Strategic Planning of Central American Insurers

Abstract

This paper presents results of an exploratory study describing a group of Central American insurers in their beginning efforts using management tool of strategic planning. The unique characteristics of Central American environment and their effect upon strategic planning are explored and analyzed. This analysis leads to a set of recommendations for those corporate executives and academicians concerned with insurance and reinsurance companies in Central America. Among many research problems of investigating application and/or limitations of application are two; definition of tool and accumulation of empirical data that are valid and meaningful. Academic literature (1) and industry speeches (2) present an array of nomenclature for planning, such as long range, medium range, corporate, tactical, environmental, and so on. In reviewing Central American insurers definition selected for this study is one that was used in a prior investigation (3). Strategy is defined as the pattern of major objectives, purposes or goals, and essential policies and plans for achieving those goals, stated in such a way as to define what business company is in or is to be in and kind of company it is or is to be. (4) This definition (although imperfect) seems to encompass many of characteristics mentioned by practitioners and academicians (5). Furthermore definition is appropriate for this study as it enables researcher to make some comparison between United States and Central American companies. The Strategic Framework The authors of definition have also developed a framework for deriving a strategic plan. The framework is divided into two interrelated sections: formulation and implementation. Briefly stated these divisions are: A. Strategy Formulation 1. Environments-Economic, social, political markets, industry competition and products. 2. Resources-managerial, financial and technical. Israel Unterman, D.B.A., is Visiting Professor of Management, San Diego State University and was formerly Professor at Instituto Centroamericano de Administracion de Empresas (INCAE), Managua, Nicaragua. The author thanks two anonymous referees for helpful suggestions in preparing this paper for final publication.