Federated Insurance Companies

Federated Insurance Companies

Industry Analysis

Under the North America Classification System, Federated Insurance belongs to Direct Life, Health, and Medical Insurance Carriers Industry which accounts for the 52411 industry code. According to the 2002 national census, there are around 13,004 organizations with total revenue estimated in $ 755,029,387. The industry is highly concentrated and competitors are primarily in the Property & Casualty Insurance industry. Among the company's top competitors, we can identify big names; including American International Group, MetLife, Aetna, State Farm and Allstate. The 50 largest companies hold more than 60 percent of the market. Federated Insurance also competes in the Life Insurance sector. Large companies have big economies of scale in administration and in access to capital. Small companies can compete successfully by specializing in particular products or industries.

After reading some news, the severe weather of the past couple of years came across to me as one of the top issue in the industry; "The insurance market has seen some significant stabilization in 2007. In contrast, 2006 was a "wild" year, which can be attributed to the insurable losses of 2004 and 2005, causing pricing for insurance to go up and coverage to decline."1

Company Overview

Federated Insurance is a mutual firm with a clear focus. The company provides multiple lines of business insurance coverage and risk management to employers in automotive repair and sales, building construction, printers, funeral homes, and jewelers, among others. Its products and services include workers' compensation, automotive, group life and health, and retirement planning. Federated Insurance markets its products both directly and through an independent sales force.

Since its founding in 1904, the company has worked closely with trade associations to develop and endorse its insurance programs. Federated's home office is located in Owatonna, Minnesota, with regional offices in Atlanta and Phoenix, and several service offices located throughout the country. Federated has more than 2,600 employees and operates in 48 states and sales for the year are $111.16 mill.

Customer Description

The industry has pretty broad market segmentation; some companies concentrate in the Business to Business area; where market segmentation is done according to businesses size (big-medium-small). Some are just focused in personal customers; where segmentation is done throught socioeconomic characteristics. And finally there are those insurance companies that deal with both B-B and Personal.

Federated specializes in business insurance for selected industries. This narrows down the company's market segment to customers in the following industries: