Firc Financial Outlook, Marketing Strategies,

FIRC

Financial Outlook, Marketing Strategies, and Demographic Changes facing the Federal Insurance Reciprocal Company

The insurance and banking industries have been radically altered by recent economic events, with certain major players no longer in the game and with industry watchfulness and consumer awareness at an all-time high. As purse strings have tightened worldwide, as will, profitability for companies in the financial sector is more difficult to come by as deals and money-saving avenues are sought by consumers and businesses alike. This has led to an interesting change in the dimensions of competition and even the viability of new competitors entering the market at the sane time as certain traditional players have hit large stumbling blocks due to issues of financial insolvency and poor investment decisions. While the nature of service provision in the insurance and banking industries have remained largely unchanged at the consumer level, the nature of attracting and conducting business in these industries has been radically altered in processes beginning even before the recent recession.

Marketing has become an issue of increasing importance in the insurance and banking sectors in recent years, stretching back to several years prior to the global recessions. Efforts to reach consumers with company messages have noticeable increased in both frequency and determination, with entire series of commercials with recurring spokescharacters being produce and played endlessly. It is striking, then, that one of the most successful and profitable companies in these recent years of financial turmoil has almost no marketing expenses relative to its competitors.

The Federal Reciprocal Insurance Company (FIRC) is unusual as an insurance and banking company in its lack of marketing presence in mainstream media. Since the company's inception by four military officers sixty years ago, the company has relied on word-of-mouth within the military community as a means of promoting itself and its services, and this has enhanced the reputation for quality and exclusivity that the company has fostered through its careful investment structuring and limited exposures. Rather than focusing on broad marketing through a series of direct advertisement, FIRC has instead relied on its focus on a very niche market and the communications and social structures that already exist within this market as a means of building both its brand profile and its client base.

This paper will examine the degree to which the Federal Insurance Reciprocal Company has achieved success through its focus on the niche market of military personnel and their families and the recent changes to its criteria for membership eligibility. It is clear that the very recent changes FIRC has made to its eligibility requirements are part of a larger necessary trend in the company's future trajectory, as a larger client base provides greater security especially as the demographics of the company's clientele necessarily begin to shift. It is with one eye towards the future and another fixed firmly on present situations that the company will continue to make the necessary decisions to achieve its full growth potential while remaining the quality "provider of choice" for banking and insurance purposes to military members and an expanding pool of their families and dependents.

The success and the future potential problems facing FIRC all come from the same basic issue: the selectivity of its member clients. By remaining exclusive, the company has been able to offer high quality services at lower costs than competitors without traditional fears of growth, market loss, or marketing costs. At the same time, this exclusivity as limited the company's growth potential and has rendered it less competitive in certain markets as it attempts to expand. This, combined with the advancing age of what were the company's core members, poses a significant threat to the company if proper actions are not taken. It seems clear, however, that these actions are being taken, and the realistic and pragmatic view that FIRC's officers have of the future does not preclude the retention of values in a commitment to principle that has been a defining feature of this company over its sixty year history.

Conclusion

The Federal Insurance Reciprocal Company has met with a great deal of success following its changes to its eligibility requirements; the addition of NCOs and enlisted men as well as their family members and dependents on an ongoing basis has hugely increased the number of clients serviced by the company, its overall market share in its various sectors if operation, and its profitability on an annual and long-term basis. The fact that some of the changes are only beginning to take effect and will likely lead to increased membership enrollment in the coming decade increases FIRC's outlook considerably at a time when it is already outperforming the industry as a whole and most of its major competitors.