine, commercial and other speciality products The firm is India’s first insurance company to be awarded the ISO 9001:2000 certification across all functions, processes, products and locations in India.

Reliance general insurance (RGI) offers insurance solutions for auto, health, home, property, travel, marine, commercial and other speciality products.

RGI is the amongst the leading private sector general insurance players in India with private sector market share of 7.5%. During 2013-2014 the gross direct premium of the private general insurance industry increased by 15 percent from 27925 crores (US$ 5 billion) of the corresponding previous period to 31934 crores ( US$ 5 billion).

RGI gross written premium for the year ended March 31, 2014 was Rs 2442 crores ( US$406 million) an increase of 20 percent over previous years.

The business achieved its first full year of profitability in 2013-2014 Profit before tax for the year ended March 31, 2014 stood at Rs 64 crores (US$ 11 million) as against the loss of Rs 93 crores (US$ 17 million) in the corresponding previous year.

The distribution network consist of 127 branches and over 15500 associates and intermediaries at the end of march 31, 2014.

At the end of march 31, 2014 the investment book increased 18 percent year on year to Rs 3843 crores ( US$ 639 million).

AWARDS AND RECOGINITIONS

CMO Asia Social Media and Digital Excellence Awards 2015Website of the year .

Best Email Marketing Campaign of the Year Banking Frontiers Finnoviti Awards 2015 Product Innovation for mobile pre-inspection system The Economic Times Promising Brands Awards 2015

Promising Brand 2015, The Indian Insurance Awards 2015 General Insurance company of the year Healthcare Leadership Award 2014 Innovation in quality of service delivery Product Innovations QCI - D.L Shah National Quality Awards 2014 Commendation award for financial services The Indian Insurance Awards 2014

General Insurance Company of the yearo Best product innovationo Technology innovation

Lokmat BFSI Award 2014Best General Insurance Company

o Asia Insurance Technology Awards o Best Insurer Technology Award

IAMAI, India Digital Awards 2014Best use of internet for social & economic development

Celent and Asia Insurance Review - Winner Asia Insurance Technology Award 2014 - "Best Insurer: Technology".

Won Quality Council of India - D. L. Shah Quality Awards 2014 "Commendation Award"for Financial Services.

Got organisational category awards"Innovation in quality and service delivery award" and "Product innovation award" at Healthcare Leadership Awards (2014).

The only Indian Company to have won prestigious award of "Risk Management- services provider for the year 2013, at the Global Risk Awards.

First non life insurance company in India to work with a license from IRDA, on 23rd October 2000.

VERTICALS IN WHICH COMPANY OPERATES

Reliance general insurance is one of the leading general insurance companies in insurance industry lead by Mr. Anil Dhirubhai Ambani group. As it is one og the fastest growing leading general insurance companies and have edge over other general insurance companies it diversified into various verticals.

RGI operates id different verticals as in motor, fire , marine, engineering, health, property and others verticals.

MARKET SHARE OF DIFFERENT VERTICALS

60%

2%5%

21%

5%7%

SECTOR WISE SHARE MOTORMARINE FIRE HEALTHENGGOTHERS

Above is the market share in which company operates its business and focusing to be more better in their business to achieve more business in their verticals.

MARKET SHARE OF THE INDUSTRY

The insurance industry in India has seen an array of changes in the past decades. The economic scenario which emerged after globalization, privatization and liberalization has thrown a new challenge before the insurance sector. Now it has to be more competitive in order to meet the needs and demands of its customers. The reforms contributed to increase the awareness of the insuring public about the wider range of choice of insurance products and the price offered by the competing insurers in the market. The customers know well about their rights and remedies, availability of various grievance redressal mechanisms, progressive decontrol and detariffication of pricing of insurance products, particularly in the non- life insurance segments. The technical know-how, expertise and wide experience of multinationals that have joined with the Indian companies have revolutionized almost all aspects of insurance industry in India.

The insurance industry has an important socio- economic function to discharge and as such it plays a leading role within the financial system in a country. It has a decided advantage over most other financial activities in the present economic world. It provides funds, largely in the long-term, to repair or compensate for the real value and cost of damages, accident and various losses in all fields of material activities, as well as life and health. An evolving insurance sector is of vital importance for economic growth. While encouraging savings habit, it also provides a safety net to both enterprises and individuals. The insurance industry also provides crucial financial intermediation services, transferring funds from the insured to capital investment, which is critical for continued economic expansion.

GROWTH RATE OF COMPANY IN THE LAST 3 YEARS

Reliance General Insurance has seen its profits more than double to Rs 24.3 crore in the first quarter of 2014-15, as the total number of policies sold during the period crossed the one-million mark.

Reliance General Insurance's first quarter profit rose by 138% to Rs 24.3 crore in the period ended June 30, 2014, from Rs 10.2 crore in the year-ago quarter.

The company sold nearly 10.99 lakh policies during the quarter - marking an increase of 19% on year-on-year basis. It had sold 9.22 lakh policies in the year-ago quarter, while the number of policies in the fourth quarter of last fiscal 2013-14 stood at 9.99 lakh -- just shy of the one-million mark, as per an investor presentation.

Reliance General's gross written premium for the quarter ended June 30, 2014 was at Rs 787 crore, a year-on-year increase of 11%, as against the average industry growth of 5%.

RGI has also gained market share and now accounts for 9% of the private general insurance market in terms of premium under written, up from 7.5% in the last three years , the company said.

Its business mix at the end of June 30, 2013 was 51% motor, 22% health, 16% fire and engineering, 3% marine and 8% others. It had a distribution network of 127 branches and over 15,500 intermediaries,

The company's investment book stood at Rs 4,495 crore -- up 31% from year-ago level -- as on June 30, 2014.

Reliance General recorded its first full-year net profit at Rs 64 crore for the fiscal ended March 31, 2014. It offers insurance solutions for auto, health, home, property, travel, marine, commercial and other speciality products.

RELAINCE EPS GROWTH

VISION

Reliance General Insurance company wants to score perfectly for world standard services & products, and want to be the first choice in domestic as well as global markets. 

MISSION

Satisfy the need of insurance cover in that crucial hourOffer incomparable customer serviceProvide innovative productsBetter reach through presence across India and abroad

GOALS

Make affordable insurance accessible to allKeeping you, our customers, as focal point in all our operationsProtect policy holders’ interestsBe the most innovative in product development

OBJECTIVES

The objective is to put an attempt to increase awareness among people regarding need of the insurance and the benefits of it . The framework enables business heads to put in place policies and practices in line with the company’s policy.

EXTERNAL ANALYSIS

PEST Framework: The PEST analysis is a tool to evaluate external factors. It is often helpful to complete a PEST analysis prior to a SWOT analysis, although it may be more useful to complete a PEST analysis as part of, or after, a SWOT analysis. A SWOT analysis measures a business unit; a PEST analysis measures trends and changes in the market.

POLITICAL FACTORS:

Political factors include government policies relating to the industry, tax policies, laws and regulations, trade restrictions and tariffs etc. As in any part of the world, political influence is highly essential to start a business in India. Especially if you are planning to start a multi-billion business, some sort of political patronage is an absolute necessity. Not only for safeguarding the interest of the company but even to begin the process of getting the required sanctions, one requires hold in the high echelons of politics and administrative circles.

Reliance industries also hold a high echelon of political and administrative circles so as to safeguard the interest of a company and for getting the required sanctions.

ECONOMICAL FACTORS:

Political factors include government policies relating to the industry, tax policies, laws and regulations, trade restrictions and tariffs etc. As in any part of the world, political influence is highly essential to start a business in India. Especially if you are planning to start a multi-billion business, some sort of political patronage is an absolute necessity. Not only for safeguarding the interest of the company but even to begin the process of getting the required sanctions, one requires hold in the high echelons of politics and administrative circles.

Reliance industries also hold a high echelon of political and administrative circles so as to safeguard the interest of a company and for getting the required sanctions.

SOCIAL FACTORS:

Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, changes in tastes and buying patterns, etc.

Safety of a person overrides all the production targets' is the Health, Safety and Environment Policy of Reliance.

Occupational Health Centres (OHCs) have been established to provide education on health and awareness issues, diagnostic camps and health exhibitions are also arranged. RIL also offers periodic medical examination of all the employees (including Contractors' employees) along with their family members.

TECHNOLOGICAL FACTORS:

The technological factors relate to the application of new inventions and ideas such as R&D activity, automation, technology incentives and the rate of technological change.

INTERNAL ANALYSIS

For doing internal analysis for Reliance General Insurance i have used Resource based view.

RESOURCE BASED VIEW

Basic principles of the RBV model

RBV of the firm provides a rigorous model for analysing firm's strengths and weaknesses

Basic assumptions of RBV :

Resource and/or capability heterogeneity : different firms possess bundles of different resources and capabilities

Resource and/or capability immobility : Some of these resources and capabilities are inelastic in supply or costly to copy

RBV posits that the sources of value creation are resources and capabilities

Value = Consumer surplus + Producer profit To outperform industry norm, a company must create more value than its

competitors

There are four categories in which we classify resources-

Financial capital Physical capital Organizational capital Human capital

FINANCIAL CAPITAL

Reliance general insurance company is one the leading insurance company in insurance sector.Total gross written premium of Baja Allianz which is the market leader of insurance private sector is Rs 4588.08 crores as compared to Reliance general Insurance which is Rs 2588.04 crores..There us not much difference between their gross written premiums which indicate that this will have a positive impact on the company as company will try to achieve this level through their improved technological ways.

PHYSICAL CAPITAL

Reliance General insurance company is one of the companies which is reaching to their customers on a large scale in very short span of time.With their 140 offices and around 13000 intermediaries they are growing on very fast scale.Also they have introduces telecalling services and have expanded their customer service department to reach its customers effectively and efficiently.

ORGANIZATIONAL CAPITAL

Reliance general insurance company is a part of ADAG( Anil Dhirubhai Ambani Group) and supported by Reliance Capital Ltd.Also it has tie ups with Hyundai Dealer, Maruti Dealers and various other dealers which give company a competitive advantage of others to grow.Also they have got product innovation award which gave them a advantage of service delivery of others.

HUMAN CAPITAL

Reliance General Insurance is a company which have their headquarters in Mumbai and their corporate and head offices in Mumbai.

With most intellectual staff Company have around 3500 employees working all over India.Servicing more than lakhs of customer on daily basis company have formed the strong customer base to grow oin insurance industry as fast as possible.

COMPETITOR ANALYSIS

Competitor analysis is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats.

Competitor analysis is an essential component of corporate strategy. It is argued that most firms do not conduct this type of analysis systematically enough. Instead, many enterprises operate on what is called “informal impressions, conjectures, and intuition gained through the tidbits of information about competitors every manager continually receives.” As a result, traditional environmental many firms are at risk of dangerous competitive blindspots due to a lack of robust competitor analysis.

One common and useful technique is constructing a competitor array. The steps include:

Define your industry - scope and nature of the industryDetermine who your competitors areDetermine who your customers are and what benefits they expectDetermine what the key success factors are in your industryRank the key success factors by giving each one a weighting - The sum of all the weightings must add up to one.Rate each competitor on each of the key success factorsMultiply each cell in the matrix by the factor weighting.

In addition to analysing current competitors, it is necessary to estimate future competitive threats. The most common sources of new competitors are:

Companies competing in a related product/marketCompanies using related technologiesCompanies already targeting your prime market segment but with unrelated productsCompanies from other geographical areas and with similar products

New start-up companies organized by former employees and/or managers of existing companiesThe entrance of new competitors is likely when:There are high profit margins in the industryThere is unmet demand (insufficient supply) in the industryThere are no major barriers to entryThere is future growth potentialCompetitive rivalry is not intenseGaining a competitive advantage over existing firms is feasible

PORTER FIVE FORCES ANALYSIS

Porter five forces analysis is a framework to analyze the level of competition within an industry and business strategy development. It draws upon industrial organization (IO) economics  to derive five forces that determine the competitive intensity and therefore attractiveness of an Industry. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit. This analysis is associated with its principal innovator Michael E. Porter of Harvard University.

THREAT OF NEW ENTRANTS

Profitable markets that yield high returns will attract new firms. This results in

many new entrants, which eventually will decrease profitability for all firms in

the industry

The following factors can have an effect on how new entrants may pose threat

on Reliance General Insurance Company -

Government policy

Capital requirements

Absolute cost advantage (accumulated experience,lower financial risks)

Cost disadvantages independent of size

Economies of scale(Cost reductions, Discounts on bulk purchases)

Economies of product differences

Product differentiation

Brand equity

Switching costs(Behavior of customers is variety seeker)

Access to distribution

Customer loyalty to established brands

Industry profitability (the more profitable the industry the more attractive

it will be to new competitors)

THREAT OF SUBSTITUTES

The existence of products outside of the realm of the common product

boundaries increases the propensity of customers to switch to alternatives. For

example, tap water might be considered a substitute for Coke, whereas Pepsi is

a competitor's similar product.

The following factors can have an effect on how threat of substitutes may pose

threat on Reliance General Insurance Company :

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution

Availability of close substitute

BARGAINING POWER OF CUSTOMERS

The bargaining power of customers is also described as the market of

outputs,the ability of customers to put the firm under pressure, which also

affects the customer's sensitivity to price changes. The buyer power is high if

the buyer has many alternatives.

For example- Customers usually prefer to take policy from that insurance

company whose premium is less than others and provides better service.

The following factors can have an effect on bargaining power of customers may

pose threat on Reliance General Insurance Company

Degree of dependency upon existing channels of distribution

Bargaining leverage, particularly in industries with high fixed costs

Buyer information availability

Availability of existing substitute products

Buyer price sensitivity

BARGAINING POWER OF SUPPLIERS

The bargaining power of suppliers is also described as the market of inputs.

Suppliers of raw materials, components, labor, and services (such as expertise)

to the firm can be a source of power over the firm when there are few

substitutes. The following factors can have an effect on how bargaining power

of suppliers may pose threat on Reliance General Insurance Company -

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Strength of distribution channel

Employee solidarity (e.g. labor unions)

Supplier competition: the ability to forward vertically integrate and cut

out the buyer.

INTENSITY OF COMPETITIVE RIVALRY

For most industries the intensity of competitive rivalry is the major determinant

of the competitiveness of the industry.

The following factors can have an effect on how intensity of competitive rivalry

may pose threat on Reliance General Insurance Company -

Sustainable competitive advantage through innovation

Competition between online and offline companies

Level of advertising expense

Powerful competitive strategy

Degree of transparency

SWOT ANALYSIS

A tool that identifies the strengths, weaknesses, opportunities and threats of an organization.

Specifically, SWOT is a basic, straightforward model that assesses what an organization can and cannot do as well as its potential opportunities and threats. The method of SWOT analysis is to take the information from an environmental analysis and separate it into internal (strengths and weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT analysis determines what may assist the firm in accomplishing its objectives, and what obstacles must be overcome or minimized to achieve desired results.

SWOT is made of two parts: the strengths and weaknesses refer to the internals of a company while the opportunities and threats are external to the company and exist in the environment. 

Strength of a company could be in managing the branding process quickly and comprehensively. Its weaknesses could lie in the distribution of products, or payment delays. These are internal problems / issues and have to be understood and dealt with on an ongoing basis. Often consultants are called in to assess these two aspects on the belief that an outsider could give more insights into the company. 

The two external factors, opportunities and threats, are not in the company's control. The environment, composed of social, economic, legal, regulatory, national and even international events, has to be continuously scanned to track these.

For example, an opportunity for a refrigerator company could be in freezers for ice cream; threats could be imports or the entry of new players with money and expertise. In a globalising world, opportunities can spring up anywhere, anytime, just as threats can come from any part or segment of global industry. 

STRENGTHS

High profitability and revenueExperience business unitsRobust and diverse product portfolioNetworking among various Dealers and 2500 employeesDomestic marketStrong capital base and strong brand backing of reliance

 WEAKNESSES

Low advertising as compared to competitorsInvestments in research and developments

OPPURTUNITIES

Growing economyNew acquisitions Global marketVenture capitalGrowing demand

THREATS

increasing competitionincreasing employee expectationsentry of other NBFC