IFFCO TOKIO GENERAL INSURANCE COMPANY

IFFCO-Tokio General Insurance (ITGI) was incorporated on 4th December 2000 with a vision of being industry leader by building customer satisfaction through fairness, transparency, and quick response. It is a joint venture between the Indian Farmers Fertilizer Co-operative (IFFCO) and its associates and Tokio Marine and Nichido Fire Group, the largest listed insurance group in Japan. IFFCO Tokio General Insurance has Pan India presence with 65 'Strategic Business Units' and a wide network of over 120 Lateral Spread Centres and 255 Bima Kendras. It offers a wide range of uniquely customized policies covering a wide range of customers, from farmers to some of India's largest automobile manufacturers. From a modest Rs 213 Crores of GWP (Gross Written Premium) in 2001-02 it has achieved an impressive Rs 2248.16 Crores in 2011-12, thereby becoming one of India's leading private players. IFFCO Tokio General Insurance has got the Technical Support for underwriting and reinsurance from Tokio Marine and on Risk Management from Tokio Risk Consulting (TRC). It is the first company in India to underwrite mega policies for a fertilizer and an automobile company. This comprehensive policy is based on international rates and optimizes the premium outflow for clients even as it offers a one-stop, all-risk cover. Other than the conventional products, it has been able to come out with niche products like Credit Insurance, Fine Arts Insurance, P & I Insurance, Errors & Omissions Policy for the IT Sector etc. At the same time it has steadfastly carried out its rural centric initiatives by launching products like Sankat Haran Bima Yojana, Mausam Bima Yojana, Mahila Suraksha Bima Yojana and Janata Bima Yojana for the masses. It's pioneering work using technology like RFID(Radio Frequency Identification Device) and NDVI (Normalised Difference Vegetation Index) have made it possible to offer Cattle and Weather insurance to the rural population at large. It is also the only insurance company in the country to have a 100%-owned distribution channel to service its retail customers called IFFCO-TOKIO Insurance Services Ltd (ITIS). It finds special mention in the 'Capgemini World Insurance Report- 2009' as an innovative distribution channel. Today, ITIS has a highly motivated workforce of over 1500 employees in over 350 towns. As a customer focused company, it conducts bi-annual customer satisfaction surveys through independent agencies to gauge its operational efficiencies. This is backed by a robust IT infrastructure, which has enabled, among other things, speedy settlement of claims.

MISSION To win the trust of individuals, trade, industry and commerce and protect citizens, corporate, cooperatives and international investors in India. VISION The vision of joint venture company is to be the INDUSTRY LEADER by 1. Building Customer Satisfaction through Fairness, Transparency and Quick Response 2. Providing Innovative Products and Services to suit every Customers need 3. Being Technology Driven, Cost Conscious and Price Competitive 4. Creating a niche in the Rural Segment GOALS AND OBJECTIVES To add value to every facet of insurance & to contribute to top & bottom line of the business by knowledge based practical applications of various insurance concepts, thereby offering customized products through continuous innovative marketing, strategic planning & positioning, public relations, prudent underwriting, reinsurance and claims management. PESTEL FRAMEWORK The PESTEL framework is designed to provide managers with an analytical tool to identify different macro- environmental factors that may affect business strategies, and to assess how different environmental factors may influence business performance now and in the future. The PESTEL framework includes six types of important environmental influences: political, economic, social, technological, environmental and legal. These factors should not be seen as independent factors. Factors such as technological advances may probably affect the social and economic conditions in different markets. Below, some characteristics in each environmental factor are listed, which may give business managers guidance to, which factors may be of importance to a companys strategy. The list is however far from complete, and it only gives managers some preliminary inspiration to, which factors may be of relevance for handling business strategies. Many factors that are not included below may have an effect on business success, and each company must evaluate for themselves, which key drivers of change will potentially have strategic and competitive consequences. Political Factors Stability of government Social Welfare Policies Foreign Trade Regulations Taxation Policies Entry mode regulations Economic Factors Disposable Income of Buyers Credit Accessibility Unemployment Rates

Interest Rates Inflation Money Supply GNP Trends Business Cycles

Socio cultural Factors Population Demographics Distribution of Wealth Social Mobility Lifestyle changes Attitude to work and leisure Consumerism Educational Levels Technological Factors Government spending on research Government and industry focus on technological effort New dimensions/developments Speed of technology transfer Rate of obsolescence Environmental Factors Environmental Protection Laws Waste disposal laws Energy consumption regulation Legal Factors Competition Law Employment Law Health and safety Product safety The key for business managers is therefore to discover the main drivers of change that may affect business strategies, and to discover the factors most likely to influence the performance of the business. In conducting a PESTEL analysis, business managers may create strategies that take several macro-environmental factors into consideration, so that the strategy formulation process will be as sensitive to current and future environmental factors as possible.

PESTEL ANALYSIS OF IFFCO TOKIO

Political Factors :
1. Government Stability : Attempts by the government to force firms to sell insurance at certain prices in given areas will result in inefficiencies and unintended consequences, the most likely of which will be an abandonment of the targeted areas altogether and loss of availability of insurance not only in the targeted areas but throughout the rest of the market. Government will be forced to have all firms, regardless of their specialty, participate in the losing market for insurance in the targeted neighborhoods. Thus the government intervention has a negative impact on the insurance industry.

2. Taxation Policy : Tax levies and tax breaks will have an enlarging impact on the insurance industry because imposing of taxes on insurance products will therefore create a pressure on the firms regarding their pricing policy for their insurance products.

3. Foreign Trade Regulations : Foreign partners in the Indian Insurance Industry operate in an extremely uncertain environment due to snake and ladder like laws governing the sector. While an Insurance Law Bill pending with the Standing Committee Of Parliament for increasing the foreign investment in insurance joint ventures to 49%, an existing regulation requires that after completing 10 years of operations, overseas investment in such companies would have to be brought back to 26%. This is somewhere creating a negative impact for the insurance companies in India.

4. Social Welfare Policy : This is an extremely diverse and far-reaching sector with a range of private, public and voluntarily organizations providing care and support for the young, elderly, vulnerable and disadvantaged members of the society. The insurance companies provide insurance for these people on a comprehensive and flexible basis and helps them to attain a positive impact for their firm.

Economical Factors :
1. Business Cycle : The insurance market has long been subject to pricing cycles. During the so-called soft market pricing may produce breakeven profitability results or even operating losses for some companies. This is then followed by a hard market where insurance prices are relatively high. Then pricing falls and a soft market slowly erodes profits, continuing the cycle. At times it becomes risky for the insurance company and may lead to negative impact for the firm. 2. Interest Rates : The interest rate figures play a major role for every insurance company in respect of their sales, revenue, profitability and also of the company valuations. If interest rates continue to stay low - and it appears likely that they will then the insurers financial pain will get broader and deeper.

3. Money Supply : Availability of money for the growth and expansion of the company is very essential and thus the firm should study every source of fund in detail and should be able to analyse the positive outcomes and the negative impact associated with it.

4. Inflation :

Inflation describes the economic phenomenon of increasing prices for the goods and services. During the financial crisis, inflation risk was a real concern for many insurers. Insurers identified it as one of their top risk management concerns because it affects investment returns, asset valuation and future insurance liabilities.

5. Disposable Income : Disposable income affects the market share of every insurance company. It may lead to positive changes or even to negative impact as well.

Socio cultural factor :

1. Population: Growth in the population is a major factor pushing up the demand. It is also going to exert a special influence on the insurance market. If the population increases, eventually demand for general insurance will increase eventually. For example, as population will increase, more people will purchase cars, leading to an increase in motor insurance policy.

2. Attitude to work and leisure: IFFCO Tokio is an organization with qualified team of professionals working together, sharing views & ideas with passion to accomplish a common goal To be an industry leader in India. The business environment they work in is dynamic with high degree of competition. They constantly challenge themselves to higher levels of individual and group performance. They focus on delivering high-value and explicit business outcomes. They design to produce the right solutions and the right results for their clients. At IFFCO Tokio, they focus on Team building and promoting a collaborative atmosphere. We use a collaborative approach to build consensus and generating momentum from the beginning itself. They create an environment that is trusting, spontaneous and encourages sincerity, flexibility, celebration and appreciation. All this is enabled through constant training, performance management, career counseling & other best practices. 3. Income distribution: Amid rising disposable income levels and better health, education and housing conditions, as much as 85 per cent of middle income earners in India feel a greater need for additional insurance to protect their lifestyles.

4. Consumerism : Consumer is the king and he must be protected. Nowadays, policy documents are easier to read and contain clearer clauses and exceptions lists written in simpler English.

5. Level of education: Level of education in India is moderately poor. As per the data published by the 2011 census India has managed to achieve an effective literacy rate of 74.04 per cent in 2011. Though the Literacy rate in India has improved a lot over the last one decade, people are unaware of the benefits of insurance. it is a big challenge for the insurance industry to create awareness. Thus, IFFCO Tokio is committed to the growth and development of the rural and social sector and fulfilling its social responsibilities. They have a fully dedicated rural team working to overcome challenges like low awareness, general apathy towards insurance, high distribution & development costs and low profitability.

Technological Factors :
1. Government & industry focus on technological efforts: To solve the challenges of accessibility, awareness and distribution; IFFCO and IFFCO Tokio came up with the unique idea of providing a Personal accident insurance cover bundled with the purchase of fertilizers from IFFCO or IPL. Our parent company IFFCO is the world's largest fertilizer cooperative with nation-wide network of about 40000 cooperative societies. We have sought to leverage its brand value, client database and distribution channel to penetrate the rural and social segment. Most of our one man offices called Bima Kendras are in the premises of a cooperative society. 2. New developments: It is also the only insurance company in the country to have a 100%-owned distribution channel to service its retail customers called IFFCO-TOKIO Insurance Services Ltd (ITIS). It finds special mention in the 'Capgemini World Insurance Report- 2009' as an innovative distribution channel. IFFCO Tokio General Insurance has got the Technical Support for underwriting and reinsurance from Tokio Marine and on Risk Management from Tokio Risk Consulting (TRC). It is the first company in India to underwrite mega policies for a fertilizer and an automobile company. 3. Radio Frequency Tagging (RFID): Animal identification is a critical challenge while deciding the claims for livestock insurance. Instead of depending on the traditional use of the metallic and plastic tags, which result in high moral hazard, IFFCO Tokio has innovatively used the latest RFID tagging for animal identification and fair and fast claim settlement. This method involves the use of a transponder and trans receiver for accurate animal identification, which eliminates of the chances of fraudulent claims. So far more than 10000 animals have been insured by this method.

4. Use of automated weather stations: In the weather insurance business, the conventional use of weather data obtained from rain gauges or observatories had problems of delays and manual interference. To combat this, IFFCO Tokio has started using data from automated weather stations (AWS), that ,besides providing timely and accurate data to the insurer, also provides daily data and short term weather forecasts to the associated farmers. It facilitates faster claim settlement , and better client interface by providing Agro-advisory services.

Legal Factors:
1. Competition Law: Every company has its own policies having defined their own terms and conditions, exclusions and scope of cover under their policy. They also compete on the basis of premium and may charge add on cover to have some sub standard risk to the cover under special cases. 2. Health and Safety Law: Workmen Compensation Act Every company provides this policy to the employer but not to the individual, thus compensating the employees of a company in the mishappening of some event. 3. Product Safety: The traditional distribution channel i.e. the tide agency of distribution channel should take the pain of explaining every material information to the prospective and should not mislead the buyer for just for the sake of selling insurance policy to him which in future can lead to consequences between the insured and insurer or may even cause danger to his property or life.

ETOP ANALYSIS A profile of environmental threats and opportunities is considered to be a very useful device and is a summarized depiction of environmental factors and their impact on future functions of firm under competitive environment. The environment is a significant source of change a n d i s h i g h l y d yn a m i c i n n a t u r e . S o m e o r g a n i z a t i o n s b e c o m e v i c t i m o f t h e c h a n g e a n d dynamism of environment. Basic Characteristics of Environment: 1. Uniqueness 2. Dynamic in Nature 3. Variability of Control 4. Environment Carries Risk, Uncertainties and Opportunities On the basis of impact on a business house we can divide the environment into 4 categories:1. 1. The Mega Environment or Broader Environment: a) Demographic Factors b) Political Factors c) Legal & Regularity d) Socio-Cultural e) Economic 2. The Micro or Immediate Environment or Industry Environment: This environment and its components are very close to the firm; in fact the firm operates within this environment. Therefore, the intensity of negative or positive effects are directly hit the firm and its strategies/decision making. 3. Technological Environment 4. Global Environment

Opportunities: A developing market such as the internet Create awareness through advertisement More training for the sales persons mergers, joint ventures or strategic alliances Moving into new market segments that offer improved profits A market vacated by an ineffective competitor (some where government companies) Threats: Increasing number of competitors in the market Price wars with competitors A competitor has a more offers and cash discounts both for employee and customers Competitors investing more on promotion and tracking of customers

ETOP ANALYSIS
ENVIRONMENTAL FACTORS
POLITICAL FACTORS

IMPACT OF THESE FACTORS

ECONOMIC FACTORS

SOCIO - CULTURAL FACTORS

TECHNOLOGICAL FACTORS

ENVIRONMENTAL FACTORS

LEGAL FACTORS