The American Family Insurance (AmFam) is an organization based in the United States that insures its clients from losses incurred by car accidents, property damages, and casualties from business activities. The company was started in 1927 by Hermann Witter and has since expanded to open other subsidiaries, such as Main Street American Insurance, American Family Life Insurance Company, and American Family Brokerage. The American Family Insurance's current head is Jack Salzwedel, and the company's headquarters are at Madison, Wisconsin, in the United States. The current company mission statement for American Family Insurance is "To inspire and protect your dreams. Because we believe a dream is the most valuable thing you'll ever own" (American Family Insurance (a), n.d.)
The above company's vision is "To be the most trusted and valued customer-driven insurance company" by offering exceptional and unparalleled services and protection to clients (American Family Insurance (a), n.d.). The American Family Insurance is committed to ensuring clients realize their dreams because, according to the organization, dreams steer the world towards its desired future. The company's core values include customer-centric service provision, employee-focus, trustworthiness, agility, passionate service delivery, and transparency.
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As listed on its website, part of its products includes vehicle, property, and business insurance and added protection. Services under the added protection docket include life, health, and travel insurance and insuring users from identity theft. Some of the current trends in the insurance industry that the American Family Insurance appears to have embraced include high differentiation of products, use of technology, such as the AmFam app to better service provision, and creating online calculators to help prospective clients calculate their premiums if they decide to procure the company's services.
Process Analysis
The American Family Insurance engages in various processes to earn income and attain a favorable return on investment. One of the company’s primary operations is the brokerage of vehicle insurance, which has been highly differentiated into a car, motorcycle, and boat insurance. Additionally, the vehicle insurance docket covers RV & Campers, snowmobiles, ATV, and classic cars. When a client wants vehicle insurance, they would contact a salesperson from the website or encounter an in-person walk-in visit from the American Family Insurance sales employee. The negotiation process to purchase a car insurance bundle could begin within an agreed time. According to data from the website, some of the products under car insurance include collision coverage that protects owners who collide with other vehicles, comprehensive coverage for non-collision accidents, and property damage liability coverage for owner cars that destroy other people’s belongings accidentally.
Moreover, the car insurance policy has the bodily injury liability coverage for injuries on other people caused by the insured owner’s car, the medical expense coverage for catering for healthcare expenses in the event the owner or car occupants are involved in an accident, and the personal injury protection coverage for reimbursing lost income or child care costs incurred for involvement in an accident ( American Family Insurance (b)., n.d.) . Other services include the Gap coverage for insuring vehicles against depreciation costs, under-insured motorist protection coverage covering extra costs that the primary insurance does not cover, and rental reimbursement for clients ordering an emergency vehicle if they are stuck.
Finally, the American Family Insurance offers emergency road service coverage for mechanical repair of cars and accidental and death dismemberment coverage for fatalities resulting from insured vehicle accidents. The American Family Insurance appears to target different consumers and increase its sales income prospective by providing over ten services under car insurance. Still, a buyer is highly likely to be repulsed by all the product bundles the company offers, which could be fewer if well-bundled. The current car insurance sales bundle is chaotic and aims to make the client pay premium upon premium that is expensive in the end ( Davcik, 2015) . Most of the car insurance bundles sold separately are a similar service coined in a different name. The prospect of selling any car insurance with excessively high product differentiation is almost impossible. Visually, the car insurance services sold separately appear as below:
Figure 1: The chaotic current car insurance bundle model at American Family Insurance
Recommendation
In my opinion, American Family Insurance should bundle most of its car insurance services to attract more clients and reduce the premiums clients expect to pay if they have to purchase insurance. For instance, the comprehensive coverage covering non-vehicle collision accidents should be bundled with the collision coverage and property damage liability coverage. Secondly, the medical expense coverage should incorporate bodily injury protective coverage, personal injury protection coverage, accidental death, and dismemberment coverage ( Fang, Sun, & Gao, 2017) . Finally, the company should offer rental reimbursement coverage and emergency road service coverage as free after-sale services for premium members to attract and retain clients. In the end, the salesperson would have only four bundles of services to offer from American Family Insurance, which are easy to present and may appear affordable to clients, resulting in more sales and increased ROI. Visually, the new bundle of car insurance would be as below:
Figure 2: Proposed product bundle for car insurance (New bundle is less chaotic and more likely to attract clients quicker).
Conclusion
The American Family Insurance sells coverage for businesses and property, vehicles and provides other added services. An extensive analysis of its car insurance product bundling process shows that the company has differentiated its products excessively, which may repulse a client willing to purchase insurance from the company currently. The business may not be achieving its ROI targets because of the excessive product differentiation because the client perceives that they have to take too many expensive bundles to be protected sufficiently. Therefore, I recommend that the company combine some of its services under car insurance to reduce the current bundles from 12 to four, which are easier to present to clients and calculate monthly premiums.
References
American Family Insurance (a). (n.d.). Mission, vision & values . Auto, Home, Life, & More | American Family Insurance. https://www.amfam.com/about/mission
American Family Insurance (b). (n.d.). Car insurance coverages . Auto, Home, Life, & More | American Family Insurance. https://www.amfam.com/insurance/car/coverages
Davcik, N. (2015). Impact of Product Differentiation, Marketing Investments and Brand Equity on Pricing Strategies: A Brand Level Investigation [Unpublished doctoral dissertation]. https://espace.curtin.edu.au/bitstream/handle/20.500.11937/8263/226726_226726%20Sharma.pdf?sequence=2&isAllowed=y
Fang, Y., Sun, L., & Gao, Y. (2017). Bundle-pricing decision model for multiple products. Procedia Computer Science , 112 , 2147-2154. https://doi.org/10.1016/j.procs.2017.08.243
