Usaa Case Analysis

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Case Analysis: USAA

Question: Is USAA a typical insurance company? List all reasons supporting your answer.

When USAA started in 1922, they were a property and casualty insurance company however, with time they expanded their services to their members and became a financial institution.

Their objective when starting the company was to provide auto insurance to military officers. In 1988, they owned 32 wholly-owned subsidiaries. Their main scope remained property and casualty insurance with automobile liability and damage insurance constituting over three-quarters of the company’s P&C business[1]. They also kept the membership limited to military officers and their dependents.

USAA is considered a financial institution for military personnel. They offer their members not only insurance products but also financial services (such as loans, credit cards, investment advice). Just as a financial institution the downturn in the Texas economy affected the value of some of its investments, particularly real estate[2]. The company’s vision is to offer its members by the year 2000 insurance products, asset management (financial services products) and quality of life (e.g., a retirement community and travel services)[3].

Therefore, USAA is not a typical insurance company, but the insurance branch of the company is still their main priority.

Question: Describe the role that IT plays within USAA.

The success of the USAA from a $200 million company in the 1960s to $11 billion empire in 1988 can be attributed to the implementation of “paperless environment” through integration of IT systems for faster processing of insurance policies and claims under a centralized automated system.

McDermott, upon his establishment as chairman and CEO of USAA in 1969 undertook to implement his vision of a “paperless environment”. His first step was to purchase a multicar policy processing system. This system was a success for the company and they were able to follow with...
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