Strategic orientation and equifinality in the U.S. private passenger auto insurance sector

Abstract

The objective of this study is to examine the strategic orientation of firms in the private passenger auto insurance sector, using the notion of strategic groups. Based on data from the period 2002 to 2007 from a sample of 53 insurers, this study found distinct strategic groups operating in this segment. Each of these groups has unique differences in their modes of operation. Accordingly, these groups are classified as Cost Leaders, Mid Tier Players, Geographic Niche Players, High Cost Niche Players, and Diversified Firms. However, despite the differences in strategic posture, these groups had comparable performance, indicating equifinality in operational modes. Study findings offer several insights to firms planning entry or operating in the private passenger segment of the property-casualty insurance industry.