How elements of the external environment have contributed to the success of Hastings Insurance Group

How elements of the external environment have contributed to the success of Hastings Insurance Group

A report on how the external business environment factors, including political, economic and technological elements have influenced the success one of the UK’s fastest growing insurance companies

Hastings Insurance Group plc (“HIG”) is an underwriter and distributor of personal lines insurance with a strategic objective of protecting 1 in 10 UK consumers by 2020. HIGcurrently has 1.9m customers under management with approximately 90%of these being private motor insurance customers. HIG’s primary distribution channel is price comparison websites such as ‘Compare the Market’ and ‘Confused’.
The business environment that HIG operates within has a direct impact on the Group’s growth and profitability. This paper explores the types of impact the external environment has had on HIG’s growth under the question:
“what are the external environment factors that have influenced HIG’s success?”

Approach tothis report
This report:
• provides an overview of the market landscape HIG operates within;
• outlines HIG’s success within this marketplace;
• provides some hypotheses on how the business environment has impacted the Group’s performance, either positively or negatively; and
• explores these hypotheses utilising various frameworks, including LoNGPEST analysis.
There are 4 specific themes that are explored within this paper:
1. the impact of external business environment factors, utilising the LONGPEST framework;
2. the impact of globalisation;
3. the impact of the competitive environment; and
4. the impact of HIG’s culture.

Method used for data collation
The following data sources have been utilised to support the construction of this report:
• Government statistics relating to relevant external influences such as unemployment rates;
• MBA course books such as Capon’s “Understanding the business environment”
• relevant reports, specific to HIG’s market, such as Deloitte’s motor insurance seminar paper; and
• other articles and publications such as Sutcliffe and Weber’s “The High Cost of Accurate Knowledge”.
Limitations to this approach
Whilst this report utilises a wide array of data, the research is all secondary and no empirical research has been undertaken. Furthermore, the majority of the conclusions from this report are based on quantitative data.

Market context
The motor insurance market is sometimes referred to as the Perfect market , a highly commoditised market with very transparent pricing. This is prompted by the mandatory nature of the product, requiring, by law, all motor vehicle users to possess insurance if they are to use their vehicle on the road .
Market size
The personal lines motor insurance market was worth approximately £8bn as at end of 2013 (please refer to Chart 1). The market has consistently lost money since the mid 1990’s, as highlighted by Chart 21, which assesses the combined ratio (effectively a profit margin ratio) since 1981.
There are around 30m licenced vehicles in the UK2and it is estimated that around 28m of these are insured providing an indication of the available market.
Chart 1 Chart 2