Question

A group of investors are discussing the formation of a new property and liability insurer. The proposed com-pany would market a new homeowners policy that combines traditional homeowner coverages with unem-ployment benefits if the policyholder becomes involun-tarily unemployed. Each investor would contribute at least $100,000 and would receive a proportionate interest in the company. In addition, the company would raise additional capital by selling ownership rights to other investors. Management wants to avoid the expense of hiring and training agents to sell the new policy and wants to sell the insurance directly to the public by selective advertising in personal finance magazines.
A. Identify the type of insurance company that best fits the above description.
B. Identify the marketing system that management is considering adopting.

Answer 1

Answer:

A. Stock insurance company

B. Direct response system marketing strategy

Explanation:

A. A stock insurance company has the stock holders or owners as investors and not policyholders. Profit is made when the stock increases in value over time. In this given question raising additional capital only happens In a stock insurance company.

B. Because the management do not want hiring of agents and personalized selling, they can do this through direct response system marketing strategy. This policy is sold directly to customers through various system such as telemarketing or through the media