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ding strong relationships with these customers is really important, but we also get to offer and trade knowledge with them. A customer can even know more than you do on a particular topic! Take advantage of this opportunity to learn more. An insurance expert is neccesary to be invited to make public speech to them and to draw potential customers interested in insurance.
Secondly, to do any further assistances freely if they have any more questions. If a customer can’t get hold of you when they need to, you could lose them forever. In PGI’s business, it should value face-to-face interaction with customers, which is often a rarity these days.

Question 2

Using the PGI case study, carry out a Situational Analysis which must include the following audits,

The following is the situational analysis of PGI using SWOP method：

PGI has encounter some challenges:
The diverse number of ICT systems in PGI, elements of which could impact on PGI ability to exploit economies of scale.
Stagnation in affinity group membership.
Decline in trade union membership.
High cost of commission payments to our sponsors or affinity groups.
Increasing disloyalty of consumers in shopping around.
Customers want “cheap”. The price list top on the needs of customers.
Aging population.
House price inflation.
Increased level of lending and new mortgages being granted.
Single product offering. PGI only offer motor policies. They are beginning to consider expanding out into other insurance ranges, however, other insurance types such as general household insurance was not a legal requirement.
Indirect distribution channel. DL took the market by storm by introducing the direct insurance concept whereby the consumer was able to go direct to the insurer and cut out the PGI and get a cheaper deal.

And PGI has some strengths and opportunities:
Highly specialized.
Expert knowledge of insurance.
Good ICT infrastructure
Good relationship with affinity groups.
PGI's existing affinity groups are 5.2million with around 4.5million in employment.
Increasing purchase through affinity groups.
Increase in house ownership.
Aging population - low risk customers
Consumer are open to new ways of purchasing insurance.
Improved labour market policy.
Increase in insurance expenditure.Expenditure by UK households on all types of insurance has increased well above inflation (RPI) since 1993.
Increased average length of household mortgages. premiums have been rising year on year for the last 20 years with an average household premium of ￡370 per year.
Low lapse rate.
Increased use of internet.

Converting challenges into opportunities:
Stagnation in affinity group membership - forces PGI to embark on improved distribution channel and reaching customers directly (not through groups)
Aging population – provides a low risk customer base which PGI can target leading to reduced operating cost due to less claims
Decline in trade union membership – forces PGI to embark on improved distribution channel and reaching customers directly (not through groups)
House price inflation – will create need for insurance in consumers since houses are now more valuable.