American Insurance Company In Terms Of Its Basic Environment Business Essay



American Family Insurance Company started in the year 1927, as a private mutual company. The company deals with casualty, property, and auto insurances. It offers commercial insurance for instance life insurance, health insurance and health insurance among other forms of insurance. The company has its base in the United States of America.

This paper analyses the American Insurance Company, in terms of its basic legal, social, and economic environment and its management, operational as well as financial issues.


The company operates in almost all states in the United States of America. The national headquarters locates in New York. It started as an auto insurance company that targeted farmers only. At that time, the company had a belief that farmers presented a less risk possibility than people who lived in urban areas. As the years passed by, the company expanded its services to cater the changing needs of its customers. It had a name recognized as Farmers Mutual. However, in the year 1963, its name changed to American family mutual insurance company, to show the broad service it had extended.

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The American Family Insurance Company operates under a certain legal environment. The insurance company operates under real estate law, regulation, and insurance laws. The company operates under several insurance laws. This happens because different states, in the United States of America have different insurance laws and regulations. Therefore, the branches of the company operate under these laws and the wider United States insurance law. The company also operates under certain specific regulations that bind its operations for offering life, car, home, property along with business insurance (Pub, 2006).

The company operates under certain specific legal principles of insurances. First, the company has the responsibility to indemnify an insured person, in case of a certain loss up to a specific interest, on the insured. Insurable interest should exist, whether property insurance or personal insurance gets involved. The insurance company must make sure that it operates under utmost good faith. This means that the insurer and the insured should work with honesty and fairness. The two parties must disclose material facts that relate to the insurance deal. This attaches to the insurer, mostly because the insurer offers the deal while the insured receives the deal. Thereof, the insurer must make sure that the insured understands all the requirements of the deal before accepting to sign any documents that may bind him or her, to the insurance deal.

The next legal framework binding the company involves subrogation. It requires legal permission, to pursue recoveries on behalf of the person who incurs loss. It may file a case for the insured loss against those liable. The cause of the loss should also come in to play, under the insuring agreement of the policy. The insuring company must include a dominant cause.

The company has a certain social environment that it operates. The company operates in a society with a diverse group of individuals. The company has a customer base that extends through the whole of the United States country. Its customers range from people who own cars, people who own homes, the working class, business owners, and homeowners among other. The company operates with a diverse group of customers, who come from different lifestyles. The interest of the company covers those people who can pay for the insurance options that the American Family Insurance offers. Therefore, it operates in a social environment comprised of different social classes.

The company operates in an environment that provides people with an opportunity where their ideas count irrespective of their age, gender, race, ethnic, sexual orientation, physical ability, or religion.

The economic environment of the American Family Insurance Company offers a diverse background. It operates with people who have differentiated economic lifestyles and engagements. This makes the company diverse. It offers its services to people who work for the government, people who own their businesses, where large or small, people who own homes, and people who own cars among others. Therefore, this means that the economic environment does not focus on a specific class of people. The company makes a lot of profit from its business (Uninsured and underinsured motorist insurance, 2001).

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The company has an estimated assets and premiums base of up to seventeen billion dollars, in the year 2010. It has four billion and eight million policyholder equity. The economic growth rate of the company reflects a considerable high figure. For instance, in 2006 the company had assets worth fifteen billion dollars. It had premiums worth three million, five hundred thousand dollars. This shows that the economic environment that the company has rates well. The company makes profits from selling various insurance premiums, to its varied group of customers. The customers support the company. The financial stability that the company has had over the years helps the company, to offer quality services, which come at competitive prices. The company has a stable financial environment.

The company has a remarkably organized environment. It has a certain managerial ranking that starts with the president, who acts as the chief executive officer. It has four executive vice presidents, three senior vice presidents and eight vice presidents. The above positions form the core management of the company. They offer executive management practices that include financial management functions, information, and legal advisory. The other managers that operate under these executive managers offer secondary management functions (Fowler, 2006).

The company has its operations in different kinds of insurance offers. As explained earlier, the company started as an insurance company that offered a single insurance policy for farmers only. However, with the changing needs of the customers and the lifestyle people get into, the company restructured, and started offered many policies. The project manager takes the responsibility of all project management affairs in the American family insurance company.

The staffing needs in the company requires a lot of deliberation. The company has a certain hiring process. The company advertises for a vacant position. People apply for the position advertised. The company then acknowledges the applications and contacts the people who applied for the job for an interview. The company applies different approaches when holding interviews for the people who apply for jobs, in the company. The approaches depend on the position that one has applied for the job. In some cases, the location of the job decides the approach that the interview takes (Harner, 2000).

The staff needs of the company decide when the company needs to employ people. The company operates through agents. The American family insurance group has many career options including actuarial, claims, and human resources legal, marketing, and underwriting. The company has diverse, friendly, and inclusive work environment. The company seeks employees who display strong communication skills and focus on customer needs. It focuses on employees who commit themselves, to achieving maximum results. This happens because the company works under an environment that requires people who have strong skills to convince people. Therefore, the company employs people based on the needs of the company and the establishment of its projects.

The projects of the company operate on a continuous basis. The end of its projects depends on certain factors such as the death of a customer. This Gantt chart shows the operations of the company.


Earliest start



Depend on

High level analysis

Week 0

1 week


Selection of market

Week 1

4 weeks


Customer availability

Development of the market

Week 5

2 months


Customer availability

Enhancing market strength

3rd month

2 months


Market analysis

Development of market strengthening factors

6th month

One month


Market availability

Development of managerial reporting

7th month

One month


Market success

The company and its affiliates needs PERT charts for budget and estimates. This works as the major activity for mangers. PERT charts help, to reduce the difficulty for managers, to do budgeting functions. However, these tools should function with keen implementation because poor implementation leads to company failure (Books, 2010).

The PERT chart helps the company perform a series of activities that require sequential performance. It requires that managers to identify specific activities, determine proper sequence of activities, build a network diagram, estimate the time required, determine the critical path and update the chart as the project progresses.

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Activity name


Early start time

Early completion time

Late completion time

Employment of staff

One month

January 2011

February 2011

March 2011

Potential change factors can affect functions management. For example, lack of funds or an availability of limited funds can impair the implementation of certain operations, in the company.


The company operates using certain company managerial functions. It operates in many states, in the United States of America. Therefore, the company requires reliable management and employees. Without these requirements, the existence of the company faces extinction. The company uses Gantt and PERT charts to help it solve certain management functions that require sequential and parallel performance. The legal, social and economic environments that the company operates in, determine the success or failure of the company. The management of the company makes important decisions for the company.