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Cup Corporation Case Study

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Cup Corporation Case Study
INTRODUCTION: CASE BACKGROUND & ISSUES

CUP Corporation was one of the largest insurance firms based in Europe. It had a worldwide operation and was recently acquired by another major insurance company. The firm had made a series of acquisitions to broaden the types of insurance offerings and expanding the market needs. It sold a various forms of insurance in the health, life, casualty, property and automotive areas. Customer segments of the firm’s services are divided into two groups of agents and brokers as well as end-customers. Over the last couple of years, the growth of premium income in German industry is somewhat instable. The declining growth rates had affected German insurance industry due to some reinforcing trends:

1) Worse economic climate such as increasing economic downsizing, increasing unemployment and fluctuations in real income.

2) Higher taxes and social welfare levies.

3) Increasing competition resulting from the deregulation of the European market.

4) Extensive satisfaction of the demand for insurance in German.

CUP Corporation had enjoyed remarkable growth despite economic downturns. However, the increasing competition and increasing client price sensitivity in the private insurance market has led to the shorter contracts and more cancellation of existing contracts among customers that is varied by the intensity of the products. Particularly, CUP Corporation is facing some problems regarding to the customer loyalty as well as in the corporate area.

In customer loyalty problems, there is increased in the “lapse rate” which refers to the customers who are shortening or cancelling the contracts compared to the total amount of contracts which is varied to the range of products. It is reported that the lapse rate is much higher against the total premium revenue. As a result, they had lost most of their customer base because of their own faults where dissatisfied customers claimed to have problems with the agents, bad

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