Insurance Australia Group (IAG) Analysis and Strategic Review

This report provides a comprehensive analysis of Insurance Australia Group (IAG), a leading insurance group operating in Australia, New Zealand, and Asian markets. The report begins with an executive summary and then delves into IAG's growth journey from an Australian-based company to a global insurance group, exploring its core competencies like customer experience, teamwork, and sustainability. It examines the company's strategic choices, including strategic partnerships and growth strategies, and discusses criticisms related to its expansion into the UK and China. A SWOT analysis is included, identifying IAG's strengths, weaknesses, opportunities, and threats. The report concludes with a review of the company's core values centered on sustainability and customer experience.

Executive summary
This report gives an analysis of IAG which is a leading Insurance group operating in
Australian, New Zealand, and Asian Markets. The report looks into the growth journey of the
company from being an Australian based Insurance company to its current position as a global
insurance group. Also explored are the core competencies and strategic choices made by the
company to aid its current success. The core competencies of the company are a focus on
customer experience, diversity, teamwork and collaboration and sustainability. The company has
also succeeded because of the adoption of various strategies such as strategic partnerships with
other industrial players, growth strategy to expand operations into different markets and focus
strategy. The report also explores some of the criticisms that have been associated with the
company in the recent past. The Insurance group’s main criticism has been due to its
controversial expansion into the Chinese and UK market. Its expansion into the United Kingdom
against the advice of experts and shareholders ended with a huge loss while the plan to expand to
China was withdrawn after objection from shareholders. The report also analyses the various
weaknesses, strengths, threats, and opportunities for the company as well as its corporate culture

Contents
Executive summary.........................................................................................................................2
TASK ONE......................................................................................................................................4
Strategic priorities........................................................................................................................4
Successful past and Current Strategies........................................................................................5
TASK TWO.....................................................................................................................................7
IAG Criticisms.............................................................................................................................7
TASK 3............................................................................................................................................8
SWOT Analysis...........................................................................................................................8
TASK 4..........................................................................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
TASK ONE
Insurance Australia Group is an international Insurance corporation, with its headquarters
situated in the city of Sydney Australia. The company came into being through a change of
ownership of NRMA Insurance from a mutual organization to a joint stock company. This

change of ownership gave birth to Insurance Australia Group in the year 2000. The company
holds a number of popular Australian Insurance brand. Its operations are spread across Australia,
New Zealand, Thailand, Vietnam, Malaysia, Indonesia, and India. The Organization’s strategy
has been optimizing Core insurance business while generating opportunities for future growth.
The Company’s main strategy is making the world a safer place for customers, shareholders,
employees, partners and the communities that it serves in Asia, Australia and New Zealand
(Olivier, 2013).
Strategic priorities
Agility: Being an Agile organization that is differentiated by its execution skills, Speed, and
Innovation
Agility means the act of moving quickly and easily. One of its strategic options is
organization focusing on the creation of a disciplined approach to its leadership and management
through the introduction of agile working methods and ensuring that their employees clearly
understand their roles(Iag, 2018). The organization also identity’s, natures and instills the
necessary skills required to achieve its strategy and enable their employees to have a smooth
transition to their future work. In addition, the organization also aims at being recognized as an
organization that is driven by purpose.
Simplification: A lower cost, modular and simplified model of operation.
The organization aims at minimizing complexities in operations through execution of
technology strategy, simplification of its processes and systems, product harmonization and
consolidation of technological platforms. The organization also aims optimizing its operation

model by influencing its operational partners(Iag, 2018). Finally, IAG is also focused on
enhancing the usage of the repairer network to reduce size claim and improve allocation
Customer: Offering the best customer experience globally
The organization is also focused on providing a satisfying experience for its customers at
all times through automation of processes, and connecting with customers easily and within the
shortest time possible. This is also facilitated by innovations to increase efficiency and cement its
market position. The organization also aims at anticipating the need of its customers through the
use of artificial intelligence and embedded cognitive competencies. A better understanding of its
customers is also one of the priorities for the organization. It aims at achieving this by making
decisions based on data (Iag, 2018).
Successful past and Current Strategies
Growth Strategies
Among the successful strategies used by the organization in the past are vertical and
horizontal growth strategies. The organization has specifically succeeded in developing its
markets and penetrating into newer markets. From its establishment as a small insurance firm
based in Sydney, the organization has become a reputable global enterprise through its successful
penetration into the Asian and New Zealand markets. This achievement has been achieved
through major acquisitions in Australia and outside. They include State Insurance in 2001, SGIO
1998, CGU Insurance, 2003, Swan Insurance, 2003, Lumley, 2014, WFI, 2014 and NZI, 2003.
(Whyte and Grigg, 2015).Through these acquisitions and global expansion of operations the
organization has also been able to develop its markets. With the success achieved through this
approach, the company is still relying on the growth strategies as part of its core strategies

Strategic Partnerships
The organization has also successfully used a strategic partnership approach to improve
its operations. A strategic partnership refers to an alliance between commercial enterprises.
Strategic partnerships are usually formalized by a single or multiple commercial contracts.
Among its strategic partners is Thailand based Safety Insurance, Malaysian based Am
Assurance, Indian Based SBI General Insurance Company, Indonesian based PT Asuransi
Parolamas and Vietnamese AAA Assurance Corporation. Strategic partnerships are also part of
its current expansion strategy (Olivier, 2013).
The Focus strategy
Under the focus strategy, organizations focus on dealing with specific markets through an
understanding of the dynamics of such markets as well as the needs of customers in those
markets. Insurance Australia Group is still focused on dominating the Asian market through
partnerships with business experts and global insurance enterprises. The organization has also
put in place measures of understanding the specific needs of their customers in specific market
segments in New Zealand and Australia. The focus strategy is aimed at understanding and
improving the experiences of customers in specific market segments (Roth, 2014).
TASK TWO
IAG Criticisms
Controversial expansion and exit from the United Kingdom
The company had in the mid-2000’s invested $1.75 billion in the UK market against the
pleas of analysts and shareholders. The expansion into the UK was done against the advice of

analysts and shareholders. Its operation in the United Kingdom ended with a loss of $240 million
after selling its Red Star business in 2013(Whyte and Grigg, 2015).
Controversial expansion to China
The company has been previously criticized for its expansion journey into the China
Market. The company has had a fair share of challenges in its expansion journey. Back in 2015,
its pursuit of the Chinese market faced a lot of opposition from stakeholders because of the
challenges faced in its overseas expansion journey previously. The main concerns were the
regulatory and business hurdles associated with the Chinese market (Liew, 2015). Back in 2015,
the company sought to pump approximately $1 billion into China, the second largest economy in
the world, through partnerships with one of the leading Insurance companies in China. This
expansion, however, received much opposition because of the loss suffered during the attempts
by the company to expand into the United Kingdom Market. In addition, analysts argued that
there were many risks involved in entering the developing Chinese market because of the
involved challenges (Liew, 2015).
Concerning its past expansion attempts into New Zealand Asia, analysts have argued that
the expansion into the two markets was not the best option as it did not provide greater value to
shareholders. On the contrary, they believed that returning excess capital would be the most
effective approach as compared to expanding into the UK or Asia (Liew, 2015). Analysts also
argued that a return of capital would have translated to a boost of 19% per share for shareholders.
There was also an argument that the company would have recorded a 21% profits and 31%
increase in prices for its shares in 10 years had it considered the option of returning capital.
(Liew, 2015).

In addition, the opposition also came as a result of the fact that ANZ Bank which had
already expanded its operation to China was still struggling to realize any benefits. The company
was also targeting Motor Insurance which was classified as the largest insurance casualty in
China. (Liew, 2015). This was also one of the reasons for the objection to the expansion move.
In the end, AIG abandoned its controversial attempt to expand into the China market as a
result of a protest vote treat by its investors.
TASK 3
SWOT Analysis
Being one of the leading Insurance companies in Australia, IAG has a number of
strengths that have enabled it to thrive not only in the Australian market but also in Asia and
New Zealand. In addition, the strengths have also enabled the organization to protect its existing
markets and enabled it to successfully penetrate into new markets. The Insurance Company also
has opportunities that it can utilize to expand its operations(Gray, 2015). However, the company
is also faced with threats to its expansion and operations
STRENGTHS
Strong Brand identity
With its customer-focused approach, the organization has been able to establish an
excellent brand identity. The company is a household name in the Australian Insurance Industry.
It has also made significant penetration and won an increasing number of customers in New
Zealand and Asia. The organization has for a long time invested heavily in building a strong
Brand Portfolio.

Customer loyalty
One aspect that organizations value is the kind of experience they have while associating
themselves with an organization. The company has for the longest time focused on improving
the experience of its customers. Its ability to satisfy the needs of their customers and improve the
overall customer experience has enabled it to have a strong customer loyalty.
Variety of Services
The company also has a variety of insurance covers that its customers can choose from.
Its main services include content, home, and vehicle, commercial and general insurance.
Market share
The Australian insurance giant also has an advantage associated with its large market share. The
company’s global market share in the Insurance industry is estimated at 40% while its market
share in New Zealand is said to be above 66% (Gray, 2015).
WEAKNESSES
Research and development
Compared to its competitors, the organization has a lower investment in research and
development. Its approach to innovation and development does not compare effectively with that
of its main competitors. This has weakened its ability to effectively compete with other players.
Below industry average performance
Another weakness can be witnessed through the below industry average percentage of its
contribution and profitability ratio.

Improper financial planning
The company also has a weakness in that its financial planning is not done efficiently. As
suggested by its current liquid asset ratios and current asset ratios, the company can be more
efficient in its cash spending than it is currently.
OPPORTUNITIES
Expansion into new products categories
With its strong brand portfolio acquired through mergers and acquisitions, the
organization has an opportunity of successfully expanding into newer product categories. The
company has also been known because of its track record in developing new product offerings.
Therefore, the organization has an opportunity for diversifying its product offerings.
New Market trends
Emerging consumer trends in the Insurance industry can open the organization to new
market opportunities giving it an opportunity to diversify into new products and improve its
revenues.
Opportunities brought about by changes in Technology
With the increasing changes in technology, Insurance group has an opportunity adopt
new practices partly with regard to its pricing strategies. This will enable the company to attract
and retain customers hence improving its market position.
THREATS
Intense competition

The company is facing intense competition from multiple insurance companies. This has
negatively affected its profitability and sales.
Differences in liability Countries liability laws
With the expansion in different countries, the insurance group is faced with the threat of
being exposed to different liability claims because such countries have different policies
TASK 4
The company has its core values centered on sustainability and improving customer
experience. The main purpose of IAG is: Making the world a safer place. This slogan is extended
to customers, employees, partners, shareholders, and all parts of the communities served by the
IAG across Asia, Australia and New Zealand (Benn and Dunphy, 2013). IAG strategy is
optimizing its core insurance business while creating future growth options. IAG operates under
three strategic priorities; customer, simplification, and people. These priorities are brought to life
by two themes-leading and fueling.
The organization culture can, therefore, be described as a culture that is based on
Diversity, teamwork and collaboration, sustainability, creation and upholding of shared values
and anchored on creating stronger, safe and more confident communities. In this regard, the
company is seeking to have at least 40% of its senior management positions in New Zealand,
Australia and 30% in Asia occupied by women by 2020. Through its sustainability and diversity
endeavor, the company is focused on reducing the amount of Co2 by 10% in 2020 and having a
1.5% percentage of employees from Aboriginal & Torres Strait Islander respectively. This
culture has been developed and maintained by the company’s leadership including its current
CEO Peter Harmer (Date, 2015).

Conclusion
In conclusion, IAG is one of the leading insurance companies in Australia. The Company
has grown steadily to become a dominant Insurance company not only in Australia but also in
New Zealand and Parts of Asia. The company has achieved its current success because of its
core competencies which are a focus on customer experience and sustainability. The company
has also succeeded through the application of various strategies in the various markets. The
company has in the past successfully used growth strategies to expand its operations in Australia,
New Zealand and Parts of Asia. Additionally, the company has also used strategic partnerships
with other Insurance companies in its current markets. Focus strategy has also been part of its
strategic choices. The company has had criticisms with its expansion to the United Kingdoms
and the Chinese markets. While its penetration into the United Kingdom ended with a big loss.
Its attempt to penetrate the Chinese markets was terminated due to the objection of its
stakeholders and experts. The company also has various strengths, weaknesses and opportunities
and treats as shown by its SWOT analysis. The organization has successfully established an
organizational culture that is based on teamwork, collaboration, inclusivity, support for the
women and upholding of shared values.
References
Iag, (2018). IAG Limited. [online] Available at: https://www.iag.com.au/ [Accessed 13 May
2018].
Date, F.D., 2015. Insurance Australia Group Limited Preliminary Final Report for the Year
Ended 30 June 2015. Change, 1000, p.2014.
Gray, M. 2015. Insurance giant dismisses deal’s impact on the market. Insurance Business NZ
Benn, S. and Dunphy, D., 2013. Corporate governance and sustainability: Challenges for theory
and practice. Routledge.
Liew, R. 2016.Harmer to persevere with IAG's China push. The Sydney Morning Herald

Olivier, A. 2013. Organisational Design: What Your University Forgot to Teach You /Andrew
Olivier. [Bloomington, Ind.], Xlibris Corp.
Roth, M. 2014. Top Stocks 2015 A Sharebuyer's Guide to Leading Australian Companies.
http://rbdigital.oneclickdigital.com.
Newton, P. W. 2008. Transitions: pathways towards sustainable urban development in
Australia. Dordrecht, The Netherlands, Springer Science.
Whyte, J, and Grigg, A.2015. IAG scraps China expansion after protest vote threat. The
Australian Financial Review.www.afr.com