Blogs - Insurance Services Outsourcing
| Reinventing Insurance Distribution |
| By Rajesh Desingu on 1/11/2010 4:50:51 AM |
When I met a senior executive from a leading insurance major a few days ago, he mentioned the recent LIMRA conference. “It’s interesting that LIMRA chose “New Rules of Engagement” as the theme of its recent conference in New York.”
Interesting? Well, yes. But predictable as well. If any seasoned analyst looked at the existing insurance landscape, he would agree that current industry pressures have made it imperative that leading players find a way to effectively face the debilitating challenges that competition, regulation, risk, capital and shrinking distribution channels will present in a post recession scenario.
The challenge is to transform into a leaner and more efficient enterprise which functions profitably while generating value for the customer. But what will actually bring about these talismanic changes has been the subject of many discussions and roundtables in the insurance industry. To illustrate, in the first half of 2009, the sales of life and annuity products fell on an average of 23 percent. But even more challenging is the policy count that has declined by four percent. So it’s natural that every insurance executive that I have interacted over the last few months has been preoccupied with three elements: cost efficiency, proactive customer service and a focus on sales.
Sales can be increased through new products or new channels or a combination of both. To underscore this point, I came across a pertinent quote while surfing the net for distribution channel related information. Steven Callahan, Senior Consultant and Practice Development Director, Robert E. Nolan Company, commented, “distribution channels will shift to broader blends of options as the Internet, bank assurance, and even retail channels expand while the career channel continues its downward trend. As the generations age, and as the pool of available experienced sales staff shrink, alternative distribution will slowly grow.”
It seems that, even in the face of these challenges, some common themes emerge. Terry Schreiber, Principal Consultant, EDS, summarizes these beautifully in a recent interview entitled Realign Costs, Build in agility and Choose effective partners. Terry observes that "the insurance industry of the future must be more streamlined." He goes on to say that enabling technologies along with intelligent cost management will generate competitive momentum in this space. On the aspect of agility, he makes a very interesting point, something that I agree with whole heartedly, "... the industry’s biggest technology roadblocks are legacy applications and traditional processing platforms. Simultaneously dismantling these roadblocks and re-calibrating cost structure will be a distinctive competency." What can a high value partner do to address these concerns? And “Choosing the right partner” is a necessary step to lean functioning and improving profitability. Watch out this space for more on this subject. |
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