Introduction insurance, freight transport insurance, industrial risk insurance etc.


            The purpose
of this report is to analyze the case of a company and assess the external
environment as well as the internal environment and accordingly propose
recommendations for strategies. The paper first begins with a brief
introduction to the company, then it analyzes the macro-environment and the
industry, then it discusses the internal structures, strengths and competencies
of the company and in the end it identifies one optimistic and one pessimistic
scenario, based on the preceding analysis, and suggests alternative courses of
action for the company. 0 The Company

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is an insurance firm, member of the Israeli Harel Group of companies. The firm
was founded in Thessaloniki, Greece back in 1890 by Mr. Karolos Saias, and it
specifically started as a commercial insurance provider. With over 120 years of
experience, in the early 2006 the multinational Harel Insurance Investments and
Financial Services, took over the largest share of the company and incorporated
it, establishing Interasco SAGI (Societe Anonymous General Insurance) as its
subsidiary (as of today, Harel holds 94% of the shares of Interasco) (Harel
Annual Report, 2016). Within one year, Interasco moved its headquarters to
Athens, located now at northern suburbs of the city and began a remarkable
performance in the market.

            Interasco sells
insurance services covering all relevant insurance sectors in both private and
business customers. For individual customers the company provides health
insurance, household insurance, personal liability, personal accident and motor
insurance, while for business customers the company provides a wide range of
packages including business property insurance, liability insurance, cyber-risk
insurance, freight transport insurance, industrial risk insurance etc. Its
mission is to provide added value to all its stakeholders by continuously
improving its services and operations, to pursue growth through enhancing its
position in the market and to innovate through providing flexible yet simple
insurance packages. Its vision is to become one of the largest insurance
providers in Greece by building trusting relations with stakeholders and expand
internationally to developing European markets (Interasco, 2017).

            Interasco is a
relatively small company, compared to giant insurance companies such as
Ethiniki Insurance, Groupama, Eurolife, Interamerican, AXA etc. (which together
hold more than 70% of the total market), but it has made a strong presence in
the Greek market especially in the health insurance area. Today it employs
nearly 60 individuals in administrative, managerial and customer service
positions and has an extensive network of approximately 500 external insurance
agents (Kotzamanis, 2016). Its financial performance in terms of profits
(before taxes) is provided in the table below:

Table 1:
Interasco’s Net Income for the period 2013-2016






Net Income (before taxes)





(Sources:, 2015; Underwriter, 2017)

market share is nearly 1.9% according to the Hellenic Association of Insurance
Companies (2015) for the year 2015. Although it is a relatively small market
share, this share has grown significantly in the last years. The major driver
of growth has been the health insurance portfolio of the company, which is the
fastest growing segment in the Greek market.


Analysis of the Macro Environment

            The PEST
model is a tool for analyzing macro-environmental factors that entail
opportunities and threats for organizations and which management needs to
consider in order to devise its strategy (Hitt, Ireland and Hoskisson, 2015).
The following discussion presents the most important issues that are likely to
impact the insurance services’ industry and consequently Interasco.

Political: There is a general political instability and
uncertainty in Greece, which has profound influences on the insurance sector.
This sector is closely monitored by the government and continuous changes in
the state insurance programs and social security are likely to produce
opportunities for greater demand for private insurance services. However, there
are some threats as well; for example, in 2015 the government announced an
increase in the standard insurance premium tax, from 10 to 15%, tightening in this way the
profit margins of insurance companies and weakening the demand for insurance
services (PRNewswire, 2017)

Economic: GDP is growing at a slow, but steady pace,
unemployment rates are falling, consumer confidence is slowly recovering, and
private consumption is increasing too. Although, Greece has not yet rebounded
or exited the economic crisis, there are some positive signs of growth (Hellenic
Association of Insurance Companies, 2015). As consumer spending is following an
up-ward trend, the potentials for private insurance companies are intensified.
However, specifically because of the uncertainty coming from the economic
situation of the country, there are optimistic and pessimistic scenarios over
the future.

Social: The healthcare system in Greece is degrading and
collapsing, causing more and more consumers to turn into private insurance
companies. Social security in Greece is a problematic sector and Greeks feel
insecurity when it comes to healthcare provision and they generally shift their
interests towards being able to have access to private hospitals, medical
institutions etc. This is very important for a company like Interasco, whose
leading service/products are health insurance packages. Another important
social issue has to do with the increasing migration in the country in the last
few years, which by nature is likely to cause increased demand for insurance
services (non-life insurance services) (Barbara et al., 2017)

Technological: Technological advancements have generally created new
business for insurance providers; for instance, the photovoltaic technologies
have developed an entire new insurance domain for companies or technological
equipment in certain industries have increased demand for insurance programs
tailored to secure organizations from risks (Barbara et al., 2017). But the
technological opportunities do not stop there; the growth of the internet and
the IT technologies present enormous opportunities for insurance providers as
they allow them to directly relate and communicate with customers, collect
market intelligence (acquire customer knowledge) and accordingly design and
build insurance service programs and disintermediate many unnecessary agents by
engaging in direct sales (Yannakopoulos, Magoutas and Chountalas, 2017)


4.0 Industry

discussion of the insurance industry is implemented through Five Forces Model
and the Strategic Group analysis. The Five Forces Model was developed by Porter
and it is essentially a diagnostic tool, allowing management to identify the
basic forces that shape the attractiveness of an industry. The Strategic Group
analysis is also a diagnostic tool that allows management to identify the
relevant position of a firm compared to other firms within the industry on the
basis of pre-defined characteristics (Hitt, Ireland and Hoskisson, 2015).

4.1 Five Forces Model

Threat of New Entrants: The threat of new entrants in the
insurance industry is moderate. On the one hand there are no particularly high
entry barriers (such as capital requirements), but access to distribution
agents, market knowledge and intelligence, specialized knowledge on insurance
services pose some significant limits to potential new entrants. New comers
mainly involve prospective multinational insurance companies and so the main
threat develops around top branded international insurance providers that might
wish to enter the Greek market.

Bargaining Power of Buyers: Buyers in the insurance industry
are individuals, businesses and external agents. Although in general the power
of buyers is low (because there are too many customers to influence prices), in
some cases their power can increase. For instance, large corporations can push
prices down, require better terms or additional services at lower rates.
Similarly, agents might demand an increase in their commissions and eventually
influence the profitability and the cost-efficiency of insurance companies
(Yannakopoulos, Magoutas and Chountalas, 2017)

Bargaining Power of Suppliers: The suppliers in the insurance
industry are actually the employees (labor) and the suppliers of any materials
required for the development of services (such as office supplies etc). It is
easily understood that the suppliers of materials in the specific industry can
do little to influence a company’s cost structures, efficiency or profitability
as there are thousands of alternative firms. On the other hand, talented
insurance employees is a significant source of competitive advantage and they
can influence insurance company’s performance (Yannakopoulos, Magoutas and
Chountalas, 2017). For a relatively small insurance firm as Interasco, talent
may be recruited by larger insurance companies and as such this can pose

Threat of Substitutes: The substitute of a private
insurance program is social insurance. The threat of substitutes goes hand by
hand with the economic situation of a country and with the development of the
social security system. A good and positive economic climate will increase the
demand for private insurance if the social security system is non-effective and
vice versa (a negative economic climate will most probably reduce the demand
for private insurance). In Greece the situation is challenging because while
economic recovery has not yet been achieved, the lack of a solid social
security system drives more and more consumers towards private insurance. But
should the economic situation change this can change too.

Rivalry Intensity: The insurance industry is a slow-growing industry and
it is highly concentrated. As of 2015, in non-life insurance services the top
five insurance firms control nearly 40% of the market, while in life-insurance
services the top five account for over 70% of the total market (Figure 1). The
vast majority of smaller firms have market shares ranging from 2 to 5%
(Hellenic Association of Insurance Companies, 2015). As the concentration is
high, the rivalry intensity is high too and competitors are competing on price,
quality of services and customer loyalty.

Figure 1:
Insurance Industry Market Concentration

Hellenic Association of Insurance Companies, 2015)

4.2 Strategic Group Analysis

following strategic group analysis shows the position of different insurance
companies on the basis of two criteria: a) gross insurance premiums (gross
premium written: the revenues to be received over the life of a contract) and
b) range of services (life, non-life or both). Figure 2 below shows the
strategic group mapping.

Figure 2:
Strategic group mapping for the Greek insurance industry

Yiannakopoulos, Magoutas and Chountalas, 2017)

As shown from the figure above, Interasco (operating in the non-life
segment) remains a relatively small player, competing directly with companies
like International Life, Interlife, NP, Aegeion SA etc. If it is to grow it
needs to focus on increasing its gross insurance premiums and resemble more the
position of larger companies like Intersanolika, Allianz, AXA, Groupama etc.


Internal Analysis

5.1 Value Chain

            The value
chain of Interasco is based on the following:

Product/service program design based exclusively on
the needs of customers. Customer data collection and market intelligence gained
through strong, close and long-term collaboration with its external agents

CRM technology which facilitates customers
relationships and enhances relationship marketing

An extensive network of externa agents to promote
Interasco’s services


5.2 International Organizational Structure and

            One of the
key strengths of Interasco is the experience, expertise and deep knowledge over
the insurance services of its parent company, Harel Insurance Investments and
Financial Services. Besides this, however, Interasco has some important
strengths relating to its structure and culture. The company’s top management
lists a number of talented insurance executives who have shown a remarkable
performance in the market. Its organizational structure is such that limits
bureaucracies, facilitates open and direct communication between employees and
management, enhances creativity and innovation, nurtures strong relations
between organizational members and generally underpins a climate that resembles
more a family business than a subsidiary of a large, multinational corporation.
This has been achieved through the values and the philosophy of its founder
(Mr. Karolos Saias) who has passed on his enthusiasm and his values to his family
successors taking over the business. Today, the founder’s grandson is the CEO
of Interasco and he runs the business as a family firm, paying special
attention to the relations and bonds between all the members of the firm.


5.3 Core Competence

            A firm’s
core competence is a capability, uniquely performed, which can provide access
to other markets or industries (is not industry or market-specific), which
provides substantial benefits to customers and which is hard to imitate on the
part of competitors (Prahalad and Hamel, 1990). In the case of Interasco, its
core competence is the development of flexible, simple, yet innovative
insurance service programs that address to the needs of contemporary customers.
Interasco is committed in learning from the customer, accumulating knowledge
about the customer and transforming this knowledge into products/service
programs. The company excels in the health insurance area and one of the
reasons for this is that it has managed to create insurance programs that are tailored
to the needs, wants and requirements of tis customers.


Alternative Scenarios and Recommendations

section discusses two scenarios, one optimistic and one pessimistic and
accordingly identifies the implications of these in Interasco’s strategy.

            One optimistic scenario
would be that the economic growth in Greece is restored and that employment
rates increase, boosting growth in consumer spending and consumer confidence.
Under this scenario, consumers’ spending will increase the sales of automotive
vehicles and as such will unavoidably increase demand for motor insurance.
Interasco’s main revenues at the moment come from health insurance programs,
but it would significantly benefit from growing its motor insurance portfolio
as motor insurance remains the largest segment of the industry. Penetrating
this segment and leveraging the potentials for growing demand, will most likely
improve the competitiveness of Interasco, enhance its position in the market
and increase its market share. Thereby, under this optimistic scenario it is
recommended that Interasco should pay increased emphasis in further developing
its portfolio in motor insurance, promoting its services and expanding its
customer base.

            One pessimistic
scenario would be that multinational insurance companies decided to enter the
Greek market and further intensify the already fierce competition in the
industry. Under this scenario, such large players could eventually take up
large shares of the market, leaving smaller competitors with limited profit
margins and smaller customer bases. The prospective strategy for Interasco,
under this scenario would be to consider strategic alliances or mergers with
other small and medium insurance companies such as International Life, Eurolife
Insurance etc. In that case Interasco would benefit from strengthening its
presence in the industry, by gaining access to new customer groups and access
to knowledge over insurance areas, which are not traditionally in the portfolio
of its services.



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