CHAPTER 1 – INTRODUCTION

A. COMPANY PROFILE

Standard Insurance Co., Inc. is a Philippine non-life insurance company with a license to
market all types of non-life insurance lines. Providing over 49 years of service, Standard
Insurance is the leader in motor car insurance in the Philippines and one of the strongest in
property insurance after its acquisition of Zurich General Insurance Philippines in late 2003. The
Company ranks 4th in terms of gross premiums, 3rd in terms of net income and 2nd in terms of
capitalization. Its retail operations, primarily motor car insurance, is the most extensive and the
most advanced in the industry with 43 computerized full service branches nationwide with
underwriting and claims servicing capabilities, more than 200 car-dealer tie-ups nationwide, and
its own technical personnel. These technical personnel are engineers and trained mechanics
who perform car repair estimates supported by the Company's own computerized parts
database for all major models of popular brand vehicles. In the industry, it has the quickest
turnaround time with repairs in the car dealership shops and the only one with its own call
center to support its retail operations. In the meantime, Standard Insurance has adopted the
Zurich practices in risk engineering, underwriting and industrial claims processing
complemented with an in-house adjusters team. The Company's property, marine and liability
insurance, as well as catastrophe (CAT) cover are supported by superior reinsurance facilities
procured from the London and Singapore markets from international reinsurers with the lead
rated by S&P at AAA and the rest of the panel at no less than A-. These facilities are under the
excess of loss reinsurance treaties with its property and CAT covers having the highest
capacities in the industry. Its risk engineering process includes the use of Geographical
Information System (GIS) where mapping of property risks linked to the online system is made
against pertinent CAT hazard maps such as fault lines, liquefaction, and ground shaking and
flooding. The Insure/90, the Company's real-time general insurance system complemented by
its own IT department, was carried over from Zurich General Philippines and is currently in use
by corporate marketing and some Metro Manila branches. The rollout and shifting to the I-90 for
the rest of the branches is projected to be completed towards the end of 2007. The Company is
accredited by most of the major banks and financial institutions. Its ISO certification for quality
management systems received in 1998 was upgraded to an ISO 9001:2000 in October, 2003
and has been maintained since then.

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 The Company has a product mix of 61:39 on the average, with motorcar accounting for
the major part of its portfolio and the balance in non-motor insurance, primarily property
insurance. The retail motorcar insurance is basically generated by the branches and car dealer
tie-ups under the Retail Group while the large corporate motorcar fleet accounts such as the
San Miguel Group, Coca-Cola, Pepsi-Cola, McDonalds, Smart Telecommunications, Globe
Telecoms and Pfizer are generated by the Corporate Marketing Group. As a result of its efficient
systems in underwriting, claims, IT and accounting for its retail operations, the Company's loss
ratio in motor car insurance has been the lowest among the major players. In the meantime,
around 42% of the Company's property insurance is generated from the International Program
Business (IPB) which is reinsured with ZFS under its cooperative partnership with the latter,
such as those of the Philippine operations of Nestle, Holmic Cement, McDonalds and Merck.
The remaining property insurance portfolio is generated from the open market and is reinsured
under the Company's reinsurance treaties with its highly rated reinsurers. Some of these
property accounts where the Company is the lead insurer include those of; a leading telecom
company, a leading realty company with its shopping malls, and a leading international hotel
chain. A majority of the property insurance for both the IPB and the open market have been
coursed through the top insurance international brokers. The prudent underwriting and risk
engineering practices of the Company have resulted in a quality portfolio which could be
generally classified as semi-prime to prime risks.

In the latter part of 2004, the Company launched its insurance product for cellular phones under
the brand "TXT2PROTECT, eStandard Cell phone Insurance". This was after nearly two years
of product research and development with the design of a dedicated and highly computerized
system in underwriting, claims (including anti-fraud) and reporting. The system includes linkages
to the leading telecom companies. The product has also been added as a value service through
an automatic insurance cover for a high-end post-paid plan of one of the telecom companies.
Similar to the motor fleet accounts, wholesale cell phone insurance has been made available to
corporate clients such as the large drug companies. The latest innovation of the cell phone
insurance product was the "Txt2protect Pre-paid Card" which became a practical and
convenient solution for premium payments and registration by clients anytime, anywhere.
Similar to the telecoms pre-paid card where subscribers scratch the pre-paid card & pin
numbers and send an SMS message to the dedicated network or mobile phone number, the
"Txt2protect Pre-paid Card" works the same way. Since Text2protect pre-paid cards are
distributed through the business centers and the retail distributors of Smart Communications'
prepaid load, the "Txt2protect Pre-paid Card" is thus made available through a wider channel of

2
distribution 24-hours a day. More importantly, evolving from servicing the low-risk corporate
clientele to a very retail and higher risk consumer clientele, its system remains to be effective in
maintaining comfortable loss ratios, vis-a-vis, efficient claims processing.

Standard Insurance has a manpower complement of more than 900 nationwide. Led by a highly
professional management team, whose expertise, discipline and technology come from both the
banking and insurance sectors, complemented by the global expertise from the Zurich Group,
the Company in the last decade has been very HRD centered. It has consistently instilled on its
personnel a quality culture of professionalism and integrity as integral to their career
development.

The Company is 60% owned by Lourdes T. Echauz Holdings, Inc. a holding firm with a
net worth amounting to Php825 million as of December 2006.The remaining 40% is owned by
CEU Holdings, Inc.1

CHAPTER 2 - RESEARCH DESIGN AND METHODOLOGY

1
http://www.standard-insurance.com/profile.shtml

3
 The researcher was able to acquire data from the following sources:

Primary Data

Primary internal data was gathered through the website of the Standard Insurance Co.,
Inc. It includes the company background and product information. The Annual Report of 2006
and financial statements from SEC explicates the company’s financial performance for the last
three years. The news magazine of the company includes their press releases and updates in
Non-life insurance.

Primary external data was congregated from the website of the Insurance Commission.
This information includes external factors that affect the industry, market size, market growth
ranking positions of all non-life insurance company in the Philippine market.

Secondary Data

Secondary external and internal data was gathered through the readings from the
internet. The information includes economic trends in insurance business and its major
competitor’s information.

Limitations

The Strategic Management Paper is limited to study and analysis of motor insurance
which the Standard Insurance Co., Inc. biggest line of the business when it comes to non-life
insurance. This financial data gathered are limited to the financial statement of years 2004,
2005 and 2006. The motor insurance has no balance sheet because Standard Insurance Co.
Inc. has a consolidated Balance sheet for the operation of the company and its business.

CHAPTER 3 – VISION AND MISSION STATEMENT

4
 A. VISION AND MISSION STATEMENT

Standard Insurance Co., Inc. is committed to continuously improve the quality of service
to the insuring public by raising the standard of competency and professionalism, and through
integrity.2

Mission Statement

• To instill a quality culture that promotes the values of professionalism,

integrity, discipline, teamwork and productivity.

• To maintain profitability and other financial targets and sustain

competitiveness of the company in the non-life insurance business.

• To consistently give our customers value for their money.

• To recruit and retain competent people committed to perform at their best in

delivering quality service to our customers.

• To promote employees' continuous professional and personal development.

Quality Management Principles

• Customer Focus

• Leadership

• Involvement Of People

2
http://www.standard-insurance.com/new_site2/quality_policy.html

5
 • Process Approach

• System Approach to Management

• Continual Improvement

• Factual Approach to Decision Making

• Mutually Beneficial Supplier Relationship

Analysis:

The company is still in the state of improving the quality of service after receiving the
ISO 9001:2000 that was received last October 09, 2006 until October 08, 2009. This vision
statement illustrates the long term goal of Standard Insurance Co. Inc. as to be recognized for
the commonality of interests in having the standard of competency and professionalism. This
formal statement is communicated to all levels of the organization through e-mails, posters,
business meetings, news magazines and company gatherings.

The mission statement portrays the philosophy, their purpose and its principles in doing
business. The researcher will add mission statements to address the dilemma.

Proposed Vision Statement:

Standard Insurance Co., Inc. is committed to continuously improve the quality of service
to the insuring public by raising the standard of competency and professionalism, and through
integrity.

Proposed Mission Statement:

• To instill a quality culture that promotes the values of professionalism,

discipline, teamwork and productivity.

6
 • To maintain profitability and other financial targets and sustain
competitiveness of the company in the non-life insurance business.

• To consistently give our customers value for their money

• By providing customers with the highest quality products and services,

we will spread safety and security to all around us.

• To recruit and retain competent people committed to perform at their best in

delivering quality service to our customers.

• To promote employees' continuous professional and personal development

• To encourage employees in obtaining highest insurance qualifications

to give us the leading edge in technical insurance expertise for the
benefit of our clients.

• To provide professional Insurance and Risk Management services with

the highest sense of integrity to all our customers".

• While demonstrating responsible management as a good corporate

citizen, we will make a positive contribute to society.

Proposed Core Values:

• Customer Focus

• Leadership

• Involvement Of People

• Process Approach

• System Approach to Management

• Continual Improvement

• Factual Approach to Decision Making

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 • Mutually Beneficial Supplier Relationship

• Respond to Social Sentiment

Analysis of the proposed vision and mission statement:

There is no change in the vision statement of the company because the idea of
improving quality service is needed in attaining as the leading provider in insurance industry. As
been discussed in the Strategic Management textbook of Fred R. David, a good mission
statement clearly states the important components which are customers, products, market,
technology, Self-concept, concern for growth and concern for employees. The additional
proposed mission statements above clearly states the majority on how to improve their product
line, services and values to the customers, practicing good citizenship and the need for
competent employees in order to achieve quality service for insuring public. The researcher
decided to include respond to social sentiment because it will help to build company’s public
image as being socially responsible through responsible management. The core values will be
the guiding principle for the employees support the organization.

CHAPTER 4 – ENVIRONMENTAL ANALYSIS

I. GENERAL ENVIRONMENT

a. Social, Cultural and Demographic Environment

The Philippines is a member of the Association of South East Asian Nations (ASEAN), a
regional trading block with combined annual vehicle sales of 1.5 million units (1996, pre financial

8
crises.) Before the beginning of the current economic crisis, Thailand was the largest
automotive market within the ten-nation ASEAN, with Indonesia ranking second in the group,
followed by Malaysia, and then the Philippines. In 1998, Malaysia was the largest, followed by
Thailand, then the Philippines and Indonesia (vehicle sales for the entire ASEAN market were
down 73 percent compared to the pre crisis levels of 1996.) The other ASEAN nations include
Brunei Darussalam, Burma (Myanmar), Cambodia, Laos, Singapore and Vietnam.

The Philippines' 1995 unit vehicle sales reached just over 128,000 units (approx. 71,000
passenger vehicles and 57,000 commercial vehicles.) Sales in 1996 were 162,000. The
Philippines has been hard hit by the economic crises in South East Asia. In 1997 motor vehicle
sales in the Philippines were 144,435 units, down 11 percent from 1996. For 1998, vehicle sales
were down 44.5 percent, to 80,231 compared to 1997. Sales are not forecast to recover to 1997
levels until 2001.

The Philippines' vehicle market is approximately 55 percent passenger vehicles and 45

percent commercial vehicles. Japanese manufacturers dominate this market with over 80
percent market share, while Korean manufacturers hold 15 percent. All other manufacturers
hold the remainder.

According to International Trade Commission (ITC) data, for the full year 1998, U.S.
vehicle exports to the Philippines were down 55 percent, from $50 million to $23 million,
compared to 1997.3

Environment – Global Warming

Global temperatures are rising. Precipitation has increased percent across the world's
continents in the last century. Worldwide have risen by some 15-20 cm (6-8 inches) in the

Although there are still some scientific uncertainties around issue of global warming, recent
experiences of unusual catastrophes have put underwriters on the alert and suggest monitoring
and prudent underwriting is required.4

Population

The Philippine population would continue to grow, increasing from 76.5 million, as of the
latest population census conducted in May 2000, to 141.7 million in 2040, according to the

3
www.internationaltradecommision.com
4
http://en.wikipedia.org/wiki/Global_warming

9
Medium Series of the 2000 Census-based population projections. This means that 65 million
people would be added to the nation's population between 2000 and 2040, which is a span of
40 years, even if the average annual growth rate is projected to drastically decline from 2.34
percent during the 1990-2000 period to around 1.0 percent during the 2030-2040 period. The
population is projected to grow by 1.95 percent in the 2005-2010 periods, from 85.3 million in
2005 to 94.0 million in 2010.

The nation's population would also become older as it is projected that child-bearing rate
by women in the country will continue to decline and the survival rates of all age groups will
improve. In 2005, the age group 0-14 accounted for 35.0 percent of the nation's total population.
By 2010, this age group would comprise 33.0 percent and by 2040, 23.1 percent. Meanwhile,
4.3 percent of the Filipinos would be 65 and over by year 2010, and by year 2040, 9.7 percent
of them would be in the same age group.

Among the regions, CALABARZON is projected to have the largest population by 2010,
surpassing the NCR which currently has the largest population. In 2010, CALABARZON would
have 11.9 million people, while the NCR, 11.6 million. By 2040, CALABARZON would have 18.5
million, and Central Luzon, by then the second largest region, would have 15.0 million.
Cordillera Administrative Region would continue to have the smallest population with 2.7 million
by year 2040. Meanwhile, MIMAROPA would remain as the fastest growing region, as it is
expected to have an annual growth rate of 2.6 percent in 2005-2010 and 1.6 percent in 2035-
2040.5

Income

The total annual family income in 2006 was estimated at P 2.99 trillion indicating an
increase of 22.7 percent over the 2003 estimate of P2.44 trillion. The total family expenditure
was approximately P2.56 trillion, an increase of 25.7 percent over the 2003 estimate of P2.04
trillion (Table 1).

5
http://www.census.gov.ph/data/pressrelease/2006/pr0620tx.html

10
 In 2006, the average annual income of Filipino families was estimated at P172 thousand.
Across income deciles, this average ranged from P32 thousand for the first income docile (or
lowest income group) to P617 thousand for the tenth income deciles (highest income group)
(Table 2b). Income deciles are the distribution of families into ten groups in terms of annual
family income. The first deciles have the lowest income and tenth deciles have the highest
income.

The 2006 average annual income (P172 thousand) is 16.2 percent higher than the 2003
estimated average of P148 thousand. Meanwhile, the average annual expenditure of families
increased from P124 thousand in 2003 to P147 thousand in 2006, or by 18.5 percent over the
three-year period. These numbers translate into average savings in 2006 of some P25 thousand
per family; the 2003 estimate was P24 thousand per family. These savings came mainly from
the tenth income deciles with P156 thousand per family on the average in 2006 (Table 2a).

From 2003 to 2006, annual income in all deciles increased. The average annual income
of the bottom 30 percent of families (or the lowest three income deciles combined) increased by
around P8 thousand; that of the upper 70 percent of families, by some P31 thousand. For all
families, the increase was P24 thousand (Table 2a).

Adjusting for the inflation between 2003 and 2006, total family income in 2006 (P2.99
trillion) would be valued at P2.50 trillion at 2003 prices. Likewise, the total family expenditure in
2006 (P2.56 trillion) would be valued at P2.14 trillion at 2003 prices. In real terms, the total
income of families increased slightly by 2.6 percent while the total expenditure increased by 5.1
percent between 2003 and 2006. Also, the average family income decreased by 2.8 percent
while average family expenditure decreased by 0.4 percent. Thus, the 2006 real average
savings by families is equivalent to P21 thousand at 2003 prices, which is lower than the 2003
average savings of P24 thousand per family (Table 1).

The income distribution changed slightly from 2003 to 2006. The share to the total
income of families belonging to the tenth deciles exhibited a slight decrease, from 36.3 percent
in 2003 to 35.9 percent in 2006. The gap in family income between the families belonging to the
tenth deciles and those in the first deciles had narrowed slightly. In 2006, the total family income
of the tenth deciles was about 19 times that of the first deciles, while it was 20 times that of the
first deciles in 2003 (Table 2a). The Gini coefficient was estimated at 0.4564 in 2006, slightly
lower than the 2003 ratio of 0.4605 (Table 1). The Gini coefficient provides a measure of income

11
inequality within a population. A Gini coefficient ranges from 0 to 1, with 0 indicating perfect
income equality among families, and 1 indicating absolute income inequality.

The spending pattern of Filipino families particularly among those in the bottom 30
percent income group continued to slide towards less spending on food. In 2006, 59 percent of
all expenditures by this group were on food, while it was 60 percent in 2003. This means that for
every P100 spent by this group in 2006, P59 went to food, compared to P60 in 2003.
Consequently, there was a decrease in the shares of other expenditure items like tobacco (2.0%
to 1.7%), clothing, footwear and other wear (2.5% to 2.0%) and house maintenance and minor
repair (0.5% to 0.2%) (Table 3).xxx6

Conclusion: Based on the analysis above. Registered car, population and import of cars in the
Philippines are continuously growing so the demand for car insurance will be increasing

6
http://www.census.gov.ph/data/pressrelease/2007/ie06tx.html

12
Table 1. Total Number of Famil
          and Gini Coefficient: 2006

Selected Indicators

------------------------------------------

Philippines
Number of families (in thousands
Gini Coefficient
13
T able 2a. T otal Income, E xpe
           by Income Decile: 200

| 2006 (In billi

Income Decile/ |------------
Income G roup | Income
--------------------------------------

P hilippines 2,992

F irst D ecile 56
14
T able 2b. A verage Incom e,
           Incom e D ec ile: 2006

| 2006 (In th
Incom e D ec ile/ |----------
Incom e G roup | Inc om
------------------------------------

P hilippines 172
15
Table 3. Percent Distribution of Family Expenditure by Expenditure Item for
Bottom 30 Percent
and Upper 70 Percent Income Group: 2006 and 2003

| 2006 | 2003
|-----------------------------------------------------------
Major Expenditure Items | All Income | Bottom | Upper | All Income |
Bottom | Upper
| Groups | 30% | 70% | Groups | 30% | 70%
--------------------------------------------------------------------------------------------------

Philippines

Total expenditure (in billion pesos) 2,561 266 2,295 2,038 212 1,827

Percent 100.0 100.0 100.0 100.0 100.0 100.0

Food expenditure 41.4 59.1 39.3 43.1 60.2 40.0

Alcoholic beverages 0.7 1.2 0.6 0.7 1.2 0.6
Tobacco 0.9 1.7 0.8 1.1 2.0 0.9
Fuel, light and water 7.6 7.3 7.7 6.5 6.6 6.6
Transportation and communication 8.2 3.8 8.7 7.3 3.2 8.2
Household operation 2.3 1.8 2.4 2.2 1.7 2.1
Personal care and effects 3.7 3.7 3.7 3.9 3.7 4.1
Clothing, footwear and other wear 2.4 2.0 2.5 2.9 2.5 3.0
Education 4.4 1.3 4.7 4.0 1.3 4.5
Recreation 0.5 0.2 0.5 0.5 0.2 0.5
Medical care 2.9 1.7 3.0 2.2 1.4 2.3
Nondurable furnishings 0.2 0.2 0.2 0.2 0.2 0.2
Durable furniture and equipment 2.7 0.8 2.9 2.6 0.8 2.8
House rent/rental value 12.7 9.0 13.2 13.1 8.8 13.6
House maintenance and minor repairs 0.6 0.2 1.8 0.7 0.5 0.8
Taxes 1.6 0.5 0.6 2.1 0.2 2.3
Special family occasions 2.8 1.7 2.9 2.6 1.6 2.8
Gifts and contributions to others 1.4 0.7 1.4 1.2 0.6 1.3
Other expenditure 3.0 3.3 3.0 2.9 3.2 3.3
Note: Details may not add up to totals due to rounding
Source: National Statistics Office, 2006 Family Income and Expenditure Survey
Preliminary Results.

Page last updated: February 19, 2008

b. Technological Environment

E-Commerce

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 Electronic commerce, commonly known as e-commerce or ecommerce, consists of the
buying and selling of products or services over electronic systems such as the Internet and
other computer networks. The amount of trade conducted electronically has grown dramatically
since the spread of the Internet. A wide variety of commerce is conducted in this way, spurring
and drawing on innovations in electronic funds transfer, supply chain management, Internet
marketing, online transaction processing, electronic data interchange (EDI), automated
inventory management systems, and automated data collection systems. Modern electronic
commerce typically uses the World Wide Web at least at some point in the transaction's
lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

A small percentage of electronic commerce is conducted entirely electronically for

"virtual" items such as access to premium content on a website, but most electronic commerce
involves the transportation of physical items in some way. Online retailers are sometimes known
as e-tailers and online retail is known as e-tail. E-commerce or electronic commerce is generally
considered to be the sales aspect of e-business.

Business-to-consumer (B2C, sometimes also called Business-to-Customer) describes

activities of E-businesses serving end consumers with products and/or services. It is often
associated with electronic commerce but also encompasses financial institutions and other
types of businesses. B2C relationships are often established and cultivated through some form
of Internet marketing.7

Conclusion: Based on the analysis above, the researcher concludes that new adopting e-
commerce will benefit the Standard Insurance Co. Inc. because Internet usage in the
Philippines is very rampant nowadays.

c. Economic Environment

7
http://en.wikipedia.org/wiki/E-commerce

17
 The Philippines was less severely affected by the Asian financial crisis of 1998 than its
neighbors, aided in part by its high level of annual remittances from overseas workers, no
sustained run-up in asset prices, and more moderate debt, prior to the crisis. From a 0.6%
decline in 1998, GDP expanded by 2.4% in 1999, and 4.4% in 2000, but slowed to 3.2% in 2001
in the context of a global economic slowdown, an export slump, and political and security
concerns. Average GDP growth accelerated to about 5% between 2002 and 2006 reflecting the
continued resilience of the service sector, and improved exports and agricultural output.
Nonetheless, it will take a higher, sustained growth path to make appreciable progress in the
alleviation of poverty given the Philippines' high annual population growth rate and unequal
distribution of income. The Philippines also faces higher oil prices, higher interest rates on its
dollar borrowings, and higher inflation. Fiscal constraints limit Manila's ability to finance
infrastructure and social spending. The Philippines' consistently large budget deficit has
produced a high debt level, and this situation has forced Manila to spend a large portion of the
national government budget on debt service. Large unprofitable public enterprises, especially in
the energy sector, contribute to the government's debt because of slow progress on
privatization. Credit rating agencies have at times expressed concern about the Philippines'
ability to service the debt, though central bank reserves appear adequate and large remittance
inflows appear stable. The implementation of the expanded Value Added Tax (VAT) in
November 2005 boosted confidence in the government's fiscal capacity and helped to
strengthen the peso, making it East Asia's best performing currency in 2005-06. Investors and
credit rating institutions will continue to look for effective implementation of the new VAT and
continued improvement in the government's overall fiscal capacity in the coming year.8

GDP: purchasing power parity - $508.1 billion (2006 EST.)

GDP - real growth rate: 6.9 % (2007 EST.)

GDP - per capita: purchasing power parity - $5,700 (2006 EST.)

Inflation rate (consumer prices): 8.3(2003) 2.7 %( 2007)

Labor force: 35.79 million (2006), 41.93 million (2007)

Unemployment rate: 10.4% (2003), 7.9% (2007)

Currency: 1 Philippine peso (P) = 100 centavos

8
https://www.cia.gov/library/publications/the-world-factbook/geos/rp.html

18
Exchange rates: Philippine pesos (P) per US$1 = 41.40 (2007), 49.28 (2006), 53.10 (2005),
56.052 (2004), 54.203 (2003), 40.427 (January 2000), 39.089 (1999), 40.893 (1998), 29.471
(1997), 26.216 (1996), 25.714 (1995)

Conclusion: Based on GDP, GNP and other economic indicators, the researcher concludes
that the general economic environment is positive for non-life insurance business.

d. Political / Government / Legal Environment

Government

Insurance Commission
Insurance touches all our lives in a multitude of ways. It is an essential element in our
present day life, securing our standards of living and the stability of our families, as well as our
property rights. Everyone in this country feels the protecting arm in some form of insurance and
most of us are affected by the many forms of its protection. In view of this widespread public
interest in the various insurance coverage, the supervision of this business has become an
integral part of our government process.9

Legal Environment
The Insurance Code of Philippines” Presidential Decree 612
ORDAINING AND INSTITUTING AN INSURANCE CODE OF THE PHILIPPINES

I, Ferdinand E. Marcos, President of the Philippines, by virtue of the powers in me vested by the
Constitution, do hereby decree and order the following:

GENERAL PROVISIONS
Sec. 1. This Decree shall be known as "The Insurance Code".

Sec. 2. Whenever used in this Code, the following terms shall have the respective meanings
hereinafter set forth or indicated, unless the context otherwise requires:

(1) A "contract of insurance" is an agreement whereby one undertakes for a

consideration to indemnify another against loss, damage or liability arising from an
unknown or contingent event.

A contract of surety ship shall be deemed to be an insurance contract, within the

meaning of this Code, only if made by a surety who or which, as such, is doing an
insurance business as hereinafter provided.
9
http://www.insurance.gov.ph/htm/_profile.asp

19
 (2) The term "doing an insurance business" or "transacting an insurance business",
within the meaning of this Code, shall include:

(a) Making or proposing to make, as insurer, any insurance contract;

(b) making or proposing to make, as surety, any contract of surety ship as a vocation
and not as merely incidental to any other legitimate business or activity of the surety;

(c) Doing any kind of business, including a reinsurance business, specifically

recognized as constituting the doing of an insurance business within the meaning of
this Code;

(d) Doing or proposing to do any business in substance equivalent to any of the

foregoing in a manner designed to evade the provisions of this Code.

In the application of the provisions of this Code the fact that no profit is derived from
the making of insurance contracts, agreements or transactions or that no separate or
direct consideration is received therefore, shall not be deemed conclusive to show
that the making thereof does not constitute the doing or transacting of an insurance
business.

(3) As used in this code, the term "Commissioner" means the "Insurance
Commissioner". 10

Conclusion: Based on the analysis above, the researcher concludes that government agency
and laws affects the legal environment of Standard Insurance Co. Inc. to ensure the welfare of
consumers and the company itself.

II. INDUSTRY ANALYSIS

a. Threat of New Entrants

When the market is opened to new players, certain barriers to entry will still exist,
including regulatory requirements such as it requires huge capital investment or minimum
capital base, finding knowledgeable and qualified staff, and laws to be followed in order to
establish a new firm for non-life insurance industry like Insurance Code of the Philippines and
application of license in Insurance Commission. As Standard Insurance Co. Inc is already in
existence, it has built up huge capital base, well brand recognition, an existing and growing
agency network. The company has been able to find, train and retain qualified staff. These may
all provide barriers to entry.

10
http://www.insurance.gov.ph/htm/pd612.htm

20
 b. Rivalry Among Competitors
There will naturally be a rivalry between competitors. There are 94 players in the industry
competing in Non-life insurance. Majority of Non-life insurance market is dominated by Malayan
Insurance Co. Inc. Extensive Research and Development and new product innovation like
Standard Insurance Co. Inc., the one and only company insuring cellular phones are keys in
competing and surviving in stiff competition.

c. Threat of Substitutes
The only substitute for insurance is a “self insured” type of product (i.e. savings set aside). It
is unlikely the entrance of another player will have an impact on this type of substitute product.
On the contrary, with another player in the market, the education level of the general public
regarding the benefits of insurance could improve, thus increase the overall demand for
insurance products and services.

d. Bargaining Power of Suppliers

Standard Insurance Co. Inc. currently is in a strong position as the contender supplier of
Non-life insurance products. As a result, the Company may not have the ability to dictate
premium rates. Their price range is relatively good among other competitors. Due to Standard
Insurance Co. Inc.’s strong position in the market, clients may not be so willing to move to an
“unknown” supplier, even if their premium rates are lower. Insurance relationships are based on
trust. Trust, knowing when a claim is made it will be paid out. The company has built a strong
level of trust amongst its clients.

e. Bargaining Power of Buyers

The bargaining power of consumers radiate from two major factors which are the size of
customers and number of companies who sell non-life insurance. The size of the customers
dictates the pricing and product feature based on the coverage of the insurance. With regards to
number of companies, they give the customers extensive choices to choose from. If the
company does not offer competitive solution, the customer can easily shift to another company.

f. Summary of Porter’s 5 Forces of Competition

The researcher performed the industry analysis using Porter’s five forces model. The
researcher specifically analyzed the rivalry among competing firms, potential development of

21
substitute products, and potential entry of new firm, bargaining power of suppliers and
bargaining power of consumers. Based on the analysis above the researcher concludes

- The researcher concludes that the intensity of rivalry is HIGH

- The researcher concludes that the threat of substitutes is LOW
- The researcher concludes that the threat of new entrants is LOW
- The researcher concludes that the bargaining power of consumer is HIGH
- The researcher concludes that the bargaining power of suppliers is LOW

III. COMPETITIVE ANALYSIS

The researcher gathered information on the premiums earned position of Standard

Insurance Co. Inc. related to its competitors in the Non-life insurance category. The data as
available of December 31, 2006, the information tells us the premiums earned by other
companies.

22
23
Source: www.insurance.gov.ph

24
 Standard Insurance Co. Inc. ranked #9 out of 93 companies. There is a difference of
P1, 689,509,494 against the top contender Malayan Insurance Co. Inc.,

Source: www.insurance.gov.ph

When Gross Premiums is concerned, Standard Insurance Co. Inc ranked #4 but still the
Malayan Insurance Company Inc. dominated it.

Conclusion: The researcher concludes that Malayan Insurance Co. Inc dominated Non-life
Insurance Category. There so much catching to be done by Standard Insurance Co. Inc.

25
 a. Profile of Competitors

Malayan Insurance Co. Inc.

The Malayan Insurance Co., Inc. is considered the core company of the Malayan Group,
having been established first. Originally capitalized at P147, 000 and domiciled in Manila,
Malayan has become a multi-million peso corporation. It has two regional offices: (1) the Luzon
Regional Office, with branches in Angeles, Baguio, Cabanatuan, Dagupan, Laoag, Legaspi, San
Pablo, and Tuguegarao, and service offices in Calamba, Cavite, Isabela, La Union, Lipa,
Palawan, and Subic; and (2) the Visayas & Mindanao Regional Office, with branches in
Bacolod, Cebu, Iloilo, Tacloban, Cagayan de Oro, Davao, and General Santos, and service
offices in Zamboanga, Tagum, and Tagbilaran. In Metro Manila, the company has branches in
Makati, Quezon City, Ayala-Alabang, Marikina and Service Offices in Honda Quezon Avenue,
Honda Kalookan, and Isuzu Manila.

Non-life insurance protection is at the heart of Malayan's diversified operations. The

insurance risks it covers include fire, marine, motorcar, miscellaneous casualty and personal
accident, and surety.

Malayan takes pride in being able to settle just and valid claims in a speedy fashion. It
gives the highest priority to the interest of its customers, as evidenced by the establishment of
the Customer Service Center (CSC) at the company's head office. The CSC is a one-stop-shop
that responds promptly to customer needs, ranging from initial inquiries to assistance in the
processing of claims.

Malayan has also set up the Express Claims Service (XCS), the only one of its kind in
the country, which enables processing of claims of up to P15, 000 on motorcar insurance within
24 hours or less, using a computerized on-line customer database system. In continuously
strengthening its leadership in the industry, Malayan abides by the core values that have been
the bedrock of its business: quality service maintained consistently above standards,
professionalism, the loyalty and results orientedness of its employees, and sincerity in fulfilling
its commitment to serve and protect the Filipino people.11

11
www.malayan.com

26
 UCPB General Insurance Company

UCPB GEN is one of the largest and strongest non-life insurance companies in the
country today. Established as Allied Guarantee Insurance Company, Inc. on January 1963, it
has been wholly owned by United Coconut Planters Life Assurance Corporation (Coco life)
since 1989, and was then known as UCPB General Insurance Co., Inc.

Its well-built financial position allows the company to take advantage of every opportunity that
further boosts up its place in the industry. It constantly ranks among the Top 10 in an industry of
more than 100 players.

As a reliable insurance company, UCPB GEN has earned the trust and loyalty of its
clients, the roster of which includes prominent multinationals and leaders in the manufacturing,
service, wholesale, retail, and merchandising industries.12

BPI/MS Insurance Corporation

The cornerstone has been laid. FGU Insurance Corporation and FEB Mitsui Marine
Insurance Company, Inc. have combined operations to form BPI/MS Insurance Corporation.
BPI/MS is a joint venture of the Bank of the Philippine Islands (BPI), a member of the Ayala
Group of Companies and one of the country's most respected banking institutions, and Mitsui
Sumitomo Insurance Company, one of the largest non-life insurance companies in Japan.

BPI/MS has ushered a new era of strength and stability, setting a new standard of
consumer-driven insurance services in the country. The expertise of BPI and Mitsui Sumitomo is
being utilized to enhance service delivery and strengthen market focus, while preserving the
stability and integrity which has earned for them distinction and a loyal client base from BPI/MS'
predecessors, FGU and FEB Mitsui.

BUILT FROM A STRUCTURE OF STRENGTH

When it comes to financial strength, BPI/MS stands on excellent footing. Fifty-one

percent of the company is owned by BPI, the most financially sound bank in the Philippines and

12
http://www.ucpbgen.com/company/ucpbgen.php

27
a leader in banking innovation. Forty-nine percent is owned by Mitsui Sumitomo Insurance, a
global insurance player with 64 branches worldwide.

LAID ON FOUNDATION OF TRUST

BPI/MS also carries with it a heritage of trust from FGU Insurance Corporation, one of
the oldest insurance companies in the country. As the non-life insurance arm of the Ayala
Group, it has earned a strong reputation of stability and integrity, becoming a pillar in the non-
life sector. Its forerunner, Filipinas Compañia de Seguros was established in 1913. Through the
years, it has built and nurtured a strong and loyal agency force. In 1999, FGU was acquired by
BPI when the bank merged with Ayala Insurance Holdings, FGU's holding company.

For FEB Mitsui, the groundwork of trust was laid in 1965 when it was then known as
Makati Insurance. In 1998, Far East Bank and Trust Company (FEBTC), then its owner, entered
into an alliance with Mitsui Marine, which bought fifty percent of the company. In the year 2000,
FEB Mitsui became part of the BPI Group after the latter's merger with FEBTC. Backed up by its
financial soundness and quality service, FEB Mitsui steadily grew to become one of the top ten
non-life insurers.

ONE BIGGER AND BETTER COMPANY

The year 2006 marked another milestone, with the signing of an asset purchase
agreement, the transfer of Aviva's insurance portfolio in the Philippines to BPI/MS was put into
place. This is subsequent to Mitsui Sumitomo Insurance’s purchase of Aviva Plc’s general
insurance operations in the Asian region specifically in the Philippines, Singapore, Malaysia,
Indonesia, Thailand, Hongkong and Taiwan. The purchase was made to rationalize the
Philippine general insurance business within the larger organization of BPI/MS Insurance
Corporation. With this integration, BPI/MS and Aviva Philippines is now ONE team, with one
goal, with one vision.13

Competitive Profile Matrix

The researcher used the Competitive Profile Matrix to analyze Standard Insurance Co. Inc.’s
strength and weaknesses in relation to its major competitors which are Malayan Insurance Co.
Inc., Prudential Guarantee and BPI/MS Corporation. These identified major competitors were

13
http://www.bpims.com/about.htm

28
based on the ranking as Gross Premiums is concerned (See Competitive Analysis Table
below).

Standard Malayan Prudential BPI/MS

Insurance Insurance Guarantee Corporation
Critical Success
Factor Weight Rating Score Rating Score Rating Score Rating Score
Advertising 0.05 2 0.1 3 0.15 2 0.1 3 0.15
Variety of
Products 0.1 3 0.3 3 0.3 3 0.3 3 0.3
Financial Position 0.1 3 0.3 4 0.4 3 0.3 3 0.3
Service 0.3 3 0.9 3 0.9 3 0.9 3 0.9
Corporate
Strategy 0.2 2 0.4 3 0.6 3 0.6 4 0.8
Management 0.1 4 0.4 4 0.4 3 0.3 3 0.3
Customer Loyalty 0.1 2 0.2 3 0.3 3 0.3 3 0.3
Market Share 0.05 3 0.15 3 0.15 3 0.15 3 0.15
Total 1 2.75 3.2 2.95 3.2

Service and Corporate Strategy are the most important success factor to top in Non-life
insurance category. Service was given a weight of 0.3 since the industry is more on serving the
customers. Corporate Strategy was given a weight of 0.2 because this is a factor that 4
companies might differ in ways how to do their business and enables the firm to respond to the
changes in the market.
Variety of Product, Financial Position, Management and Customer Loyalty were given a
weight of 1.0 because it will be supporting factors for success of the company.
In terms of the corporate strategy, FGU Insurance Corporation and FEB Mitsui Marine
Insurance Company, Inc. have combined operations to form BPI/MS Insurance Corporation.
BPI/MS is a joint venture of the Bank of the Philippine Islands (BPI). The strategy of having a
joint venture with one of the leading banking institution in the country is an excellent idea plus
the fact the MS Insurance Corporation is one of the biggest non-life insurance Corporation in
Japan to achieve global expansion that’s why it was given the highest mark.
Malayan Insurance and Prudential Guarantee were given the same mark. First, Malayan
Insurance supported of their banking institution it will be an easy process for the company to get
customer because if the customer loan from RCBC the strategy of promoting the non-life

29
insurance policy is very effective. The company is having one-stop non-life insurance. Secondly,
Prudential Guarantee has successfully entered into a joint venture with Sompo Japan Insurance
Inc. (formerly Yasuda Fire and Marine Insurance Company, Ltd.), one of the first fire insurance
organizations in Japan and one of the top 10 non-life insurance companies in the world, to form
PGA Sompo Japan Insurance Inc. (formerly PGA Yasuda Insurance Company, Inc.) PGA
Sompo Japan is now a highly successful organization, servicing the insurance needs of
numerous multinational companies based in the Philippines. Standard Insurance Co. Inc. was
given the lowest mark among the three because the company does not have their own banking
institution and did not reach for global expansion but they survived in this competition and being
ranked #4 means that company is very competitive even without those advantages that other 3
big company players had.
In terms of service, all of them were given a mark of 3, through superior technical
knowledge, innovative marketing and excellent services. These companies handle more than
150,000 clients, many of who belong to the country's top 1,000 corporations.

IV. SUMMARY AND CONCLUSION

a. Summary of Key External Factors

Registered car, population and import of cars in the Philippines are continuously
growing so the demand for car insurance will be increasing and it will be an opportunity to grab
a market share. The researcher concludes that government agency and laws affects the legal
environment of Standard Insurance Co. Inc. to ensure the welfare of consumers and the
company itself. Based on GDP, GNP and other economic indicators, the researcher concludes
that the general economic environment is positive for non-life insurance business.
The researcher concludes that the intensity of rivalry is HIGH, threat of substitutes
is LOW, threat of new entrants is LOW, bargaining power of consumer is HIGH, bargaining
power of suppliers is LOW.
Based on competitive analysis, the researcher concludes that Malayan Insurance
Co. Inc dominated Non-life Insurance Category. There so much catching to be done by
Standard Insurance Co. Inc. The company needs strategies to address the stiff competition in
Non-life insurance. They need to improve the corporate strategy.

30
 b. External Factor Evaluation (Matrix)

The researcher performed the industry analysis using the external factor evaluation
matrix. The external factor evaluation matrix summarizes and evaluates the economic, social,
cultural, demographic, environmental, technological and competitive information. The external
factor evaluation matrix for the Standard Insurance Company Inc. is given below:

Weighted
Key External Factor Weight Rating Score

Opportunity
Strengthening of Peso Value as of 2008 (40.32 pesos - 1 dollar) 0.1 3 0.3
Increase in Life sum insured as % of GDP last three years
28.59% 0.05 3 0.15
Decrease of Inflation Rate last three years by 2.52% 0.05 3 0.15
Increase of car related incidents nationwide 0.2 4 0.8
New laws governing the insurance code of the Philippines 0.1 2 0.2

Threats
Leading Competitors increased its ad expense 0.1 3 0.3
Moral Hazard and Adverse 0.05 2 0.1
Leading rival firms are more fully integrated 0.1 3 0.3
Economic and Political Disability 0.05 3 0.15
Increasing governmental regulation in the industry 0.1 3 0.3
Increase of old cars that can't be anymore insured 0.1 2 0.2

Total 1 1.35

Based on EFE Analysis, the researcher concludes that Standard Insurance Company
Inc. response to external factor is just average. Positive economic environment and innovations
on car insurance products and services will help them to grow in the industry.

31
 CHAPTER 5 – INTERNAL ANALYSIS

I. MANAGEMENT

Board of Directors

ERNESTO T. ECHAUZ
Chairman
PAULO E. CAMPOS, JR.
Vice Chairman
EDITH D. SUMAJIT
Member
CARMELITA E. La'O
Member
GIDEON G. SISON
Member
CRESENCIO V. ASPIRAS, JR.
Member
ESTELA P. DOMINGO
Member
JOSEPHINE E. LICHAUCO
Treasurer
VALENTINE B. GARCIA
Assistant Treasurer
CELSO P. DE LAS ALAS
Corporate Secretary
JOEL RAYMOND R. AYSON
Assistant Corporate Secretary

Corporate Officers

EDITH D. SUMAJIT
President / Chief Executive Officer
WIVINIA C. RODRIGUEZ
OFELIA P. YTURZAETA
Executive Vice Presidents
CELSO P. DE LAS ALAS
Chief Legal Counsel / Corporate Secretary

32
 ANTONIO B. ESPEJO
LEANDRO M. ESTRERA
AMELIA M. HERNANDEZ
NOEL T. MOLINA
SEVERO L. SANTILLANA, JR
MARITA R. SORIANO
LETICIA C. TENDERO
ANATOLE DAN R. VIRAY
Senior Vice Presidents
MARIBETH C. CASTRO
EDENA B. ENFESTAN
JOSELITO L. LAZAGA
DIVINIA D. MITRA
JOSEPH G. SEVERINO
REYNALDO D. UMALI
ELIZABETH G. VILLAMIL
First Vice Presidents
ELIA AKOL
ELAINE JOY D. ALAMPAY
CARMEL N. BERKENKOTTER
JEFFREY JOSEPH R. BOBADILLA
ANTONIO L. CASTILLO
ALFREDO F. DELA CRUZ
JOSELITO P. MACAPINLAC
JESSE JAMES S. MENDOZA
MARLENE P. NAVARRA
ROLANDO E. RAMIREZ
WILFREDO EMMANUEL JUAN E. REYES
ZALDY G. RODRIGUEZ
ALEX S. SANTIAGO
ELVIRA S. SUSMERANO
Vice Presidents
EDEN O. ABITAL
ROGER P. AGUIRRE
PAUL A. AMPO
MARVIN M. BAUTISTA
JOEL D. BRAZIL
MIGDONIO G. BUGARIN, JR.
ROGACIANO E. CALUNSAG
JOEL VICTOR K. DE LAS ALAS
DOMINGO A. ESCOTO
MA. REMEDIOS D. FIDEL
JOSE GERARDO G. FRANCISCO III
MA. CHRISTINA T. GALANG
EDGAR J. GALEA
MARILOU M. GOMEZ
HILARIO M. GONZAGA
SILVESTRE D. INDIANA
JANET R. INOCENO
MARICHU M. MABIOG
ROMULO M. MANUCOM
ARISTON F. MINEZ JR.
ROLANDO M. NEPOMUCENO

33
 BERNARDITA H. ORUGA
MARIA RICA RAMIREZ
SEYMOUR B. SALDAVIA
ANTONIO S. TANJUAKIO
FLORIDO V. TEMBLOR SR.
PATROCINIO M. VALENZUELA III
ANGELO R. VILLAMEJOR
Senior Assistant Vice Presidents
CELIA P. ABORDO
DESIDERIO T. ACEBEROS
MA. THERESA Q. ACUNA
BASILIO F. AGRAMON JR.
MA. TESSIE ALVARES
GERALDINE G. BALIGOD
RAOUL V. CASADO
REGINA B. CONCEPCION
REMEDIOS H. CRISOSTOMO
EDILBERTO M. CUETO
JOAQUIN E. DAVID
MA. CRISTINA G. DEFENSOR
VILMA D. DOLLENTAS
ALMA C. ESPAÑOL
NOLAN E. GLODOVIZA
RIZALINA D. GO
AUGUSTUS M. GONZALES
LINA FLOR G. HIZON
MA. CRISTINA D. LAGRISOLA
ARLENE O. LASCO
KAY N. LAYUG
ISIDRO F. MANUEL
ANA LISA V. MUÑIZ
LEILA U. PATAG
HERMES PIDO
CONRADO B. PUDE
SIM S. QUINA
CAMILO S. RAMOS
DHORA FLORESSA T. ROJAS
JERALINE Q. COMBALICER-SALDAVIA
LODY M. SANCHEZ
GLORIA V. SANTOS
Assistant Vice Presidents

II. MARKETING

4 P’s of Marketing

34
 A. Product

Standard Insurance provides the following types of motorcar insurance policies:

 Private Car (PC)

 Commercial Vehicle (CV)

 Motorcycle (MCY)

 Motor Trade (MT)

 Land Transportation (LTO)

The Standard Motorcar Insurance gives you more reasons to drive with ease and peace of mind
with the following coverages:

Own Damage

Coverage against damages to the property insured arising from accidental collision,
overturning, falling, fire and malicious acts of third party.

Theft

• Coverage required by the law that protects the assured against liability for death
of or bodily injury to third party arising from an accident involving the insured
vehicle, subject to the schedule of indemnities incorporated in the policy.

• Compulsory Third Party Liability (CTPL)

• Coverage required by the law that protects the assured against liability for death
of or bodily injury to third party arising from an accident involving the insured
vehicle, subject to the schedule of indemnities incorporated in the policy.

Excess Bodily Injury (EBI)

Coverage answers for indemnities beyond the limit set forth under CTPL coverage.

Third Party Property Damage (TPPD)

- Coverage against liability for damage to third party property arising from accident
caused by the insured vehicle.

35
Pa Rider

This is a voluntary coverage that financially protects the passengers against injury or
death arising from car accident.

Value-Added Services

Free Accident Coverage (PA)

Free P.A. Coverage for the family. This includes five (5) members of your family for
P10,000 each.

Free Roadside Assistance Program

You will be provided with towing and other services in cases of accidents or vehicle
breakdown

Automatic Technical Assistance

A group of auto-experts will assist you in assessing the extent of damages of your car in
case of accident

Casa Repair

Because of our extensive tie-ups with Car Dealers nationwide, we provide automatic 5- star
motor shop repair for cars 12 years old and below14

B. Promotion

Standard Insurance Co. Inc. has its own marketing group that provides excellent service
strategies to both employees and customers. The company is engaged in Internet and E-
commerce strategies. Online Inquiries and Feedbacks were designed to know customers
insights about the product and services. The major marketing communication strategies
revolved around online marketing, press releases, sales conferences and technical
conferences. The company participated in car exhibits of different car dealers and they have
racing car entry for the Philippine Grand Prix which is an avenue for promoting the company in
other sector.

14
http://www.standard-insurance.com/new_site2/motorcar.html

36
 C. Placement

Standard Insurance Co. Inc., have the most extensive and the most advanced in the
industry with 43 computerized full service branches nationwide with underwriting and claims
servicing capabilities, more than 200 car-dealer tie-ups nationwide.

D. Pricing

Standard Insurance Co. Inc pricing depends on which type of car that the customer wants to
insure. They provide quotations and give discounts.

III. Finance/Accounting

For the year 2006, the company fully adopted the Philippine Financial reporting Standards
(PFRS) of accounting from the previous years’ Philippine Accounting Standards (PAS).

In spite of the expected negative growth of the non-life insurance industry at -2% for 2006,
the company posted a 10.4% growth in gross earned premiums to a level of P1.96 billion. This
has placed the company as the fourth largest non-life insurance company in the country with
expectation of being third by the end of 2007. Motor car insurance, which accounted for 61% of
total gross premiums, posted a growth rate of 6%.

A. Net Income (2004-2006)

The graph below shows the annual net income of the Standard Insurance Co. Inc. for the
past three years (2004-2006)

37
 Standard Insurance Co. Inc had an annual net income of P103,566,764 then a major
drop in net income was experienced during 2005 of -15% . Furthermore in spite of negative
growth of the non-life insurance industry at -2% for the same year, the company was ale to
regain from P 88,463,882 to P 135,413,026 or 35% increase in net income for 2006

IV. PRODUCTION/OPERATION

Technical personnel are engineers and trained mechanics who perform car repair estimates
supported by the Company's own computerized parts database for all major models of popular
brand vehicles. In the industry, it has the quickest turnaround time with repairs in the car
dealership shops and the only one with its own call center to support its retail operations. In the
meantime, Standard Insurance has adopted the Zurich practices in risk engineering,
underwriting and industrial claims processing complemented with an in-house adjusters team.
The Company's property, marine and liability insurance, as well as catastrophe (CAT) cover are
supported by superior reinsurance facilities procured from the London and Singapore markets
from international reinsurers with the lead rated by S&P at AAA and the rest of the panel at no
less than A-. These facilities are under the excess of loss reinsurance treaties with its property
and CAT covers having the highest capacities in the industry. Its risk engineering process
includes the use of Geographical Information System (GIS) where mapping of property risks
linked to the online system is made against pertinent CAT hazard maps such as fault lines,
liquefaction, and ground shaking and flooding. The Insure/90, the Company's real-time general
insurance system complemented by its own IT department, was carried over from Zurich
General Philippines and is currently in use by corporate marketing and some Metro Manila
branches. The rollout and shifting to the I-90 for the rest of the branches is projected to be
completed towards the end of 2007. The Company is accredited by most of the major banks
and financial institutions. Its ISO certification for quality management systems received in 1998
was upgraded to an ISO 9001:2000 in October, 2003 and has been maintained since then15

V. RESEARCH AND DEVELOPMENT

Electronic Parts Catalog

The Parts Section of the Technical Department plays an important role in the processing of
Repair Valuation Reports as basis in Motor Car Claims Settlement. Automotive parts that are
recommended for replacement by its Technical Assistants are carefully studied to ensure that
correct terminologies and part numbers are used to arrive at accurate quotations for every

15
http://www.standard-insurance.com/new_site2/company_profile.html

38
model and make of insured vehicle inspected. This is made possible through the use of the
Standard Insurance Auto Parts Data Base, Automotive Parts Catalogs, EPC etc. Standard
Insurance Co., Inc., in its goal to continuously lead in the insurance industry, invests on
resources one of which is the acquisition of available EPCs (Electronic Parts Catalogs) needed
by its staff to access varied pieces of automotive information.

The EPC contains Parts List, Part Number Application to Models, List Price and Illustrations
among other details. All you have to do is follow the instructions displayed on the computer
screen and input the vehicle information which could be done in three ways such as the VIN
(Vehicle Identification Number), Model Name / Catalog Code or the Model Code. When the
Search Route appears, a selection has to be made out of various choices to display the
Illustrated Index for the chosen group. The Illustrated Index for the chosen group and the Figure
Number List will appear on the screen in which you just move the "mouse" to the left or right to
such direction and clicking the button of the "mouse" for your chosen figure to appear on the
screen to get the information to match the part description and part number. The company's
application of modern technology in its processes such as the Electronic Parts Catalog to
provide fast and accurate Repair Valuation Reports along with a competent Technical Team
truly makes Standard Insurance Co., Inc. the leader in the motorcar insurance industry.16

How GIS technology helps Standard Insurance in natural hazard assessment?

The insurance industry is continuously improving risk management by installing appropriate

systems and tools for the hazard assessment of perils such as earthquake, typhoon and flood
for insurance cover.

In the Philippines, considered as one of the most disaster-prone countries in the world,
extensive assessment of the natural disasters becomes essential to risk managers.

16
http://www.standard-insurance.com/new_site2/epc.html

39
 Through the Geographic Information System (GIS) and
the Global Positioning System (GPS), risk assessment
techniques are developed to determine the degree of
geohazards involved in each risk (property to be
insured).

Standard Insurance Company, Inc. has initiated its own

study of local natural hazards, which GIS graphically

represents in maps. The company's GIS is utilized to provide risk accumulation analysis.
Through this, the company is able to acquire catastrophe cover from international reinsurance
companies at a high coverage against total accumulation.

Natural Hazard and Risk Assessment

In underwriting risk against natural perils, natural hazard information and risk assessment plays
an important role. With the known exposure to the different natural hazards, underwriters, risk
engineers and risk engineering analysts are made aware of the important areas or aspects of a
particular property which will need closer attention with respect to risk assessment. While
hazards may be present in a particular risk exposure, the need for mitigation and engineering
measures against those hazards are likewise taken into consideration in order to determine the
extent of the exposure and their probability of occurrence.

Risk Management

While insurance companies allow themselves to accept sizeable amount of risks and the
number of individual risks for which it wishes to underwrite and accumulate, insurers control its
financial exposure through a risk management technique called risk transfer. The concept of
transferring risk, i.e., one party transferring the financial effects of his loss to another party, is
vital to an insurer to enable him to reduce to acceptable levels of probability the severe claim or
accumulation of claims that will ruin or threaten the company's financial stability.

Accumulation control, portfolio analysis and catastrophe analysis are done as part of the risk
management techniques. Through these analyses, underwriters and risk managers will be able
to apply the concepts of risk transfer or reinsurance, cession limits, liability limits, etc.

40
Catastrophe Risk Monitoring System (CRMS)

Cognizant of the need for a natural hazard and risk assessment tool for better underwriting and
risk engineering, and to provide a system that can generate and manage risk information for the
acquisition of reinsurance facilities and Catastrophe (CAT) cover, the company, through the
Risk Engineering and Risk Management departments of Standard Insurance, developed the
Catastrophe Risk Monitoring System (CRMS).

The system, currently in version 1.0, is in the first phase of development covering Metro Manila.
The natural hazard information included in the system is initially limited to earthquake, typhoon,
flood, landslide, and volcanic eruption.

Utilizing the system for natural hazard and risk assessment enables us to plot the risk being
insured over various natural and geologic hazard maps. Subsequently, the system generates
natural hazard assessment reports which include hazards brought about by earthquake,
typhoon, flood, volcanic eruption and landslide. The hazard susceptibility rating is analyzed and
rated according to grading levels of high, moderate, low and none.

The rating system provides risk engineering analysts and underwriters a better understanding of
the degree of exposure involved and other factors that influence the exposure levels present in
a particular property being assessed against the natural hazards.

However, not all risks located in "high" hazard areas should be treated as "high risk" or
unacceptable risk without considering the engineering measures implemented and the physical
conditions of the property. Apart from the natural hazard information in the database, CRMS
also includes in its records risk engineering information related to the physical characteristics of
the property such as building height, age, type of construction, etc. Engineering measures such
as seismic design, type of structural frame, etc. also form part of the overall risk assessment
prior to acceptance or declination of the risk.

CRMS in Risk Management

CRMS provides risk managers information about the current accumulation of policies in force in
terms of gross sum insured. Accumulation zones in Metro Manila are subjected to accumulation

41
limits. These limits prompt risk managers not to accept any risk with gross sum insured
exceeding the maximum limits imposed.

Risk accumulation information generated by the system is always "current" and is constantly
being updated, thereby allowing the utilization of such information in formulating retention
policies, reinsurance facilities, cession limits, liability limits, and others.

Catastrophe analysis can also be made through the CRMS using the Catastrophe Risk
Evaluating and Standardizing Target Accumulations (CRESTA) Zones. Metro Manila comprises
of 4 out of the 9 CRESTA Zones for the entire Philippines. These zones are 2 (Makati City
area), 3 (Manila Bay Reclamation area), 4 (Sta. Cruz/Binondo area) and 5 (areas within Metro
Manila but outside zones 2, 3 and 4). Most insurance and reinsurance companies use this zone
method to analyze the catastrophe exposure for CAT cover.17

VI. MANAGEMENT INFORMATION SYSTEM

Cellphone Insurance System - CIPD

Cellphone Insurance Policyholders Database (CIPD) is an innovative web-based system used

by the Cellphone Insurance Department (CID) that aims to integrate the figures from its key
units namely claims, underwriting, anti-fraud and accounting. The CIPD allows these units to
have a common data container for a simple and automated data processing and operations.
The CIPD can be used for a simple viewing, updating and accumulation of records

up to a dense and convoluted reports generation. Each

user have their own access code to uphold security
measures where every entree cipher has its vital
confines on the operating modules in CIPD. This
maintains the distinctiveness of each and every unit.
The viewing and accretion of records have been made
easy through a search engine facility that accepts
several user parameters to perform its query. It also
maintains a

17
http://www.standard-insurance.com/new_site2/gis.html

42
'claims forms' section where forms and documents of the claims unit can automatically be
printed by just feeding the essential details. This section also includes the auto-printing of a
denial letter for denied claims.

A customer communication board has been made available as a means of communication for
all the users concerning matters focusing on the clients. A user can post minutiae of a client's
request, complain or anything that concerns a customer. Overall, its objective is to provide
enhanced services for a guaranteed customer satisfaction and improved relationship with
clients.

The 'claims monitoring facility' is another feature on hand in CIPD. This feature intends to
monitor the progress of each and every claim including the status of the claim before and after
the required documents have been submitted. This will ensure a faster and more efficient
processing of claims.

One of the key areas of the CIPD is the Reports Generator section. This section provides Excel
format reports that are based on the encoded figures provided by the users. The report
generator is a restricted module where only unit and department heads are provided with the
access since these records are confidential. Collection reports, no of claims by status and
financial status of policyholders are just some of the reports generated by CIPD.18

VII. SUMMARY AND CONCLUSION

a. Summary and Conclusion

18
http://www.standard-insurance.com/new_site2/cipd.html

43
 b. Internal Factor Evaluation (IFE) Matrix

Weighted
Key Internal Factors Weight Rating Score

Strength

Customer Support 24/7 0.08 2 0.16

The company have 43 branches nationwide 0.05 4 0.2
The company have 200 car dealer-tie up 0.15 3 0.45
The company have different line of services in Non-
life Insurance 0.05 3 0.15
Standard Insurance Co., Inc., an ISO 9001: 2000
version certified company, one of the leading
organizations in the non-life insurance industry. 0.06 4 0.24
Internationally affiliated by Zurich General Services
in Switzerland 0.08 3 0.24
Only company that provides cellphone insurance 0.05 4 0.2
24/7 Roadside Assistance Program 0.05 3 0.15
Online Services and Bidding Program 0.06 3 0.18
Agency participation in selling insurance 0.1 3 0.3

Weakness

Standard insurance Company assets is lower than

industry average 0.1 2 0.2
Irregularity of Prices and Figures in Non-life
insurance qoutation 0.06 4 0.24
Supply of parts in motor car, cellphone and others 0.06 3 0.18

44
Slow processing of approval in claims 0.05 2 0.1

Total 1 2.99

CHAPTER 6 – STRATEGY FORMULATION

The comprehensive analysis on the internal and external environment enabled the
researcher to identify the different opportunities and threats to the Standard Insurance Co. Inc. It
also determined the strengths and weaknesses of the company.

This chapter focuses on generating and evaluating alternative strategies, as well as

selecting strategies to pursue. Strategy analysis and choice seek to determine alternative
courses of action that could best enable the firm to achieve its mission and objectives. The
firm’s present strategies, objectives and mission, coupled with the external and internal audit
information, provide a basis for generating the evaluating feasible alternative strategies. (Fred
R. David). It will utilize several strategy formulation tools to come up with strategic plans which
are:

• Boston Consulting Group Matrix (BCG)

• Internal-External Matrix (IE)

• Strategic Position and Action Evaluation Matrix (SPACE)

• The Grand Strategy Matrix

45
 • The Threat-Opportunities-Weaknesses-Strengths (TOWS)

• The Quantitative Strategic Planning (QSPM) Matrix

The Quantitative Strategic Planning (QSPM) Matrix will then be used to ascertain the
comparative attractiveness of unconventional strategies in order to impartially select the best
strategy.

I. BCG MATRIX

The researcher utilized this tool to aid Standard Insurance Co. Inc. in the measurement of all
their company products and services according to relative market share and market growth. The
concepts underlying this matrix are those of the experience curve (x-axis measures relative
market share) and the product life cycle (y-axis measures market growth). It assists with the
optimization of the benefits associated with relative market share (competitive cost position) and
the impact of the growth rate of the market (position on the product life cycle). The matrix is
made up of four quadrants and the circle size lends a third dimension – turnover. Cash cows are
cash generators and require an invest or hold strategy while maximizing cash flow. Stars are
potential cash cows and require adequate funding to establish a dominant position before the
market growth rate slows down and they become cash cows.

Question marks do not have market share on their side. They are found in growing
markets and require funding if they are to become stars. If not withdrawal is possible. Dogs are
neither cash generators nor in many instances cash drains. They can be left alone or removed
from the portfolio. The aim is to achieve a balanced portfolio, sustaining or holding the Cash
Cows, investing in the Stars and some select Question Marks and divesting or holding Dogs. If
necessary, Questions marks could also be divested if they do not have a chance of becoming a
Star. There has been a lot of criticism regarding the growth – share matrix and many
subsequent matrices have been designed to try to overcome these deficiencies.19

RELATIVE MARKET SHARE POSITION

HIG MED LO
H .0.5 W
1.0 0.0
HIG
CASH
STAR
COW DOGS
19
H
th
Strategic Management 11 Edition by Fred R. David QUESTION
46
 INDUSTRY
SALES
MED
GROWTH
.0 RATE

LO
W–
20

Based on the result of two evaluative dimensions in the BCG Matrix, Standard Insurance
Co. Inc is positioned under the STAR Quadrant Stars are potential cash cows and require
adequate funding to establish a dominant position before the market growth rate slows down
and they become cash cows. This division with a high relative market share and high industry
growth and the recommended strategies are forward, backward and horizontal integration;
market penetration; market development and product development.

CONCLUSION: The research concluded that based on the BCG Matrix Standard Insurance
Co. Inc., is in the quadrant of stars and the recommended strategies are forward, backward and
horizontal integration; market penetration; market development and product development.

II. INTERNAL EXTERNAL MATRIX (IE MATRIX)

The diagram below shows the Internal-External Matrix of the Standard Insurance Co. Inc.
The IE Matrix is based on two key dimensions: the IFE total weighted scores on the x axis and
the EFE total weighted scores on the y axis. Recall that each division of an organization should
construct an IFE Matrix and an EFE Matrix for its part of the organization. The total weighted
scores derived from the divisions allow construction of the corporate-level IE Matrix. On the x
axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak internal
position; a score of 2.0 to 2.99 is considered average; and a score of 3.0 to 4.0 is strong.
Similarly, on the y axis, an EFE total weighted score of 1.0 to 1.99 is considered low; a score of
2.0 to 2.99 is medium; and a score of 3.0 to 4.0 is high.

47
 The IF Matrix can be divided into three major regions that have different strategy
implications. First, the prescription for divisions that fall into cells I, II, or IV can be described as
grow and build. Intensive (market penetration, market development, and product development)
or integrative (backward integration, forward integration, and horizontal integration) strategies
can be most appropriate for these divisions. Second, divisions that fall into cells III, V, or VII can
be managed best with hold and maintain strategies; market penetration and product
development are two commonly employed strategies for these types of divisions. Third, a
common prescription for divisions that fall into cells VI, VIII, or IX is harvest or divert. Successful
organizations are able to achieve a portfolio of businesses positioned in or around cell I in the IE
Matrix

For the Standard Insurance Co. Inc., the External Factor Evaluation in Chapter 4
resulted to a total weighted score of 1.35 which is considered as low as shown in the y-axis of
the IE Matrix. The Internal Factor Evaluation in Chapter 5 resulted to a total weighted score of
2.99 which is considered average as shown in the x-axis in IE Matrix above. The result of the
EFE and IFE intersect in cell II which indicates a strategy of Grow and Build. Intensive (market
penetration, market development, and product development) or integrative (backward
integration, forward integration, and horizontal integration) are the commonly employed
strategies.20

THE IFE TOTAL WEIGHTED SCORE

STRONG AVERAGE WEAK
3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

4.00
3.00 2.00 1.00
IFE =

I II III
3.0
HIGH to
4.0
EFE=3 2.99
3.00

MEDIU
M
2.0
to
2.99 2.00
IV V VI
20 LOW
1.0
to
1.99 1.00
VII VIII IX
Strategic Management 11th Edition by Fred R. David

48
Conclusion: Based on the results of the IE matrix, the researcher concludes that Intensive
(market penetration, market development, and product development) or integrative (backward
integration, forward integration, and horizontal integration) are the recommended strategies for
Standard Insurance Co. Inc.

III. STRATEGIC POSITION AND ACTION EVALUATION MATRIX (SPACE)

The SPACE Matrix characterizes a strategy as being aggressive, conservative, defensive or

competitive in nature. Additionally, the SPACE Matrix analysis functions upon two internal
strategic dimensions: financial strength and competitive advantage. The SPACE factors under
financial strength which analyze a business’ internal strategic posture are: return on investment,
leverage, liquidity, working capital and cash flows. In contrast, the SPACE factors which
determine a business’ external strategic posture are: technology, inflation rates, demand,
industry price fluctuations, Barriers to entry, competitive pressures, price elasticity, and risk.

The SPACE Matrix methodology also examines strategic factors within two external
dimensions: environmental stability and industry strength. The factors considered under
competitive advantage are market share, quality, life cycle, customer loyalty, and supplier
influence while the factors under industry strength are growth potential, profit potential, financial
stability and resource utilization, among others. The SPACE Matrix methodology factors each of
these dimensions and places them on a Cartesian graph with X and Y coordinates.21

FINANCIAL STRENGTH RATING

Return on Assets and Equity is high, 10.3%
and 21.7% respectively; asset turnover is 4.00
65.28 times and net profit margin is 17.9%
The company has a high liquidity ratio,
current ratio of 2.09 times and quick ratio of 4.00
1.68 times
The company increased from gross
premiums of 2005 by 60.5% in 2006 3.00
11.00

21
Strategic Management 11th Edition by Fred R. David

49
 INDUSTRY STRENGTH RATING

Non-life insurance premiums grew by 9.4 percent, as

premium rates increased. Over the past decade,
global insurance premiums rose by more than a half
as annual growth fluctuated between 2 percent and 10
percent 5.00
Numerical Rating for Motor Vehicle Insurance: Academicians and
Insurance industry practitioners alike always try to come up with a
premium rating structure that charges each buyer of insurance products
4.00
according to the risk he/she exhibits. Motor insurance, in particular, has
been the focal point of such attention. An empirical analysis of motor
vehicle insurance data is performed to predict pure risk premiums to be
charged.

Policyholder loyalty the relationship between loyalty and company-

related factors (e.g., agent services, policy plan and customer
service staff) as well as between loyalty and policyholder-related
factors (e.g., gender, age, income and education level).

3.00
12.00

ENVIRONMENTAL STABILITY RATING

Political Stability and economic rising of

the country for the year 2007 -1.00
Global Warming and Environmental
Issues that affects business -1.00

50
 Threat of New Entrants, the average
entrepreneur can't come along and start a large
insurance company. The threat of new entrants
lies within the insurance industry itself. Some
companies have carved out niche areas in which
they underwrite insurance. These insurance
companies are fearful of being squeezed out by
the big players. Another threat for many insurance
companies is other financial services companies
entering the market. -3.00
Price inelasticity in relation to demand for
insurance -3.00
-8.00

51
 COMPETITIVE ADVANTAGE RATING

Customer Support 24/7 -1.00

-2.00
The company have 43 branches
nationwide

The company have 200 car dealer-tie up -2.00

The company have different line of
services in Non-life Insurance -1.00
Standard Insurance Co., Inc., an ISO 9001:
2000 version certified company, one of the -1.00
leading organizations in the non-life
insurance industry.

-1.00
Internationally affiliated by Zurich General
Services in Switzerland

Only company that provides cellphone

insurance -1.00
24/7 Roadside Assistance Program -3.00
Online Services and Bidding Program -2.00
Agency participation in selling insurance -1.00
-15.00

52
 FS

4 (2.5,1.7)
CONSERVATIVE 3 AGGRESSIVE

1
CA IS
-3 -2 -1 1 2 3
-1
-2
DEFENSIVE -3 COMPETITIVE
-4

ES

Based on the result of the SPACE Matrix analysis above, the directional vector fell on
the aggressive quadrant which implies that Standard Insurance Co. Inc. is an organization takes
an excellent position to use its internal strengths to take advantage of external opportunities,
overcome internal problem and avoid external threats. Therefore market penetration, market
development, product development, backward integration, forward integration, horizontal
integration, conglomerate diversification, concentric diversification, horizontal diversification or a
combination strategy all can be feasible, depending on the specific circumstances that face the
firm.

Conclusion: Based on the result of the SPACE Matrix analysis, the researcher concludes that
market penetration, market development, product development, backward integration, forward

53
integration, horizontal integration, conglomerate diversification, concentric diversification,
horizontal diversification strategies for Standard are the recommended Insurance Co. Inc.

IV. GRAND STRATEGY

The researcher performed the Grand Strategy Matrix Analysis for Non-life insurance (Motor
car) of Standard Insurance Co. Inc., The Grand Strategy matrix is a popular tool for formulating
alternative strategies, all organizations (or divisions) can be positioned in one of four quadrants
based on two evaluative dimensions: competitive position and market growth.22

Rapid

Market
Growth
Standard
Insurance
Co. Inc.

QUADRANT II QUADRANT I Strong

Weak
Competitive
Competitive
condition
condition
Quadrant 1 Strategies:

- Market Development
QUADRANT III QUADRANT IV - Market Penetration
Slow - Product Development

Market - Backward Integration

Growth
- Forward Integration

- Horizontal Integration

- Concentric Diversification

Based on the Space Matrix, the company of Standard Insurance Co Inc. is considered to
be located in the FIRST QUADRANT. On this quadrant, it is indicated that the state of the
company have a STRONG COMPETITIVE CONDITION together with a RAPID MARKET
GROWTH in terms of their market. They have running for 43 years in our local industry and

22
Strategic Management 11th Edition by Fred R. David

54
seem to have a convincing improvement in their growth and maturity with their increasing share
of the market sales.

Conclusion: The researcher concluded that Standard Insurance Co. Inc. is considered to be
located in the FIRST QUADRANT. On this quadrant, it is indicated that the state of the
company have a STRONG COMPETITIVE CONDITION together with a RAPID MARKET
GROWTH in terms of their market. The recommended strategies are Market Development,
Market Penetration, Product Development, Backward Integration, Forward Integration,
Horizontal Integration and Concentric Diversification

V. THE THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTH MATRIX (TOWS)

One of the most widely used strategic planning tools is a SWOT (Strengths, Weaknesses,
Opportunities, Threats) analysis. Most companies use, in one form or another, SWOT analysis
as a basic guide for strategic planning. A SWOT analysis involves a company's assessment of
its internal position by identifying the company's strengths and weaknesses. In addition, the
company must determine its external position by defining its opportunities and threats.
Strengths represent those skills in which a company exceeds and or the key assets of the firm.
Weaknesses are those areas in which a firm does not perform well. Opportunities are those
current or future circumstances in the environment that might provide favorable conditions for
the firm. E. Threats are those current or future circumstances in the environment, which might
provide unfavorable conditions for the firm.

Cell 1 contains important areas in which the company is exhibiting poor performance. When
a company identifies these areas it becomes aware of the need to improve its efforts in order to
strengthen its performance. Important areas in which the company is performing very well are
located in Cell 2. A company should continue its current efforts in these areas. Cell 3 contains
unimportant areas in which the firm is performing poorly. Since these areas are a low priority for
the company, it need not pay a great deal of attention to these areas. The last category, Cell 4,
includes areas in which the company is performing well, but which are unimportant. The firm
may need to pull back some of its efforts in this area, depending on how unimportant the area is
to the overall picture.23

23
Strategic Management 11th Edition by Fred R. David

55
56
 CONCLUSION: The researcher concludes that the TOWS Analysis resulted to strategies
that revolved around market penetration, product development and concentric diversification
which is consistent with the results of the other strategy formulation tools.

VI. The Quantitative Strategic Planning Matrix (QSPM)

QSPM is designed to prioritize or determine the attractiveness of the strategies generated in

the TOWS and IE matrices. An organization cannot implement all the strategies generated in
the TOWS and IE, so the QSPM is needed and used to narrow the number of strategies down
by determining the relative attractiveness of each one.

The researcher used the BCG Matrix, Internal-External Matrix (IE), Strategic Position and
Action Evaluation Matrix (SPACE, Threats-Opportunities-Weaknesses-Strengths (TOWS) and
Grand Strategy Matrix to define possible strategies for the Standard Insurance Co. Inc., In
summary, all of these are

• Market Development • Horizontal Integration

• Market Penetration • Concentric Diversification

• Product Development • Conglomerate diversification

• Backward Integration • Horizontal diversification

• Forward Integration

The researcher utilized the Quantitative Strategic Planning Matrix to objectively evaluate all of
these alternative strategies. To simplify the QSPM analysis, the researcher incorporated all of
these strategies into three major categories which are:

 Intensive Strategy

 Integration Strategy

 Diversify Strategy

The Intensive Strategies include Market Development, Market Penetration and Product
Development. The Integration Strategies includes Forward, Backward and Horizontal

57
Integrations. The Diversify Strategies includes Concentric Diversification, Conglomerate
diversification and Horizontal diversification

These three major strategies were objectively evaluated using the QSPM based on the
previously identified external and internal critical success factor.

58
Results of QSPM

Based on the results of the QSPM, the intensive and diversification strategy had the
highest Sum Total Attractiveness Score which is at 6.97. This indicates that Standard Insurance
Co. Inc., should select integration and diversification strategies over intensive strategies.

Conclusion: The researcher recommends for Standard Insurance Co. Inc., to implement
intensive strategies specifically focusing on market penetration, product development and
market development.
 CHAPTER 7 – STRATEGIC OBJECTIVES AND RECOMMENDED STRATEGIES

I. BUSINESS OBJECTIVES:

In this section, the researcher established specific business objectives for Standard
Insurance Co. Inc. These business objectives are both strategic and financial in nature.

1. Double Standard Insurance Co. Inc, market revenue share in Non-life insurance by 2009

2. Improve Excellent Service and add value to the customer’s money

3. Increase Brand Awareness

4. Molding Competent Employees in obtaining highest insurance qualification

5. Achieve a higher rank in Non-life insurance category.

Vision Statement

Standard Insurance Co., Inc. is committed to continuously improve the quality of service
to the insuring public by raising the standard of competency and professionalism, and through
integrity.

Mission Statement

• To instill a quality culture that promotes the values of professionalism,

discipline, teamwork and productivity.

• By providing customers with the highest quality products and services,

we will spread safety and security to all around us.

• To encourage employees in obtaining highest insurance qualifications

to give us the leading edge in technical insurance expertise for the
benefit of our clients.

• To provide professional Insurance and Risk Management services with

the highest sense of integrity to all our customers".

• While demonstrating responsible management as a good corporate

citizen, we will make a positive contribute to society.
 The business objectives above were formulated based on the existing vision. In Chapter
3 which is Standard Insurance Co., Inc. is committed to continuously improve the quality of
service to the insuring public by raising the standard of competency and professionalism, and
through integrity. The first two objectives focus on growing the revenues generated in Non-life
Insurance products. These will enable Standard Insurance Co. Inc., to go head to head against
the Malayan Insurance by the coming years. The third objective is to improve their service. It will
be a big factor for the company enable to improve their line of service to gain competitive
advantage and customer loyalty. The fourth objective is focused is to increase brand
awareness. This will enable the company to increase their premiums as well as to gain good
image when it come to service. The last objective is to mold competent employees. This will
enable the working force being the crème of the top and competitive employees.

Overall, the four objectives established for the Standard Insurance Co. Inc., are fully
aligned to the vision of the group.

II. RECOMMENDED BUSINESS STRATEGIES

In this section, the researcher established specific business strategies for each business
objective based on the results of the strategy formulation in the previous chapter. In summary,
the recommended business strategies from the strategy formulation chapter are market
penetration, product development and market development. The strategic objectives along with
the corresponding business strategies are given as follows:

1. Double Standard Insurance Co. Inc, market revenue share in Non-life insurance by
2008
The recommended strategies to grow Standard Insurance Co. Inc.’s non-life insurance
revolve around market penetration. The specific strategies are to give a quota for
agencies and branches target premiums. Giving rewards and recognition to agencies
and branches whose will perform an excellent production. Improve Excellent Service and
add value to the customer’s money
2. Improve Excellent Service and add value to the customer’s money

The recommended business strategies from the strategy formulation chapter are market
penetration, product development and market development. The specific strategies are
research and development of product line. Secondly, Quality management Control. Third
is to improve the process of claiming the insurance.

3. Increase Brand Awareness

The recommended strategies to increase Standard Insurance Co. Inc.’s brand revolve
around market penetration. The specific strategies are to have extreme marketing
strategies. They need to provide free kits on safety driving tips when an individual is
getting a driver’s license. Together with Land Transportation Office it will help to
penetrate the market. Second is advertising through traffic signs. Together with MMDA it
will help to increase awareness in advocacy of safety driving.

4. Molding Competent Employees in obtaining highest insurance qualification

The recommended strategies in molding competent employees of Standard Insurance

Co. Inc.’s brand revolve around market penetration and market development. The
specific strategies are trainings and career development through job rotation.

5. Achieve a higher rank in Non-life insurance category

When Gross Premiums is concerned, Standard Insurance Co. Inc ranked #4 but still the
Malayan Insurance Company Inc. dominated it. After all these business strategies have
been achieved it will benefit the company to achieve higher rank.

III. STRATEGY EVALUATION

A. FINANCIAL PROJECTIONS
 The researcher established a forecast of the Net income of Non-life Insurance of
Standard Insurance Co. Inc., The period covered is 2004 to 2009. The Financial
projections below was based on the strategic objectives and proposed strategies on the
different aspects of the business established in the previous chapters.

YEAR 2004 2005 2006 2007 2008 2009

NET 103,566, 88,463,8 135,413,0 342,691,8 1,209,947, 5,481,926,
INCOME 764 82 26 29 318 938
0.85417 0.653289 0.395145 0.2832287 0.2207156
25 308 184 2 96
85.4172 65.32893 39.51451 28.322871 22.071569
5 076 84 95 56
% of -
Increase or 14.5827 34.67106 60.48548 71.67712 77.92843
Decrease 5 924 16 805 044

Conclusion: The strategies recommended by the researcher are projected to gradually enable
the Standard Insurance Co. Inc., to achieve its strategic objectives of growing the net income to
P 5,481,926,938 exceeding the net income of previous years.

CHAPTER 8 – ACTION PLANS AND DEPARTMENTAL PROGRAMS

In this section, the researcher established the specific business action plans for each
strategy developed in the previous section. The action plans are discussed based on the
strategic objective and strategy it supports. The action plan for Standard Insurance Co. Inc. is
given as follows:

6. Double Standard Insurance Co. Inc, market revenue share in Non-life insurance by
2009

Key Strategy: The specific strategies are to give a quota for agencies and
branches target premiums
Strategic Expected
Program Output Timetable Persons/Unit Responsible
June 08-July
1.) Briefing and They will know 08 Management, Agencies,
Review of how much they Branches
Company’s will target for
 performance next year 2009
last year 2007

2.) Execute the July 08-May

The company’s
business 09
agencies and
proposal branches will do Management, Agencies,
the job Branches,
Marketing

3.) Monitor the

July 08-May
company’s Monitor the
09
new premiums that
performance can be earned Finance

4.) Rewarding Rewarding and

Ceremony for Giving
June08-July
best in recognition for
09 Marketing, Finance,
production the agencies Agencies, Branches
and branches
achieving the
best production

7. Improve Excellent Service and add value to the customer’s money

Key Strategy: Research and Development of Product and Service Lines

Strategic Expected Persons/Unit
Program Output Timetable Responsible
Marketing, Production,
1.) Review Product and Management, Technical
product and Services is being May08-July
services study for 08
compare its recommendation
 viability s

2.) Test the

process
stability, and
marketable for Actual test of July 08-Oct.
the product marketability 09 Marketing, Agencies,
Branches

3.) Review Analysis of Oct.08-

improved marketability Dec.08 Marketing, Production,
products and Management, Technical
services
New improved Jan.09-July Marketing, Agencies,
4.) Launch and products and 08 Branches
Promote the services
new improved
products and
services

8. Increase Brand Awareness

Key Strategy: Extreme marketing strategies.

Strategic Expected Persons/Unit
Program Output Timetable Responsible
1.) Review and May 08- Marketing, Management,
Briefing of Analysis of June08 Finance
Company’s Brand Awareness
Marketing to the Consumer
Efforts

2.) Increase Direct May 08- June Marketing

Marketing Advertising with 09
efforts through Target Consumer
free kits on
safety driving
Together with
Land
Transportation
Office and an
advertising
effort through
traffic signs.
 Together with
MMDA

3.) Evaluation of Analysis In

Marketing changes of
Efforts production and Marketing and Finance
volumes of
premiums earned June 08-June09
in finance

9. Molding Competent Employees in obtaining highest insurance qualification

Key Strategy: are trainings and career development

Strategic Expected Persons/Unit
Program Output Timetable Responsible

1.) Review and

Analysis of Analysis of career
Manpower in development in May 08- June 08 Human Resource
the Company the company

2.) Raising the Competent

standard of Employee May 08- June09 Human Resource
Hiring employee

3.) Conduct Increase of Depth

Seminars and Experience Dec.08 - June 09 Human Resource
Teambuilding
 CHAPTER 9 – STRATEGY MONITORING AND CONTROL

In this section, the researcher established a framework for Standard Insurance Co. Inc.
to monitor and control strategies implemented. The balance scorecard covers the following
perspectives: financial, customer and internal business.

Financial Perspective
Goal Measures
Income Growth Actual Income versus Target

Customer Perspective
Goal Measures
Improved Service Customer Feedback and
and Products Satisfaction
Increase Brand
Awareness Customer perception

Internal Business Perspective

Goal Measures
Competitive
Employees Training Employees

In every implementation, it is important that the firm monitors the results so that
whenever a problem arises, the firm may immediately address the problem and give the
necessary remedies to correct it.

On the Financial Perspective, the researcher established income growth as the main
goals to measure. The growth can be monitored by historical analysis of checking the income of
the previous years.

On the Customer Perspective, In order to improve the products and services, it can be
measure through feedbacks and loyalty. Increase Brand Awareness will help the customer
perception of the company.

On the Internal Business Perspective, the researcher established employees Training as

goal and it can be measure through the product of competitive employees in working efficiently
and effectively.