WeInsure™ Insurance

B US I NE S S PL A N
A MEDIA LIABILITY INSURANCE COMPANY

BY
DEEPMALA KHATRI

JITENDRA ASHANI

KRISHNA HARALE

NILESH NAGDEV

PRAJAKTA CHAUDHARI

TARINA VASWANI

MARATHON MAXIMA,
L . B . S . R O A D , M U L U N D W E S T,
MUMBAI- 400 080
 E X E C U T I V E S U M M A RY
WeInsure Insurance – A Media Liability Insurance Company

BUSINESS GOALS AND MISSION

By entering into new area of Insurance, WeInsure™ Insurance

plans to establish and expand as major company for Media Liability
Insurance.

MISSION STATEMENT

• The mission of WeInsure™ is to provide professional insurance

services to the clients we represent.

• We strive to develop a customer base that will appreciate our

service orientation and value added approach.

• We provide our clients with competitive, high quality insurance

oriented products.

• We endeavor to maintain long-term customer relationships that

are based on coverage and service.

• We embrace automation as a means to enhance service and

improve communication.

To accomplish these goals, we establish standards, workflows and

procedures that enable us to provide a consistently high level of
service to our customers. We staff the department with competent,
ethical, individuals who are dedicated to continuing education and
professional development.

SWOT ANALYSIS

MAJOR STRENGTHS

• Premium rates are increasing and so are commissions

• The variety of products that can be offered is high

 • Prospects expect more services from their brokers

MAJOR WEAKNESS

• High risk is involved as it is comparatively new product

• Lack of awareness amongst prospective customers

• Absence of strong sales/marketing expertise

• Overdependence on few key

OPPORTUNITIES

• Market segment is poised for rapid growth

• Absence of companies providing media liability insurance

• Large untapped markets as organizations are not aware of

importance of such insurance

• Scope to diversify into related market segments

THREATS

• The high cost for insurance might hit a point where a backlash
will occur

• Major Player may enter targeted market segment

• Economic slowdown could reduce demand

• Government regulations on issues like media liability are not well

defined

• Market segment's growth could attract major competition

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 BUSINESS DESCRIPTION

Media Liability Insurance protects organizations against claims

arising out of the gathering and communication of information. Media
Liability Insurance provides very valuable coverage against defamation
and invasion of privacy claims as well as copyright and/or Trademark
infringement.

Any company that distributes information to the public via a web

site or other means of communication (desktop publishing, email) now
faces the exposures of a traditional publisher.

Although new media and other publishers worry about claims like
libel and copyright infringement, attorneys and insurers have seen a
dramatic rise in recent years in the number and severity of claims for
errors and omissions. Unlike traditional claims involving allegations of
libel, copyright infringement, invasion of privacy, piracy and
plagiarism, errors and omissions claims seek to impose liability on the
publisher for physical injuries or economic loss allegedly caused by
some flaw or negligent publication in the ideas or expressions
contained in the published material.

BUSINESS FORMATION

WeInsure™ Insurance primarily markets and services Media

Liability Insurance. Its target customers are mostly from business
sector.

WeInsure™ Insurance is a privately incorporated company in the

Mumbai suburb and is licensed to transact media liability insurance.
The shares in the company are held by all the directors and its
Promoters.

Our modern attractive office is located in a Mulund. It comprises

2,000 square feet.

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 The stress will be given to good communication between the sales
representative and client to ensure proper coverage is in place. As
clients become better informed about this type of insurance, there
would be a tremendous increase in clients wishing in-depth discussions
about their policy coverage and how they would get the most value for
their insurance money. Our staff has specialists in media liability
insurance that can properly service and underwrite local business.

BUSINESS PHILOSOPHY

WeInsure™ is customer-focused and responsive to change,

balanced by a clear understanding that value and quality guide our
decision-making.

We provide a way to do business in a secure environment, guided

by prudent rules and regulations.

• We challenge our priorities, policies, rules, procedures,

regulations, and laws to ensure that we are providing efficient
and effective services to our clients and our staff.
• We recognize and accept that change never ceases; that it
provides us the opportunity to become responsive to clients
needs.

• We continually evaluate our business processes to support a

user-friendly environment that improves customer and employee
satisfaction.

• We demonstrate accountability to those we serve by taking

responsibility for our actions, and we encourage our clients to
take responsibility for the management of their retirement and
health benefits.

• We encourage management and staff to demonstrate

responsiveness and flexibility in servicing client’s needs and
solving client’s problems.

• We support open communication at every level of our business

processes.

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• We acknowledge that change drives our organization. Our
responsibility is to deliver consistent and timely information to
our client’s about the rules, policies, regulations, and laws that
govern the programs we administer. Knowing this encourages us
to seek efficient means of providing quality customer service,
value-added retirement and health benefits, and other related
programs and services.

OBJECTIVES

• To establish WeInsure™ Insurance as the value-priced insurance

company across India.

• Providing products suitable for filling up the gap in our present

Insurance offerings and the current market need.

• Get commitments for support and products that we can sell in

our market context.

• Establish good working relationships with media, insurance and

finance market leaders by meeting with their decision makers
and plotting a mutual plan for success.

• Investigating markets to propose our offerings.

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 KEY ADVANTAGES

We believe that keys advantages are:

• Knowledgeable, friendly staff that can empathize with our

consumers needs and circumstances, especially in handling a
loss.

• Policy that meets or exceeds the expectations of our clients, and

that are affordable, available, and understandable.

• Policy and endorsement delivered on time with minimal errors.

• A commitment to an annual insurance review for all of our

clients. A phone call is more than any direct mass marketer
offers. We believe personal contact and service is the
cornerstone of our success.

STRATEGIC ALLIANCES

Strategic alliance with foreign company appears essential driver of

superior growth. Media Liability insurance is comparatively a new
concept in Indian Market. Many foreign insurance companies see India
as huge market for this insurance product. Especially in a time when
growing international marketing is becoming the norm, such
partnership can leverage the growth of foreign companies through
alliances with WeInsure™. Rather than take on the risk and expense
that international expansion can demand, many foreign companies can
enter Indian markets by forming alliance with WeInsure™.

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 As we consider the legal issues that WeInsure™ might face in
business, it is important to find legal advisory firm who will fit for the
business. WeInsure™ expect lawyer not just to drop the decision in
company’s lap, or to reject your strategy out-of-hand, but rather to
provide strategic counsel to help align company’s decision with
company’s business objectives. WeInsure™ is planning to grow &
important advices on legal front are required. Considering this
strategic alliance with legal firm is also important. Some of the
functions of this legal firm include dealing with and managing
correspondence with Regulatory and other Governmental Authorities in
connection with the Company’s business. Ensure compliance with local
laws and regulations

LICENCES

LICENCES REQUIRED

Licenses required to be procured before commencing the operations

of any Insurance company are:

• Registration with the Registrar of Companies in accordance with

Companies Act 1913

• Certificate of Registration in accordance with the Insurance Act

1938

APPLICATION FOR CERTIFICATE OF REGISTRATION

To apply for Certificate of Registration in accordance with Insurance

Act 1938, documents required are:

• Certificate of Registration of the company in accordance with the

Companies Act 1913

• Details including the name, address and the occupation of the

directors of the company incorporated.

• A statement of the class of insurance business to be done and a

statement that the amount required to be deposited before
application for registration is made, has been deposited together

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 with a certificate from the Reserve Bank of India showing the
amount deposited.

• A declaration verified by an affidavit made by the Principal

Officer of the insurer authorized in that behalf that the provisions
for paid-up equity capital or working capital have been complied
with.

• A certified copy of the published prospectus and of the standard

policy forms of the insurer and statements of the assured rates,
advantages, terms and conditions to be offered in connection
with insurance policies.

• The receipt showing payment of fee as may be determined by

the regulations for each class of business.

FUTURE VISION

WeInsure™ will strive hard to:

• Create a revolution in the Insurance industry by introducing new

types of insurances in future.

• Help our customers cover all their risks.

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 D E V E LO P M E N T P L A N
WeInsure Insurance – A Media Liability Insurance Company

LOCATION DETERMINATION

The choice of a business location is a very important decision and

depends on what type of business you’re starting. While choosing a
business location, we kept in mind what we needed, what we wanted
and what could afford.

Mulund is one of the prosperous suburbs of northeast Mumbai. It

has been called the Prince of Suburbs to rival the Queen of Suburbs,
Bandra. It is accessible by rail on the Central Railway line of the
Mumbai Suburban Railway It has easy access to the Eastern Express
Highway and Navi Mumbai through the Mulund-Airoli bridge.
Additionally it is also easy to go to Thane or Mumbai North-Western
such as Borivali using the Ghodbunder Road.

As most of the prospectus clients are located along western suburbs

and New Mumbai. Cost for renting office in Mulund is around Rs.150
per Sq. feet. It is cheaper than setting up office in South Mumbai or
Western Mumbai.

From all above considerations Mulund is good choice for setting up

office considering connectivity.

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PROJECT PLAN

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 H I S T O R I C A L A N A LY S I S
WeInsure Insurance – A Media Liability Insurance Company

HISTORY

Media Liability Insurance was originated in the United States in

1930 by the Employers' Reinsurance Corporation. There was a
perceived need, especially with respect to newspapers at the time, for
protection for alleged libel and slander claims.

Currently, expanded media liability policies, geared to the needs of

growing numbers of firms with communication exposures, are carefully
underwritten by a substantial group of insurers.

GENERAL VIEW

• Media Liability Insurance classification: General Insurance

• Size of General Insurance industry in India: US$5.6 Billion

industry

• Competition in General insurance market:

6 public sector players
11 private players

• Policy:
Regulated by IRDA
FDI upto 26% approved
Detariffed General insurance segment

• Potential:
Non-life penetration is even lower at 0.6% in 2006-07

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 CASES – EXAMPLES (NON INDIAN)

CORRUPTED DATA
A communications company sues for lost revenue and expenses to
recover billing files for wireless customers that were deleted by their
software vendor who was updating the system.

Indemnity Paid: $750,000

Defense Cost Paid: $150,000

SOFTWARE FAILS TO MAINTAIN EMPLOYEE HOURS

A company provides timekeeping hardware and software to its

customer. The software doesn't function correctly; it fails to maintain
employee hours worked and to correctly apply the hourly and overtime
rate of pay. The failure results in over/underpaying employees and the
need to replace the timekeeping clocks. The customer sues the
provider of the hardware and software

Indemnity Paid: $440,000

MISSED DEADLINES CAUSE A BREACH OF CONTRACT

A firm out sources to an information technology and management

service company for the replacement of hardware, software and
infrastructure as well as telecommunications and related services in
order to upgrade its ability to serve customers and address any
problems. The information technology and management services firm
fails to meet deadlines due to a high turnover of staff and a breakdown
of project management.

Indemnity Paid: $2,000,000

Expense Paid: $500,000

LAWSUIT IN FRANCE

A software developer is sued in French courts for failing to deliver an

operational version of a software system. The plaintiff alleges that the
system sold and installed was not compatible with their mainframe
systems, despite assurances to the contrary. The plaintiff sues for
recovery of consequential damages.

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Indemnity Paid: $600,000

BREACH OF SECURITY

A telecommunications firm is sued by a customer claiming they were

sold a defective system with inadequate security protections. The
customer claims the faulty system allowed individuals to access their
phone system and, as a result, they incurred fraudulent overseas
charges.

Indemnity Paid: $3,450,000

DEFENDING SOFTWARE THAT PERFORMED AS PROMISED

A software company was sued by a customer after he used the

company's cost estimating software. The software itself was found to
have functioned perfectly. The error was on the part of the user who
later underbid a work project. The customers eventually dropped the
case, but only after considerable legal expenses were incurred by the
software company.

BACKGROUND

The Indian Liability Insurance market is still in its nascent stage, but
the market is now seeing good growth with increase in premium
collections of more than 100%. Currently the liability Insurance
constitutes just 3% of market in India.

With increasing globalization of Indian industries and rapid industrial

development, and high growth in IT sector, the market force is high
growth potential for liability risk insurance.

The liberalization of Indian Economy in its wake provides both

opportunities and challenges along with liberalization of Insurance
sector world wide, the need for study of various liability risks emerging
world over and its management is being felt continuously.

Managing risk and ensuring underwriting profitability are priorities

for Insurers, while the service providers are exposed to various of

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liabilities. Liability portfolio is a fast emerging and is acquiring
importance due to of business.

A proper understanding of emerging liability scenario and the risk

involved need to be better understood by the concerned with an
objective of managing these liability risks in a better manner and the
insurance industry need to be more responsive to the customer needs
for such liability coverages.

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 MARKETING PLAN
WeInsure Insurance – A Media Liability Insurance Company

PRODUCT

MediaInsure™
A product by WeInsure™ for covering your Media liabilities

Any company that distributes information to the public via any

means of communication including website, desktop publishing and
email faces the exposures to risk. These risks seek to impose liability
on the publisher for physical injuries or economic loss allegedly caused
by some flaw or negligent publication in the ideas or expressions
contained in the published material.

MediaInsure™ offers specialized coverage for a wide variety of

businesses against the devastating impact of lawsuits arising out of
gathering and communicating information.

COVERAGE

• All media classes of business covered not excluding electronic

media.

• Coverage for the publication, broadcast or other dissemination of

matter in any form including electronically or digitally.

• Coverage for the acquisition and gathering of matter in addition

to the actual publication, broadcast or other dissemination.

• Coverage for defamation including product defamation,

emotional distress, outrageous conduct and prima facie tort.

• Coverage for invasion of privacy or publicity.

• Coverage for infringement of copyright, trademark, title, slogan

or other misappropriation.

• Coverage for breach of a license to use a third party’s intellectual

property.

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 • Coverage for breach of agreement to maintain the confidentiality
of sources.

• Coverage for personal injury from the acquisition and gathering

of matter to be published, broadcasted or disseminated.

• Coverage for unfair competition or conspiracy.

• Coverage for negligent supervision of an employee.

• Coverage for negligent transmission of a computer virus or

malicious code in media.

• Advertising coverage for the publicity and promotion of the

Insured’s media.

• Coverage for third parties who Insured agrees to indemnify for

claims arising out of matter furnished to the third party.

• “Insured” includes part-time, seasonal, leased or temporary

employees and volunteers.

• Independent contractors added to coverage at Named Insured’s

discretion.

AVAILABILITY

Primary or excess coverage available.

OPTIONAL COVERAGE

• Joint Venture Coverage

• Merchandising Activities

• Public Appearance Coverage

• Miscellaneous Exposure Coverage

EXCLUSIONS

• Patent Infringement

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 • Intellectual Property Disputes with parties involved in a business
relationship

• Employment practices

• Breach of Contracts excluding those mentioned in coverage

scope

• Public Appearances including any political subject of discussion

• Public Appearances including any personal disputes

• Piracy

QUOTATION REQUIREMENTS

• Completed WeInsure™ application form

• Detailed synopsis of production

• Copy of contract with distributors

• Claim history

ANALYSIS OF THE PRODUCT

Abroad, where the awareness for Copyrights and similar legal rights
is very profound, media liability insurance is a very popular concept.
Various firms offering professional liability insurance also offer Media
liability insurance as a part of their product portfolio.

In the light of recent events like the Om Shanti Om or Krazy 4 cases,

the need for such a product has been felt in the Indian market.
Companies abroad provide coverage against different claims; making
each product though not unique but largely different from each other.
Hence considering the current scenario, we have made provisions to
cover major types of claims that could arise in the Indian context.

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 MARKET ANALYSIS

The product concept is very new to the Indian markets. Though

there are no defined market segments, following sectors are prospects
for the product:

• Advertisers

• Ad Agencies

• Authors / Freelancers

• Book Publishers

• Broadcasters (Radio, Television & Cable)

• Magazine Publishers

• Multimedia Companies

• Newspaper Publishers

• Public Appearances – talk shows, news channels

• Radio, TV & Film Producers or Distributors

MARKETING GOALS AND STRATEGIES

GOALS

• To create awareness for risk exposures involved in gathering and

communicating information and educating those involved with
the benefits of our offerings.

• To ensure winning hallmark cases to create a prominent brand

image in market

• To ensure winning credible accounts to create a strong client

portfolio.

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STRATEGIES

Since the product concept is new to the Indian market, awareness

creation will be of a prime importance; even before the marketing
team takes up branding exercises. The strategy is divided into two
parts:

CONVENTIONAL METHODS

• Internet: Website and other electronic media

• Out-door promotion at only few strategic locations

• Magazine and Newspaper Advertisements

• Electronic Newsletters

• Trade shows and similar events (Broadcast India – Mumbai,

Media Expo – Kolkota)

• Direct mail

• Directories and old contacts

SPECIFIC EFFORTS OF THEMARKETING TEAM

• Hold product launch parties for prospective customers.

• Hold conferences and seminars, inviting internal and external

industry experts and discuss the latest innovations. Let the
experts speak about various recent cases in other pats of the
world and similar applicable situations in India.

• Create and actively interact with customer advisory boards.

Invite the most influential opinion leaders to participate.

• Create and actively interact with strategic partner boards.

• Create external “expert councils” for future products. Invite the

most knowledgeable and influential outside experts to
participate, involve them in the product design itself.

• Hold lounge parties inviting current satisfied customers,

prospective customers and internal and external industry
experts. Present case studies and allow time for networking.

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• Record testimonials from your most supportive customers and
subtly interweave these with the background music that plays
when people are on hold at your company.

• Develop and disseminate a portfolio of customer case studies to

reinforce specific brand benefits to specific target customers.

• Publish and widely disseminate white papers to position your

organization and brand as experts in your field.

• Develop a speakers’ bureau and actively orchestrate speaking

engagements at key industry events – conferences, trade shows,
industry association meetings, etc.

• Actively seek industry association committee assignments and

board positions.

• Constantly keep the following people and organizations aware of

your brand and its latest accomplishments:

Industry analysts

Financial analysts

Resellers and other strategic partners

Your organization’s professional partners: lawyers,

accountants, management consultants, advertising
agencies, etc.

Trade magazine editors and writers

People who write about your industry for the general

business press

People who write books about your industry

Influential bloggers and podcasters in your category

Other opinion leaders

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 PRICING POLICY

MediaInsure™ is an exposure rated product that has to be

customized to fit every customer’s need.

While selling the product, Profile writing for the particular customer
is the first important step; before making any final policy sale. This
step involves tapping various initial details of the customer and of the
customer’s work that the customer seeks to insure.

After the Profile writing stage, the work of the customer is itself
judged by the underwriting department to calculate the premium and
coverage policy. A few prominent factors on which the pricing policy
will depend are:

• Severity and type of risk involved

• Probability of frequent claims

• Claims against which the customers seeks protection

• Expected return value form the law suit

• Expected duration and expenses involved in the actual trial

• Duration of coverage

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 SALES ESTIMATE

OPERATIONS

A few responsibilities to be carried out by the Marketing team in

excess to the sales activity are:

• KYC – to check up for the paying capabilities and past records of

the customer.

• Online sales rep or product expert – to interact with any

customers looking for first hand information on the product and
try converting them into qualified leads.

• Help the IT team in managing the online portal.

• Help the IT team in implementing free services.

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 ADVERTISEMENT AND PROMOTION

Apart from the specific marketing strategies discussed above, the

company website will play an important role in creating awareness and
educating prospect customers.

The website should not only display product information and allow
downloads of case studies and white papers, but also allow a variety of
activities like:

• Allow visitors to create an online account for themselves to take

part in blogs – to enhance their understanding while getting
opinions from experts and qualify to receive free services

• Free services will include providing the prospect a dummy policy

based on the primary inputs received (will help in pseudo –
profiling)

• Provide customers with a Customer Account to help them

manage their policies and claims history for different policies.

• Allow online counseling for any visitor by a sales representative.

FUTURE PRODUCTS

Keeping in pace with the requirements of the Indian markets,

WeInsure™ ensures innovative extension of its product portfolio to
cover risks in the Technology field and the business liabilities in
general.

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O R G A N I Z AT I O N S T R U C T U R E
WeInsure Insurance – A Media Liability Insurance Company

MANAGEMENT AND PERSONNEL

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BOARD OF DIRECTORS

There will be 5 Board of Directors who will be the integral part of the
management for taking decisions and handling certain departments.
According to their domain know-how, qualifications and experience.

• Shailesh Gidwani (C. E. O.) aged 40 years, has completed his

MBA in Finance from Mumbai University, FRM (Financial Risk
Management) and PGMBA (Two year) course in Insurance. He
was working with AIG as a manager of Professional Liability
Department.

• Avinash Singh, (Chief Finance Officer) age 34 years, has

mastered in Finance from Bangalore University. He had prior
experience in Corporate Finance at ABG finance ltd.

• Anamika Seth, (Chief Operating Officer) age 37 years. She is

MA in human resource management from TISS, Deonar. She has
worked with Manpower Professional for 4 years.

• Sameer Narang, (Marketing Manager) 38 years old, has done

his MBA in Marketing from Delhi University. He has worked as an
executive in Max New York Life Insurance Ltd.

• Sagar Kataria (Chief Information Executive), 33 years old, he

has done his MBA in Finance from Mumbai University. He has
prior work experience in underwriting department at Karvy
Securities and in Claims department at in Sundaram life .

INTERNAL AUDIT DEPARTMENT

In this department three personnel will be appointed externally to

audit financial statement of the company and follow up thereof with
the board of directors for the same.

ACTUARY

Initially we will appoint three actuaries to deal with the company

risk and uncertainties. They will perform actuarial analysis of insurance
rates, rating procedures, rating plans, and schedules of our insurance

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companies. These are professionals who are experienced in reviewing
and analyzing insurance operations, reserves and underwriting
procedures and provide technical assistance regarding actuarial
matters to policy examiners and other technical staff. In other words
they are the people who ascertain in advance the uncertain events
that could take place in future and come to a financial conclusion.

OPERATIONS DEPARTMENT

In this department there will be one manager and three operational

specialists to recruit and handle manpower, to handle administrative
work and back office work of the company like documentation,
stationary records and recruitment.

ACCOUNTS AND FINANCE DEPARTMENT

In this department company will have one manager and two deputy
chief accountants to look after financial transactions of the company
like as follow:

• Handling the financial affairs of the company, including handling

of all funds, accounting and reporting procedures and long-range
planning.

• Provides necessary financial data in a timely manner to the

respective department

• Monitors all vouchers authorizing the expenditures of money.

• Prepare and analyze all financial statements.

• Arranges for audits of all accounts and records annually by an

independent, certified public accountant selected by the Board.

UNDERWRITING DEPARTMENT

In this department there will be five personnel, a manger and four

deputy underwriters. Job responsibility of this department will be as
follow:

• Review and evaluate new and renewal Media, Technology and

Misc Professional Liability business based upon company
underwriting guidelines, competition and geographic focus.
Develop strategy and make recommendations.

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 • Analyze and underwrite individual risks. Develop appropriate
limit structure, retention, pricing and endorsements within
authority granted. Refer to supervisor for approval if outside
authority.

• Review coverage requests provided by agent and determine

department’s position relating to such requests within individual
authority granted. Present those requests outside the individual
authority to immediate supervisor for approval or guidance.

• Manage personal book of business.

• Continue to develop and update product and underwriting

knowledge.

CLAIMS DEPARTMENT

This department plays crucial role in the organization; Individuals

and businesses purchase insurance policies to protect against
monetary losses. In the event of a loss, policyholders submit claims, or
requests for payment, seeking compensation for their loss. Adjusters,
appraisers, examiners, and investigators deal with those claims. We
will have a manger and two claim adjustors and two claim
administrators to look after claims and so on.

MARKETING DEPARTMENT

The personnel of this department are the acting face of the

organization. As they need to bring potential clients and maintain the
existing clients. In our company there will be one marketing manager
and twelve marketing executives. Following are the job details of
marketing representatives.

•Identify new Media, Technology and Misc Professional Liability

business targets and opportunities, work closely with producer/agent
to ensure department receives opportunity to offer proposal. Make
strategy recommendations to supervisor.

•Solicit new accounts, gather market intelligence and deliver up-to-

date department information relating to products and services.
Perform required number of broker marketing calls. Manage select
agency relationships to ensure objectives are achieved.

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•Coordinate with other representative for follow up with the clients and
promoting to other potential clients.

LEGAL DEPARTMENT

This department is responsible for supporting all the other

departments with legal advice for their operations.

IT DEPARTMENT

The personnel of this department is responsible for implementing

and maintaining the entire IT infrastructure and services offered.

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 R I S K M A N AG E M E N T
WeInsure Insurance – A Media Liability Insurance Company

RISK REDUCTION

The risk analysis considers critical factors that may lead to a failure
of the business concept. Such factors can involve failures during the
implementation phase as well as during operations.

• The company might lose liquidity if its credit rating falls, it

experiences sudden unexpected cash outflows, or some other
event causes counterparties to avoid lending to the company.
Thus, one common reason for bankruptcy is in sufficient liquidity.
In that case it is possible that all liquid funds are used to cover
losses or that liquidity needs were planned too tight. To be able
to flexibly react to changing liquidity needs, it important that
sufficient funds be planned even during the start-up phase, thus
5-10% of the investment sum should be held as liquidity reserve
permanently.

• Over-indebtedness: Many businesses are run on a small equity

base. The majority of investments are funded by debt. If the
business becomes unprofitable, debt obligations cannot be
covered. It is therefore important that a share of earnings is
retained for debt service.

• Insufficient demand and customer loyalty: This frequently leads

to business failure. This includes permanently low demand, as
well as a temporary collapse in demand. Often demand
estimates were too optimistic at the outset. Such failures might
also come from external shocks instead of operating deficiencies.
Since the expected frequency of business demand during the
start-up phase are still low, a critical success factor is to focus
promotional effort so as to generate customer loyalty early on,
which will help minimize the effects of demand fluctuations. This
is also important for the future development of the business.

• The future success of the company will also depend in large part
on the ability to attract and retain highly qualified service and
management personnel. The company faces competition for
personnel from other companies, academic institutions,
government entities and other organizations.

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 EXIT STRATEGY

SELL THE BUSINESS TO YOUR EMPLOYEES

Current employees and/or managers may be interested in buying
your business. Arranging an employee buyout can be a win-win
situation as they get an established business they know a great deal
about already and you get enthusiastic buyers that want to see your
business continue to thrive.

One way of setting up this exit strategy is through an Employee

Share Ownership Plan (ESOP), a stock equity plan for employees that
lets them acquire ownership in a company.

An employee buyout doesn't have to involve a stock equity plan

though. It might be as simple as having one of your current employees
take over the business.

SELL THE BUSINESS IN OPEN MARKET

This is the most popular exit strategy for small businesses. At a

certain point in time, when there are problems of liquidity, loses,
Management Failure the small business owner puts the business up for
sale for a certain.

JOINT VENTURES

Another exit strategy is entering into a merger with some of the

insurance company as they already have the expertise in this field.

SELL TO ANOTHER BUSINESS

Since we are in Insurance, we can sell our business to some another

company who us is already into insurance or any bank or firm who
wants to enter into insurance sector.

Positioning your small business to be a desirable acquisition can be

a very profitable exit strategy. Businesses buy other businesses for all

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kinds of reasons, from using a new acquisition as a quick path to
expansion through buying out.

The trick to success with this exit strategy is to target your potential
acquirer(s) in advance and position your company accordingly. And of
course, convincing your acquirer that your small business is worth
what you want for it.

REINSURANCE

Reinsurance is a means by which an insurance company can protect

itself with other insurance companies against the risk of losses.
Individuals and corporations obtain insurance policies to provide
protection for various risks. Reinsurers, in turn, provide insurance to
insurance companies. The company requesting the cover is called the
cedant and the reinsurer can be called the ceded.

Some of the Re-insurance will help our business by means of:

RISK TRANSFER

The main use of any insurer that might practice reinsurance is to

allow the company to assume greater individual risks than its size
would otherwise allow, and to protect a company against losses.
Reinsurance allows an insurance company to offer higher limits of
protection to a policyholder than its own assets would allow. For
example, if the principal insurance company can write only $10 million
in limits on any given policy, it can reinsure (or cede) the amount of
the limits in excess of $10 million.

Reinsurance’s highly refined uses in recent years include

applications where reinsurance was used as part of a carefully planned
hedge strategy.

INCOME SMOOTHING

Reinsurance can help to make an insurance company’s results more

predictable by absorbing larger losses and reducing the amount of
capital needed to provide coverage.

Reinsurance policies are of several types:

PROPORTIONAL

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 In this type of insurance, reinsurers receive a specific share of risks
and premiums on each policy that an insurer underwrites.

There are Several Types of Proportional Reinsurance Policies:

QUOTA SHARE

Through this insurance, an insurer cedes a specific percentage of

losses and premiums. For example, an insurance company can
purchase a 50% quota share treaty and share half of all premiums and
losses with the reinsurer.

SURPLUS REINSURANCE

Through this insurance, an insurance company cedes those

insurances where risks are higher than a specified amount.

NON PROPORTIONAL (EXCESS OF LOSS)

In this type of insurance, an insurer takes on all the losses till a

specific limit (retention) is reached. After that level, the reinsurer takes
on all the losses.

Following are the Types of Non-Proportional Reinsurance Policies:

PER RISK

In this type, an insurance company might insure a policy with a

specific limit and then buy per risk reinsurance to cover losses of more
than a limit within the policy. For example, a company might reinsure
policies with limits up to $5 million and then buy a reinsurance policy
of $3 million in excess of $2 million. This way if it receives a claim of $4
million, it can recover $2 million from its reinsurer.

PER OCCURRENCE

Also called catastrophe excess of loss, this policy has insurance

policy limits less than the reinsurance retention.

RISK ATTACHING BASIS

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 In this type, a reinsurer accepts only those claims that were made
for policies bought before the reinsurance policy started.

CLAIMS MADE BASIS

This policy covers all claims reported to an insurer within the policy
period, irrespective of when the event causing the loss occurred.

LOSS OCCURING BASIS

This is a type of reinsurance policy, wherein all claims occurring

during the period of a contract, regardless of the time when the policy
was bought, are covered. Losses due to any claims made after the
expiry of a contract are not covered.

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 FINANCAL PLAN
WeInsure Insurance – A Media Liability Insurance Company

INVESTMENT BUDGET

INVESTMENT BUDGET

INVESTMENT IN DEVELOPMENT OF BUSINESS 1000000000

Building Investment N. A.
Furniture 2500000
Office equipment 1500000
Technical equipment & Software 5000000

INVESTMENT IN DEVELOPMENT OF OPERATIONAL BUSINESS

Licenses 1500000
Rent 6000000

Marketing and distribution 4500000

Start promotion 2000000

START UP COSTS
Consulting 500000
Insurance 1000000

FINANCIAL COSTS
Interest 1200000
Liquidity 185000

TOTAL COSTS 1025885000

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 STATISTICAL DATA - RATIOS

TO

RETURN OF INVESTMENT

To

FINANCIAL PROJECTIONS

Two

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