Smartphone Insurance
Practice this intermediate product launch case interview question in the Financial Services sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
This case tests market sizing, financial analysis using insurance-specific metrics (Combined Ratio), and strategic thinking. The key insight is recognizing that while agent distribution is initially more profitable in Year 1, the website channel becomes superior due to one-time development costs and higher customer acquisition, requiring candidates to think beyond first-year financials.
Insuraco is a large US insurer that’s looking to grow. They currently sell a wide range of insurance products to US consumers and are considering developing a new product: $5/month smartphone insurance for under-30s.
Insuraco’s management is excited about the opportunity of selling to this large, under-insured group. However, before they develop the idea further, they’d like to know whether this is indeed a good idea, and, if so, how they should roll-out this new product.
Clarifying Information
- Insuraco’s primary objective is to maximize profit, particularly in the first year the product is released
- Insuraco currently sell their products through agents
- Insuraco are only interested in selling this product in the US (and are licensed to do so in all US states)
- Insuraco’s investment income can be ignored in any financial calculations