Conseco: Marketing Assumption and Risk Harvard Case Solution & Analysis

Conseco: Marketing Assumption and Risk Case Solution

1     Introduction

The case is about the viability of the insurance company Conseco which was founded in the year 1979 by Stephen Hilbert and David Deeds. The company through the several acquisition and by going public has created a strong name and had succeeded in providing various insurance policies to the needy people. The policy of acquisitions of the company once resulted significant threat of solvency that it filed for bankruptcy in the year 2002 because of the unsustainable debt from the acquisition of a mobile-home lender.

The company in the year 2003 once again emerged from this issue and started focusing on the insurance policies. The overall situation resulted in the loss of the valuable management personnel.  However, the company started growing by selling a good number of policies as compared with the overall spending of the Americans on the LTC. The company due to the increasing inflationary trends in the market is required to pay heavily to the selling agents, which costs the company a lot.

In addition to this, the other significant issue which the company is facing is the loss of the potential selling agents due to the significant change in the customers’ perception and health consciousness which also resulted in the increased cost of health care for the company.  Due to theoverall inflationary trends in the market, the competitors started leaving and the selling agents increased their powers to sell a unique insurance policy to its clients. Moreover, the bad news regardingnot providing the required duty resulted in significant threat for the reputation of the company in the long run.

The recent news on the New York Times created aserious threat on the reputation of the company in the presence of thousands of employees, investors and various agents who sold the insurance plans to a wide number of customers.

2     Problem Statement

The company has faced many financial crisis in the market due to lack of control in economic crisis. As compared to competitors, Conseco has received lots of customers’ complaints regarding the services. The most of the complaints are emphasis on the payout timeliness and frustration. In addition to this, the other significant issue which the company is facing is the loss of the potential selling agents due to the significant change in the customer’s perception and great health consciousness which also resulted in the increased cost of health care for the company. On the other hand, the company also faced reputation risk in the market which took place due to the lack of environmental issues, financial crisis, bankruptcy, incentive system and risk mitigate. The rest of the problems are mentioned below:

  1. Environmental issue inside the company that is why employees and CEO left it very early.
  2. Low motivation because of low Salary.
  3. Wrong assumption about policies claims, and wrong calculation of claims.
  4. Economy is key influencer of them, which is not in there control.
  5. Bed time for overall industry.
  6. They do not take risk factor seriously.

3     Data Analysis

3.1   Risk in the long term care (LTC) industry

Long term care insurance services may be be defined as a part time and full time care services for the people who would not be able to satisfy their basic needs such as food, clothing, bathing and walking. In simple words these services are for those people who would not be incapable of self-care..............

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