Page 1: Introduction
This case study focuses on how one of this country’s major service organisations, The Equitable Life Assurance Society, has harnessed modern technology in order to focus better on providing an excellent service to clients.
The Equitable Life Assurance Society is the oldest mutual life assurance provider in the world. Founded in 1762, its values and principles remain as important today as they were in the days when its founders invented the principles of modern life assurance. Today the Society is a highly successful and innovative provider of both life assurance, pensions and other financial service products in the UK and through its international branches in Germany, Republic of Ireland, Guernsey and Dubai.
Success in business is based on competitive advantage i.e. the ways in which an organisation is able to provide a better range of benefits to consumers than those offered by rivals. The success of the Society stems from the following factors:
- Being a mutual, the Society is owned by its policyholders (rather than by shareholders) and this gives it a clear focus towards its customers.
- Its target market is high net worth individuals, thereby bringing in policies with higher than average premiums.
- Policies are sold through the company’s own sales representatives and no commission is paid to third parties for the introduction of new business. This allows The Equitable to keep tight control over the distribution of its products in terms of focusing on its target market and on the quality of advice given to customers.
- The Equitable prides itself on its innovative approach to a whole range of its business activities from product design to the use of Information Technology.
The Society today
In Business Studies, the term milestone refers to the measurable progress which an organisation can point to as an indicator of ongoing success on the route to achieving long term goals.
During 1997, the Society reached a number of milestones in its continued successful development. These included:
- Total premium income in the year exceeded £3bn for the first time in its history. Indeed, at £3.45bn, it was almost 22% higher than in 1996. Within this figure, premiums from international business increased by 48% to £167m.
- New annual premium income at £494m was again a record for the Society, as was its single premium income at £1.95bn.
- The market value of assets stood at £24bn at the end of 1997.
- The expense ratio (i.e. the ratio of expenses of management to total premium income) fell for the ninth consecutive year, to 4.1%, which is expected to be the lowest in the industry.
This continued growth is, however, carefully controlled, as it must always be seen to be providing enhanced benefits for the customers. These benefits take the form of bonuses on their with-profits policies and reduced charges on many of the contracts. The success of The Equitable is also monitored and measured to ensure that it stays ahead of competition.