Balanced Scorecard - A Performance Support System
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Case Code: INS039 Case Length: 03 Pages Period: 2003 Pub Date: 2003 Teaching Note: Available |
Price: Rs.100 Organization: Varied Industry: Insurance Countries: India Themes: - |
Abstract Case Intro
FOCUS E & W is a subsidiary of the leading insurer, FOCUS Insurance Corporation. Although its performance had been satisfactory till 1990, it suffered huge losses ($1 billion) between 1990 and 1993.
This was mainly due to huge payments made by the company (towards claims for catastrophes as varied as floods, hurricanes, riots and environmental clean-ups). Moreover, the company's combined ratio had risen to 140% which meant that for every dollar received as premium, the company was paying out $1.40 as claims.
Therefore, the company's financial rating was downgraded from A to B+.
The losses could partly be attributed to the company's outdated and unfocused business strategy.
The company issued policies to any and every individual, without obtaining required details (like the safety measures taken by the company to avoid fire accident in its manufacturing plant, to prevent damage to machines, etc.) to boost the volume of business. As a result, underwriters failed to understand the risk involved in the transaction...
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