Infinity Auto Insurance Harvard Case Solution & Analysis

Infinity Auto Insurance

Description of the business

Infinity has an extensive and successful history of giving valued car insurance services from the year 1950. Infinity has over 2100 employees across the United States. They offer car insurance and protection for those clients, who have a proven track record of disaster free driving and those who are facing the complexity in obtaining the coverage due to accidents , occupation, violations, their age and other type of the car they drive. Infinity enjoys an A category (Excellent) ranking from A.M. as the Best Company. A.M. is an independent company that ranks the overall financial strength and performance of all the insurance companies.


Designing the goals that need to be achieved is the most important task for any business, which include: improving the financial position, implementing the overall best practices, sustainability, replacement cycle along with training and development. They wanted to increase their market share by providing superior services to the existing as well as new clients. Furthermore, they wanted to present a very positive image of the company in the community and to play a further optimistic role in enhancing its initiatives and corporate goals. In addition, they wanted to take their premium growth to 10% from 5% by 2014. The company also wishes to increase their return on equity from 6 % to 7.5 %.


According to the statistics of national association of insurance commissioners, Infinity insurance had a market share of around 0.67% in the year 2012. They wrote around $1,177,767,227 in their direct premium accounts. The company started business in 1955 named as Dixie Insurance Company. Initially, they served one client in eastern Alabama. In recent years, the company has witnessed significant growth and now it is serving clients in 43 states within the United States.  According to the company statistics, Infinity is the second largest writer of non-standard insurance in the United States in the automobile sector. Services are available for customers in a wide range of network. The network is based on 12,900 independent brokers with 16,200 locations approximately.

Macroeconomic Environment

Global Economics Trends & Outlook

The global economy is projected to pick up pace as the years progresses and is expected to increase by 2.8 % this year, taking strength to 3.4% and 3.5%  by the year 2015 and 2016, respectively. The economies that posses the high-income may add about half of global expansion in the year 2015 and 2016, as compared to less than 40 % in the year 2013. Emerging countries are found headed for a 3rd repeated year of disappointing expansion averaging  below 5 %, as first quarter flaw in 2014 has delayed a projected pick-up in the overall economic activity. This is mentioned in the World Bank’s newest Global Economic projection report, which was issued recently on June 10, 2014.

The global growth of the Gross Domestic Product adjusted for price rises would bounce back from 2.9 % in 2013 to 3.3 % in the year 2014. Among established economies, the 2014 expansion outlook has enhanced considerably to 2 % expansion in 2014, in comparison with 1.3% in the year 2013.

National and State Economy (Impact on insurance)

The United States of America is the world's biggest sole national economy. The United States of America nominal gross domestic product was expected to be around $17.02 trillion as per the statistics of the 1st quarter of 2014, approximately a quarter portion of the nominal global gross domestic product. Its GDP at buying power equality is also the biggest of any particular country in the globe, which is just about a fifth of the global sum. The dollar of the United States is the currency that is mostly used in global transactions and is the world's leading reserve currency.

            Since, the currency is strong and people of US posses the high buying power so the insurance sector always receive the positive impact of this situation. Furthermore, their per capita income also plays an important role in the development of insurance sector and this per capita income is increasing year by year and reached 53,143 by the year 2013.











This per capita income shows the tremendous trend of growth year to year. This enables people to buy more and more cars and getting them insured. Moreover, fuel prices fluctuate significantly across countries. The costs of fuel in various petrol generating states are low than a dollar or a euro cents for a liter. In some developed European countries, a gas per liter cost more than $2. The per gallon prices in US is around $3.593; which is not that much costly. In US, people can easily afford cars due to affordable fuel prices......................

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