Östgöta Brandstodsbolag started its insurance business in 1841 and is today a part of Länsförsäkringsgruppen, which consists of 24 independent and locally anchored county insurance companies. The local concept is a condition for the county insurance (länsförsäkring) idea, which means that the 24 county insurance companies cooperate freely. Länsförsäkringar is the market leader within property and liability insurances in Sweden and has a market share of 30.5%. The largest, and most well known, insurance companies in Sweden, apart from Länsförsäkringar, are If, Trygg-Hansa and Folksam.
This essay treats with Östgöta Brandstodsbolag, which is one of Sweden's largest county insurance companies. The company is active in the county of Östergötland where it has the dominant market shares within home, detached houses, car and farming. The largest and most prosperous department is property and liability (93%). It is divided into private, agricultural and business markets. The part this essay concentrates on is the business market, which renders all business related insurances to the company. The business market department reaches its customers via three distribution channels: own sales, bartered sales and a newly started direction: franchise. This direction started in 2006 in Östgöta Brandstodsbolag and the franchise direction is a business form which has grown much during the last couple of years in Sweden, 28% of all franchise systems in Sweden have been created during the last three years. But among insurance companies Länsförsäkringar is the only company actively working with franchise for distribution of insurance. The goal with Länsförsäkringar's franchise business is that it should be characterized by long-termness, clarity and mutual respect. The aim of the operations in Länsförsäkringar is an increased market work-up of small and middle sized companies.
In connection with this organizational change it was estimated that Östgöta Brandstodsbolag needed to needed to expand its economical follow-up as well as create relevant analyses on the business aims. A good follow-up will give a good steering tool for the company, which will show which direction the company should strive towards.
The aim of the essay is to show the possibilities for examining and analyzing the profitability in the three distribution channels. Which profitability has the channels per se and how should the distribution of all costs be calculated? Assessment and evaluation of the economical fall-out can be made through two different approaches. Either overall calculations are made for the distribution channels, in this case I have gathered relevant information from Göran Andersson's Kalkyler som beslutsunderlag [Calculations as a Basis for Decisions] (1997) and Gunnar Ohlsson's Företagskalkyler [Business Calculations] (2001) regarding the creation of self cost calculations, contribution calculations and ABC-calculations to then be able to analyze the result. Or does the company change the structure of the present accounts where a total distribution of all income and costs through a complete cost division should be made? To make this analysis I have used a distribution model from Lönnqvist and Lind's Internredovisning och prestationsmätning [Internal reporting and prestation measuring](1998).
I have explained both lines of action in my essay as well as building a model of my own showing the dispersion between the distribution channels. The calculation model created visualizes that the own sales has the lowes coverage contribution since franchising as well as the highest bartered deals according to income and cost details from Östgöta Brandstodsbolag. According to economical theory the line with the highest coverage degree be chosen by the company to maximize the usage of resources. In this case Östgöta Brandstodsbolag should opt for using bartered deals as much as possible, but bartered deals are generally larger deals and demand more insurance commissions to build up an insurance company. Franchising has thus a higher coverage contribution than the own sales but the difference between the directions is not noti...
