Blue ocean strategy

of
Life insurance
businessPRESENTED BY
AMIT KUMAR SINGH
CHIRANJEEV GUPTA
DIKSHA SINGH
ARNAV KUMAR
JOY SAHA

Insurance sector in india

total of 24 life insurance companies in India.
Life Insurance Corporation of India (LIC) is
the only public sector insurance company.
The penetration for the insurance sector as
a whole in the year 2013 was 3.9 percent in
India
The insurance penetration of South Africa
stands at 15.4 percent (in 2013); China 3
percent; Brazil 4 percent and Russia 1.3
percent.


A2z life insurance corporation vs other companies

In general insurance many customers

are discouraged from buying
insurance due to the anticipated
complexity involved in settlement of
claims.
the companies are targeting on day
to business insurance.
As it Is a very costly process so they
have to pay the agents, follow-up
expenses etc

A2z life insurance corporation

As a2z life insurance corporation is new in
the market
a2z life insurance corporation planed to tieup with BEST Transport division (Mumbai)
They planed to give life insurance facility to
best bus passengers, by giving them
insurance security.
A2Z MOTTO :- Aapki khusi apke sath
bhi....or aap k badh bhi.

BEST Transport division

(Mumbai)

As of 2015, the BEST runs a total of

3,600 buses
ferrying 4.8 million passengers
over 365 routes
workforce strength of 38,000, which
includes 22,000 bus drivers and
conductors
(this comes to an average of 11.2
employees per bus).

Tie-up
As best bus charges RS 3.5 per km.
So for per km a2z life insurance corporation will
charge RS 0.10.
Best bus will be given 30% share of the profit.
A2Z life insurance will get 70% of the market
share.

Profit calculation
So as off there have been total 199 deaths in 6 yeras. Out of which 13 were
passengers. So per year passenger deaths on an average are 2.16.

Total travellers = 48,oo,ooo

Per km cost = RS 3.5
Per km insurance cost = RS 0.10
If on an average per person travel 5 km per day
Then, RS 3.5* 5 = RS 17.5
RS 0.10*5 = RS 0.50
Total cost on 5 km = RS 18
Per day insurance earnings on 5 km = RS 24,00,000
Yearly earnings on insurance(365 days) = RS 87,60,00,000
So, on an average there are 2.16 deaths of passengers. If each
passengers death have to be given a compensation of RS 20,00,000.
SO, 2.16*20,00,000 = RS 43,20,000

 If there are 10 injured passengers per year. If each

passengers are given RS 5,00,000 as compensation.
So, 10*5 = RS 50,00,000
So, total compensation = RS 93,20,000
30% profit to be shared by Best bus
So, 87,60,00,000-93,20,000 = RS 86,66,80,000
BEST bus share = RS 26,00,04,000
SO, A2Z LIFE INSURANCE CORPORATION SHARE PER
YEAR
= 86,66,80,000 26,00,04,000 = RS 60,66,76,000

BLUE OCEAN STRATEGY

RED OCEAN
As all the companies are targeting similar kind of customers.
They are trying to give more benefits to their customers, but with
similar features.

Blue ocean
As many companies are giving insurance on air travels, but none
of them are giving insurance to the bus passengers.( There are
insurance facility to the bus but not to the passengers.)
As a2z has unlocked new market by giving new kind of product.
As there are many deaths in india occurred because of road
accidents and the compensation money which use to be received
were very low. So there was very high deand.

 Break the value-cost trade-off

As a2z could have competed in the same
kind of product without innovating any new
kind of product.This could have reduced the
value of the company or the profit margin.
As there were no securities to the BEST bus
passengers, so this will provide securities to
the passengers with good amount of
compensation.

Low Prices
Good compensation
Big tie-up

Visual Exploration
in this these factors would be
eliminated
agents
Low benefits to the customers
It would reduce the cost of company
as they dont have to follow the
individual customers.

Visual Strategy

As on this the a2z life insurance had tie-up

with best bus service and they are having
4..8 million customers
it will generate huge amount without
competing with other life insurance
companies.
As best bus are having monopoly in
Mumbai bus service, so they are having no
competition threat.


Visual Communication
Before this company was competing
on individual customer to customer
life insurance.
But after getting into tieup with
BEST bus service they got a huge
customer base.

 Raise in this a2z life insurance corporation has tried to raise the
customer base by providing life insurance service for every income
group, whoever is travelling from best buses.

Eliminate in this follow up cost have been reduced. As they have
got a huge customer base, so they dont have to follow the individual
customer.which reduce the cost and increase the profitability.

Create all the insurance companies are not offering such a low
insurance premium but with a high compensation rate.

Reduce low compensation rate should be reduced. There should be
high claim settled ratio. Which increase the customer faith in the
organiation. And lead to the loyal costumer.

Stage 03: Buyer Utility Map

Buyers utility map based on a2z business plan.

Buyer Utility Map

This is partially applicable for a2z life insurance corporation
model. As all the parameters may apply for a product based
business model and this is insurance serice provider.
However, As per buyer utility map the current industry focus
was to retain their exosting customer by providing them
more benifits and better solution.
a2z came up with a new idea of providing insurance to bus
passengers as it is done for flight passengers. So as per blue
ocean offering as below:
Customer productivity: New product with new customers.
Simplicity & convinoence is there in paying premium by just
paying for tickets and for their insurancd claims also.
Risk is there as it all depends on the contract they have with
best.
Fun and Image and environmental friendliness does not
apply here.

Stage 03: Price Corridor of the Mass

The target mass customer of the a2z is the passengers of the best
bus service who are with an agreement to provide insurance to
their pasengers and staff.
Per km insurance cost calculated is only RS 0.10 . So It hardly has
to set any high level of legal and resourse prtection. Only it has to
be extra cautiosus while dealing with claims and that involves
some level of legal and resourse protection.
For a2z business tieup price corridor of mass is of Mid level
pricing.

Stage 04: Blue Ocean Strategy

Sequence
Yes, the buyer utility is
exceptional as a2z has came
with a unique product with best
bus service.
The cost, profit are below
explained as per the
analysis made by a2z.
Yearly earnings= RS
87,60,00,000
Total compensation =
93,20,000
EST bus share = RS
26,00,04,000
A2Z SARE PER
YEAR=86,66,80,000
26,00,04,000 = RS
60,66,76,000
Leagal tieup, fluctuation in
yearly accident counts, fraud in
claims these are few intitial
hurdles.

Strategy Sequence: Strategy Execution - Four Hurdles